Macro 1
What is the most important motive for holding money?
The transaction motive.
The theory that households respond to budget deficits by increasing their present saving in anticipation of higher future taxes is known as the?
Ricardian Equivalence Theorem
A closed economy does not engage in what?
international trade
What do we call a firm's percentage of the total sales in a market?
Market Share
Measures the explicit cost of operating a business.
Accounting cost
What is the term for the condition of a company in which all debt obligations can be paid when due?
Solvent
What candy was originally called “Chicken Feed”?
Candy Corn
How would a Keynesian economist recommend dealing with high unemployment?
Increased government spending and/or reduced taxation
When inflation accelerates very rapidly, it is called:
hyperinflation
How does the banking system increase the money supply?
Creates checkable deposits
The inclusive annual time period used by an organization to budget, account for, and report on operations is the organization's:
fiscal year
A measure of liquidity, defined as current assets divided by current liabilities?
Current ratio
Define the P/E ratio.
Stock price per share divided by earnings per share
Which vegetable typically used in fall soups is technically a fruit?
Pumpkin (and butternut squash, too)
How do currency speculators aid international trade?
They absorb the exchange rate risk that others do not want to bear
What type of income tax would help stabilize a cyclical economy?
Graduated (income tax)
What are the four components of GDP?
Consumption, Investment, Government Spending and Net Exports
What is a monetary debt owed by a firm or an individual?
Liabibility
Assets pledged to secure a debt with the lender entitled to the assets if the debt is not repaid defines:
Collateral
How is the quick or acid test ratio calculated?
(CURRENT ASSETS less INVENTORY) divided by CURRENT LIABILITIES
What weather phenomenon causes leaves to crunch more underfoot?
Low humidity
What two indicators are associated with stagflation?
high inflation and high unemployment
It may be misleading to label a trade deficit as "unfavorable" or "adverse" because?
American consumers benefit from a trade deficit during the period it occurs
If the Fed wants to increase the money supply, does it buy or sell government bonds?
It buys bonds.
What term describes a reduction in the value of an asset?
Capital Loss
Name the two basic discounted cash flow methods that provide information for capital budgeting decisions.
Net Present Value (NPV) and Internal Rate of Return (IRR).
How do you calculate the adjusted basis of an asset for tax purposes?
The cost basis less (-) depreciation
What is the only Major League Baseball team named after a bird that migrates in the fall?
St. Louis Cardinals
According to the Keynesian economic model, a depression is caused by _____.
Insufficient aggregate expenditures or demand
What type of tax occurs when the average tax rate falls as income rises?
Regressive
What do we call a clause in a wage contract that raises wages in times of inflation
COLA (cost of living adjustment)
What term is used for the undepreciated value of an asset shown in the business’s records?
Book Value
Given a depreciable investment of $100,000, a economic life of 10 years, and a salvage value of $20,000, what is the 150% declining balance method depreciation in year one?
$15,000
Farmers are excluded from involuntary bankruptcy proceedings if at least what percentage of their gross income in the previous tax year came from farming: 40%, 60%, or 80%?
80%
What gas do apples release that speeds up ripening — which is why you shouldn’t store pumpkins near them?
Ethylene