Reference no: EM13246015

What method of inventory valuation should be used for economic decision-making problems?

             a.   book value

             b.   original cost

             c.   current replacement cost

             d.   cost or market, whichever is lower

             e.   historical cost

The cost function is:

             a.   a means for expressing output as a function of cost

             b.   a schedule or mathematical relationship showing the total cost of producing various quantities of output

             c.   similar to a profit and loss statement

             d.   incapable in being developed from statistical regression analysis

17. In which of the following econometric problems do we find Durbin-Watson statistic being far away from 2.0?

             the identification problem

            Autocorrelation

            multicollinearity

            heteroscedasticity

            agency problems

The net present value of an investment represents

     an index of the desirability of the investment

     the expected contribution of that investment to the goal of shareholder wealth maximization

     the rate of return expected from the investment

     the rate of return on equity

The North America Free Trade Association (NAFTA)

encompasses less than 15% of world trade

includes the two largest trading partners of the U.S.

exceeds the EU's share of world trade

all of the above

none of the above

  In a recession, the trade balance often improves because

service exports exceed manufactured good exports

banks sell depressed assets

fewer households can afford luxury imports

direct investment abroad declines

the capital account exceeds the current account

An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from

higher anticipated costs of production in the U.S.

higher interest rates and higher inflation in the U.S.

higher growth rates in the trading partner's economy

a change in the terms of trade

lower export industry productivity

The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time

increase exports

reduce the competitive pressure on prices

lower the value of the currency

increase foreign aid

increase the speculative demand for the currency

In an open economy with few capital restrictions and substantial import-export trade, a rise in interest rates and a decline in the producer price index of inflation will

raise the value of the currency

lower the nominal interest rate

increase the volume of trading in the foreign exchange market

lower the trade-weighted exchange rate

increase consumer inflation.