SOLVED

 1 Financial Institutions and Financial Markets 1) The term “capital,” as used in macroeconomics, refers to A) the plant, equipment, buildings, and inventories of raw materials and semi-finished goods. B) financial wealth. C) the sum of investment and government purchases of goods. D) investment. 2) The term capital, as used in macroeconomics, refers to A) the amount of money that someone can invest in a new venture. B) the amount of money a firm can raise in the stock market. C) physical capital. D) All of the above answers are correct. 3) Which of the following items are considered physical capital? I.shares of Ford stock traded on the New York Stock Exchange II.the Taco Bell store nearest you III.the rental cars owned by Hertz Rental-A-Car IV.the salaries paid to Intel executives A) II and III. B) I and IV. C) I, II and III. D) I, II and IV. 4) Gross investment A) is the purchase of new capital. B) includes only replacement investment. C) does not include additions to inventories. D) Both answers A and B are correct. 5) The total amount spent on new capital in a time period is equal to A) wealth. B) gross investment. C) depreciation. D) net investment. 6) In January 2013, Tim’s Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2013, Tim spent $200,000 on new machines. During 2013, Tim’s gross investment totalled A) $1 million. B) $300,000. C) $200,000 D) $900,000. 7) Net investment equals A) capital stock minus depreciation. B) gross investment minus depreciation. C) the total quantity of plant, equipment and buildings. D) gross investment/depreciation. 8) The increase in the capital stock equals the amount of A) gross investment. B) depreciation. C) net investment. D) private sector spending. 9) The capital stock increases whenever A) gross investment is exceeds net investment. B) net investment exceeds gross investment. C) gross investment is negative. D) net investment is positive. 10) If the economy’s capital stock increases over time, A) net investment is positive. B) depreciation is less than zero. C) depreciation exceeds gross investment. D) gross investment equals depreciation. 1