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| 1 | |
Most business firms in the United States are |
| | A) | sole proprietorships. |
| | B) | partnerships. |
| | C) | corporations. |
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| 2 | |
Most American corporations are |
| | A) | publicly owned. |
| | B) | very large. |
| | C) | very small. |
| | D) | owned by foreigners. |
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| 3 | |
Which statement is true? |
| | A) | Bondholders are owners of a corporation. |
| | B) | The largest firms in the United States are corporations. |
| | C) | There are just over 10 million business firms in the U.S. |
| | D) | No business firm has sales of over $10 billion. |
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| 4 | |
Which statement is false? |
| | A) | There are more partnerships than corporations. |
| | B) | There are more proprietorships than partnerships and corporations combined. |
| | C) | Less than one of every ten U.S. businesses is a partnership. |
| | D) | There are about 25 million business firms in the U.S. |
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| 5 | |
Of the four types of investment, the only one that can be negative is |
| | A) | inventory investment. |
| | B) | investment in plant. |
| | C) | investment in equipment. |
| | D) | investment in residential housing. |
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| 6 | |
Our level of investment in plant and equipment in 2005 was about _______ that in 1990. |
| | A) | half |
| | B) | the same as |
| | C) | 50 percent larger |
| | D) | double |
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| 7 | |
The flow of foreign savings into the U.S. |
| | A) | has declined over the last 10 years. |
| | B) | is about the same as it was in 1990. |
| | C) | plays a very small role in the American economy. |
| | D) | plays a large and increasingly important role in the American economy. |
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| 8 | |
The level of investment tends to rise as the capacity utilization rate ____ and the interest rate |
| | A) | rises, rises |
| | B) | falls, falls |
| | C) | rises, falls |
| | D) | falls, rises |
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| 9 | |
Whenever the level of depreciation exceeds the gross private domestic investment for the economy, |
| | A) | net investment is negative. |
| | B) | net foreign investment is negative. |
| | C) | real gross national product is falling. |
| | D) | no conclusion can be made about any of these sectors of the economy. |
| | E) | None of the above. |
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| 10 | |
During recessions inventory investment |
| | A) | goes up. |
| | B) | is steady. |
| | C) | goes down. |
| | D) | is negative. |
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| 11 | |
Business firms invest in plant and equipment even in recession years for all of the following |
| | A) | interest rates are lower. |
| | B) | it has been planned years ahead. |
| | C) | it might be used to replace worn-out plant and equipment. |
| | D) | the expected rate of profit equals the going interest rate. |
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| 12 | |
You have the chance to borrow $100,000 for one year at an interest rate of 6 percent, and can
invest this money in inventory. You would definitely borrow the money for investment if you had expected profits of _________ on your investment (before paying the interest). |
| | A) | $1,000. |
| | B) | $6,000. |
| | C) | $7,000. |
| | D) | $15,000. |
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| 13 | |
Which statement is true? |
| | A) | During most recessions, the level of investment is negative. |
| | B) | Investment is the largest sector of GDP. |
| | C) | Inventory investment is the largest part of investment. |
| | D) | None is true. |
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| 14 | |
The least stable sector of GDP is |
| | A) | G |
| | B) | I |
| | C) | C |
| | D) | net exports |
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