10. Which of the following statements is true? a. Interest rates charged to well
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Question
10. Which of the following statements is true?
a. Interest rates charged to well-known corporations are higher than rates charged to individuals because corporations can afford it.
b. If people expect higher rates of inflation, the market interest rate will decrease because fewer people will borrow.
c. Interest rates in politically and economically unstable countries are lower than rates in stable countries.
d. The risk of doing business in a high-crime area is greater than that in a safe area, and the cost of borrowing is also greater.
e. The lower the tax rate, the greater the cost of borrowing.
11. The requirement that firms doing business with the federal government set numerical hiring, promotion, and training goals was meant to:
a. increase the income level of households headed by females.
b. lower the disparity in wages between white and black workers.
c. increase the demand for skilled labor.
d. organize the unskilled labor force and help them form labor unions.
e. protect the rights of workers affiliated to labor unions.
13. If a firm can borrow or lend at a 10 percent annual interest rate, it will _____.
a. buy all the units of capital with an expected rate of return above 10 percent
b. buy all the units of capital with an average rate of return above 0.1 percent
c. buy all the units of capital with an expected rate of return below 10 percent
d. buy all the units of capital with an average rate of return below 10 percent
e. select only the unit of capital with the highest expected rate of return, assuming it is above 10 percent
15. Which of the following is a reason for the very slow growth in per capita income of the poorest economies?
a. They have focused on developing new technologies rather than adopting the technologies.
b. Birth rates in these economies are double than those in the richer countries.
c. They have focused on the production of export-oriented goods.
d. The manufacturing sector contributes the most to their national income.
e. They have invested heavily in human capital.
16. A primary requirement for development is:
a. government control over the production of essential consumer products.
b. government control over the distribution of natural resources.
c. a high confidence in foreign currency.
d. a low and predictable inflation rate that encourages saving.
e. printing money to finance a large proportion of public outlays.
17. Identify the correct statement about the securities market.
a. Secondary markets make shares readily convertible into cash and increase the liquidity of securities.
b. Secondary markets make bonds readily convertible into cash and increase the funds available with a corporation.
c. The securities market decides the value of a corporation on the basis of its profits.
d. The securities market decides the value of a corporation on the basis of the number of years it has registered profits.
e. The securities market decides the value of a corporation on the basis of the number of its employees.
18. The present value of receiving M dollars in year t when the prevailing interest rate is i is given by the formula _____.
a. M ? it
b. M × (1 ? i)t
c. M/(1 + i)t
d. M/(i x t)1
e. M/it
19. The Equal Employment Opportunity Commission was established to:
a. expand the safety net for unemployed workers.
b. encourage self-employment and self-sufficiency among black workers.
c. monitor cases involving unequal access to promotion.
d. protect the rights of the workers in the unorganized sector.
e. protect the rights of the workers in the organized sector.
20. Which of the following is true of bilateral funding?
a. It is provided by the World Bank only.
b. It is tied to the purchase of goods and services from donor countries.
c. It includes grants and loans that are extended at very high interest rates.
d. It is provided by the International Monetary Fund only.
e. It is provided by philanthropic organizations.
21. The reinvested profits of a corporation are known as:
a. retained earnings, and these help a firm to grow.
b. dividends, and these are paid to the shareholders of the corporation.
c. dividends, and these are paid to the bondholders of the corporation.
d. retained earnings, and these are retained by the entrepreneur.
e. retained earnings, and these are retained by shareholders.
22. Which of the following is true of welfare reforms in the United States?
a. Almost all individuals leaving welfare have full-time jobs.
b. The earned-income tax credit was discontinued after the introduction of the Social Security program.
c. Single mothers who head families have found jobs.
d. Former welfare recipients who are now working find that they no longer qualify for food stamps, child care, or Medicaid.
e. Welfare rolls remained stable during the late 1990s and the early twenty-first century.
23. Which of the following is true of the foreign aid provided by the United States?
a. During the last four decades, the U.S. has provided less than $400 million in aid.
b. Most U.S. aid has been coordinated by the Department of Defense.
c. The U.S. Agency for International Development emphasizes short-range plans.
d. The U.S. Agency for International Development focuses on health, education, and agriculture.
e. Foreign aid is a large part of the U.S. federal budget.
24. The newly industrialized Asian economies have developed by adopting the latest technology and investing in _____.
a. human capital
b. the agricultural sector
c. defense equipment
d. public infrastructure like roads, communication, and transport
e. developing consumer-oriented products.
25. Which of the following is a reason for many developing countries to open their economies to free trade?
a. Domestic producers do not recognize their potential losses.
b. Customers do not recognize their potential gains.
c. The government lacks political will to remove impediments to development.
d. Consumers and firms are aware of the products and technology available abroad.
e. The potential winners from free trade remain largely unaware of the gains from trade.
29. Erbia is a developing country. Erbia’s neighbor Glassen is also a developing country, which is growing at a fast rate by adopting existing technology. Unlike Glassen, Erbia is not growing as fast as it should. Which of the following could be one of the reasons for the slower growth in Erbia?
a. Erbia lacks a reliable source of electricity to power new technologies.
b. Erbia has adopted an export-oriented trade policy.
c. The manufacturing sector is the highest contributor to Erbia’s national income.
d. Erbia has a low birth rate, and therefore, population growth has slowed in Erbia.
e. Erbia has invested heavily in consumer products.
36. The supply of loanable funds comes, in part, from _____.
a. consumer saving
b. business investment
c. the federal government
d. current consumption
e. future consumption
46. In the United States, the dramatic increase in government social spending since the mid-1960s has:
a. made the distribution of income more unequal in the economy.
b. brought about equality in the distribution of income in the economy.
c. not greatly increased the money income share of the poorest fraction of the population.
d. greatly increased the money income share of the richest fraction of the population.
e. decreased the percentage of families in the lowest fifth.
48. Which of the following resources is necessary to efficiently combine other resources to produce goods and services?
a. Natural resources
b. Capital
c. Labor
d. Entrepreneurial ability
e. Financial institutions
Explanation / Answer
Answer 10 :
The first statement is False. Big corporates are charged less interest rates because the loans to them are considered less risky as compared to individuals.
The second statement is false if inflation is going the rise interest rates will rise too.
The third statement is also false, interest rates in less stable countries are higher.
Only the Fourth and fifth statement are true. IF the risk is higher the interest rates will be higher and lower the tax rates the more people will borrow for new business increasing the rate of interest.
Fourth and Fifth Statement is correct all others are False.
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