C09 Online Exam 7_10 SCORE 92.5 PERCENT

Question 1
When governments change taxes, their transfer payments, and expenditure on goods and service, they influence aggregate demand through __________.


Question 2
What represents the relationship between the quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same?


Question 3
Expenditures such as investment, government expenditure on goods and services, and exports __________ on real GDP.

Question 4
The __________ is the amount by which a change in autonomous expenditures is multiplied in order to determine the change in equilibrium expenditure that it generates.


Question 5
As long as aggregate planned expenditure exceeds real GDP, companies will __________ production in order to restore their inventories to their target level.
A. maintain
B. decrease
C. increase
D. not adjust

Question 6
What is the total amount of final goods and service that firms in a country plan to produce, depending on the labor, capital, technology, natural resources, and entrepreneurial talent in the market?

Question 7
Which of the following would cause an increase in aggregate demand in the short run?


Question 8
If the price level from the GDP price index falls, what happens to the quantity of real GDP supplied?

Question 9
Adjustments in __________ take the economy from the short-run equilibrium to the long-run equilibrium.

Question 10
When the price level increases, the real interest rate __________.

Question 11
When the real GDP increases, disposable income and consumption expenditure __________.


Question 12
All other things remaining the same, the lower the price level, the __________ the quantity of real GDP demanded.

Question 13
When the Federal Reserve changes the quantity of money and the interest rate, it influences aggregate demand by using __________.

Question 14
When the real wage rate changes, firms change the __________ and the level of production.

Question 15
The change in equilibrium expenditure also equals the change in __________.

Question 16
A rise in the price level __________ the buying power of money.

Question 17
If home prices are falling, consumers purchasing a home will find their purchasing power of money has increased. This benefit to consumers is called the __________.



Question 18
To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must __________.


Question 19
What are the two main influences that the world economy has on aggregate demand?

Question 20
The __________ curve summarizes the relationship between aggregate planned expenditure and the real GDP.
A. AES
B. AE
C. AD
D. APE

Question 21
Ready Tees, an on line retailer of t-shirts, orders 100,000 t-shirts per year from its manufacturer. The cost of ordering and delivery is $100 per order. If Ready Tees orders 6,667 t-shirts in each order, what are the firm's total annual ordering costs (rounded to the nearest dollar.?
A. $1,000
B. $667
C. $1,500
D. $2,000

Question 22
________ is the collective term used to describe a firm's decisions as to how customers will qualify for credit, what payment plan is allowed to creditors, and how overdue bills will be collected.
A. Credit policy
B. Collection policy
C. Credit history
D. Payment policy

Question 23
Extending credit to a customer has three major components:


Question 24
With energy costs greater than ever, Berwick's Bike Shop is well-placed for an expansion. Its initial capital cost (not including working capital. is $750,000, expected after-tax operating cash flow is $225,000 per year for five years, and the recovery of capital assets after five years is $75,000. There is also a $100,000 increase in working capital at the beginning of the project that is recovered in whole at the end of the life of the project in Year 5. If this project has a required rate of return of 15%, what is its IRR? Use a financial calculator to determine your answer.
A. 12.60%
B. 13.60%
C. 15.60% (Incorrect)
D. 14.60%

Question 25
Float, from the buyer's perspective, is called ________ float and from the seller's perspective, is called ________ float.


Question 26
When a company deals only in cash, the cash conversion cycle becomes ________.


Question 27
Ready Tees, an on line retailer of t-shirts, orders 100,000 t-shirts per year from its manufacturer. Ready plans on ordering t-shirts 12 times over the next year. Ready receives the same number of t-shirts each time it orders. The carrying cost is $0.10 per shirt per year. What is the annual carrying cost of the t-shirt inventory (rounded to the nearest dollar.?
A. $5,000
B. $834
C. $10,000
D. $417

Question 28
Total carrying cost equals ________.
A. The average carry cost per item times the maximum level of inventory
B. The average carry cost per item times the average level of inventory divided by 2
C. The average carry cost per item times the average level of inventory
D. The average carry cost per item times the minimum level of inventory

Question 29
Ready Tees, an on line retailer of t-shirts, orders 100,000 t-shirts per year from its manufacturer. Ready plans on ordering t-shirts 12 times over the next year. Ready receives the same number of t-shirts each time it orders. The carrying cost is $0.10 per shirt per year. The order cost is $500 per order. What is the annual ordering cost of the t-shirt inventory (rounded to the nearest dollar.?
A. $5,000
B. $10,000
C. $12,000
D. $6,000

Question 30
The optimal order quantity as determined by the EOQ occurs when ________.


Question 31
The ________ is the period from the start of cash outflow for producing a product or service until the associated cash inflow materializes from the sale of that product or service.


Question 32
Which of the following is NOT an inventory management technique?
A. JIT
B. ABC
C. EOQ
D. 6 SIGMA

Question 33
The ________ begins at the time a firm first starts to make a product and lasts until the time the customer buys the product.
A. accounts receivable cycle
B. cash conversion cycle
C. production cycle
D. business operating cycle

Question 34
The Hannibal Homers minor league baseball club is considering an expansion of its stadium to increase capacity by 2,000 seats. Management estimates increased revenue from ticket and concession sales to be $600,000 per year for the next 5 years. The cost of expansion is $750,000, with an additional $50,000 in working capital. The working capital increase is permanent (will not be recovered after 5 years.. Annual costs are expected to increase by $200,000 per year, the club's cost of capital is 14%, and its tax rate is 30%. If the stadium addition is depreciated in a straight line to a value of $0.00 over 5 years, what is the NPV of this project (rounded to the nearest dollar.? (Ignore any revenues or costs associated with a terminal value of the project after five years..

Question 35
With energy costs greater than ever, Berwick's Bike Shop is well-placed for an expansion. Its initial capital cost (not including working capital. is $750,000, expected after-tax operating cash flow is $225,000 per year for five years, and the recovery of capital assets after five years is $75,000. If this project has a required rate of return of 15% and the initial cost of working capital is $100,000, should Berwick expand the bike shop? (Assume that the $100,000 of working capital is recovered in Year 5 at the end of the project life. Compute an NPV to support your decision..


Question 36
An important objective of cash management is to ________ the disbursement float and ________ the collection float.

Question 37
Of the following items, which would be considered working capital as opposed to a capital asset?
A. An addition to the existing building designed to facilitate a new product line
B. A CAD/CAM machine used in the manufacturing process
C. Disposable parts that aid in installation and are shipped with each sale
D. None of the above are working capital assets.

Question 38
________ is the order quantity that minimizes total cost, and it is the result of trading off carrying costs and ordering costs.
A. EOQ
B. Q/2
C. ABC
D. None of the above

Question 39
Estimating ________ is one part of managing short-term cash needs. The second part is estimating ________.

Question 40
The ________ starts at the time production begins and ends with the collection of cash from the sale of the product.


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