Refer to Scenario 9.5 below to answer the question(s) that follow. SCENARIO 9.5: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 percent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $3 on average per meal. Refer to Scenario 9.5. In the short run, if the restaurant shuts down, it ________ variable costs and ________ revenue.
A. has; earns
B. has no; earns
C. has; earns no
D. has no; earns no
Answer: D
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In Macroland there is $10,000,000 in currency. The public holds half of the currency and banks hold the rest as reserves. If banks' desired reserve/deposit ratio is 10%, deposits in Macroland equal ________ and the money supply equals ________.
A. $50,000,000; $55,000,000 B. $50,000,000; $60,000,000 C. $100,000,000; $100,000,000 D. $55,000,000; $55,000,000
When government decides to increase spending, interest rates generally ________ and this change in interest rates ________ investment spending
A) increase; increases B) increase; decreases C) decrease; increases D) decrease; decreases
When a nation exports a good, its ________ surplus decreases, and when it imports a good, its ________ surplus decreases
A) consumer; producer B) consumer; consumer C) producer; producer D) producer; consumer E) total; consumer
Economists observed the following growth rates in the fourth quarter of 1995: real GDP = 2.8 percent; M1 = 7.8 percent; GDP Deflator = 2.2 percent. Given this data, the growth of nominal GDP was approximately
a. 12.8 percent. b. 10.0 percent. c. 5.6 percent. d. 5.0 percent. e. 0.6 percent.