Review Questions 1 Flashcards
Types of Risk that make up Financial Risk
Business Operations Supply-Chain Product Liability Political and Economic
What is the primary source of funds for Sovereign Wealth Funds?
Earning from commodity-based exports and trade surpluses driven by the export manufactured goods
Net Domestic Product Equation
GDP - Depreciation
Net National Income Equation
NDP - Indirect Business Taxes
Personal Income Equation
NI - Corp Taxes - Undistributed Profits - Social Security Contributions + Transfer Payments
What is the relationship between Potential National Income and Actual National Income during a recession?
Potential exceeds Actual
A country’s Current Account Balance equals what?
Net Exports + Net Investment Income + Net Transfers
Monopoly can increase profit by increasing output and decreasing price as long as what?
Marginal Revenue > Marginal Cost
Where does Diseconomies of scale begin?
When Average Total Cost (ATC) start to increase
Federal Reserve can control the M1 money supply with what 3 ways?
Selling government securities
Changing the reserve ratio
Changing the discount rate
Who prints money in the US?
US Treasurey
Multiplier equation?
1/MPS
If an issuer does not have an audit committee financial expert what must they do?
Disclose the reason why
At what point in profit typically maximized?
MR = MC
GDP Expenditure Approach Equation
Personal Consumption + Gross Private Domestic Investment + Government Purchases + Net Exports
Pools of money accumulated from a country’s reserves that are provided for investment purposes that will benefit the country’s economy and citizens is what?
Sovereign Wealth Fund
Real GDP Equation
(Nominal GDP/Price Index) X 100
Real Per Capita Output is what?
Measure of Economic Growth
Elasticity of Demand equation
% change Quantity / % change in Price
Law of Diminishing Returns
The marginal product (output) fall as more units of variable are added to fixed inputs
Average Fixed Cost has what curve shape?
Negatively Sloped
Are diminishing returns a short-run or long-run problem?
short-run
Are disceconomies of scale a short-run or long-run problem?
Long - run
Does short-term or long-term financing offer greater flexibility
Short - term
What defines something as a “Natural Monopoly”
A firm has increasing returns to scale
What is the shape and relationship to the marginal revenue curve of the demand curve for a monopoly?
Negatively sloped, above Marginal Revenue
Income Elasticity Equation
% change in quantity demand / % change in Income
Inflation does what for the demand of foreign goods?
Increases the demand for foreign goods
Are current prices in Nominal or Real GDP
Nominal
