Consumers, Producers, and the Efficiency of Markets
1. Welfare economics is the study of
a. the well-being of less fortunate people.
b. welfare programs in the United States.
c. the effect of income redistribution on work effort.
Firms in Competitive Markets
1. For a firm in a perfectly competitive market, the price of the good is always
a. equal to marginal revenue.
b. equal to total revenue.
c. greater than average revenue.
d. equal to the firms effici
Five Debates Over Macroeconomic Policy
Many studies indicate changes in monetary policy have most of their effect on aggregate demand about six
months after the change is made.
LOC: Monetary a
Open-Economy Macroeconomics: Basic Concepts
A country with negative net exports has a trade surplus.
LOC: International trade and finance
If a countrys imports exceed its
Measuring the Cost of Living
The consumer price index is used to monitor changes in an economys production of goods and services over
LOC: The study of economics and definitions of economic
Most people rely on income other than their labor earnings to maintain their standard of living.
LOC: The study of economics and definitions of economics
TOP: Income | Standard of
A Macroeconomic Theory of the Open Economy
Over the past two decades, the United States has persistently exported more goods and services than it has
LOC: International trade and fin
1. In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too
high relate to the
a. Efficiency of the audit.
b. Effectiveness of the audit.
c. Selection of the sample.
d. Audit qualit
c 1. A sales cutoff test of billings complements tests of
a. Sales returns.
c. Accounts receivable.
d. Sales allowances.
2. An auditor should perform alternative procedures to s
1. A client erroneously recorded a large purchase twice. Which of the following control procedures
would be most likely to detect this error in a timely and efficient manner?
a. Footing the purchases journal.
b. Reconciling ve
1. To strengthen control procedures over the custody of heavy mobile equipment, the client would
most likely institute a policy requiring a periodic
a. Increase in insurance coverage.
b. Inspection of equipment and reconciliat
1. When an auditor selects a sample of items from the vouchers payable register for the last month
of the period audited and traces the items to underlying documents, the auditor is gathering
evidence primarily in
Chapter 2Introduction to Transaction Processing
1. Processing more transactions at a lower unit cost makes batch processing more efficient than real-time
2. The process of acquiring raw materials is part of the conversion cycle.
Chapter 1The Information System: An Accountants Perspective
1. Information is a business resource.
2. An information system is an example of a natural system.
3. Transaction processing systems convert non-financial transactions in
Chapter 3Ethics, Fraud, and Internal Control
1. The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to
those who share the risks.
2. The ethical principle of informed consent suggests t
Chapter 12 Accounting for Partnerships
Admission of a New Partner
Withdrawal and Death
Other cases in formation
1. Contribute services
2. Not liable to losses
1. In addition to assessing the fairness of the entity's financial statements, a governmental financial
statement audit is concerned with evaluating
a. Internal control.
The Short-Run Trade-Off Between Inflation and Unemployment
In the long run, the natural rate of unemployment depends primarily on the growth rate of the money supply.
LOC: Unemployment and inf
Public Goods and Common Resources
1. A view of a spectacular sunset along a private beach is an example of a
a. private good.
b. public good.
c. nonrival but excludable good.
d. rival but nonexcludable good.
2. Which of the foll
Application: International Trade
1. An important factor in the decline of the U.S. textile industry over the past 100 or so years is
a. foreign competitors that could produce quality textile goods at low cost.
b. lower prices of
Supply, Demand, and Government Policies
1. Price controls are usually enacted
a. as a means of raising revenue for public purposes.
b. when policymakers believe that the market price of a good or service is unfair to buyers or se
The Design of the Tax System
1. Which of the following statements is correct?
a. Equity is more important than efficiency as a goal of the tax system.
b. Efficiency is more important than equity as a goal of the tax system.
The Costs of Production
1. According to the law of supply,
a. firms' production levels are not correlated with the price of a good.
b. the supply curve will slope downward when demand decreases.
c. firms are willing to produce a
Frontiers of Microeconomics
1. In economics, a difference in access to relevant knowledge is called a(n)
a. behavioral gap.
b. frontier gap.
c. information asymmetry.
d. access imperfection.
2. A worker knows more than his emplo
The Theory of Consumer Choice
1. The theory of consumer choice examines
a. the determination of output in competitive markets.
b. the tradeoffs inherent in decisions made by consumers.
c. how consumers select inputs into manufac
The Basic Tools of Finance
If the interest rate is 8 percent, then the present value of $1,000 to be received in 4 years is $735.03.
LOC: The Study of economics, and definitions of economics
Production and Growth
If per capita real income grows by 2 percent per year, then it will double in approximately 20 years.
LOC: Productivity and growth TOP:
Saving, Investment, and the Financial System
The financial system coordinates investment and saving, which are important determinants of long-run real
LOC: The Study of economics, and def
The Monetary System
In an economy that relies on barter, trade requires a double-coincidence of wants.
LOC: The role of money
Joe wants to trade eggs for sausa
Aggregate Demand and Aggregate Supply
According to classical macroeconomic theory, changes in the money supply change nominal but not real
LOC: Aggregate demand and aggregate supply