1. Susan Jahlberg, CFA recognizes that the expanding economy of China is increasing prosperity and the demand for many types of goods and services. To estimate the demand for a particular item, which of the following elasticities of demand would be the best choice for Jahlberg to calculate? (]b! {kS
A. The price elasticity. U2{ dN>
B. The income elasticity. .9R
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C. The cross-elasticity. S7=Bd[4
2. Using the following information, calculate the firm’s economic profit. &@%W29:
Revenues 200,000 Rz (QC\(
Cash Expenses 100,000 W"): -Wq
Economic depreciation 15,000 Fp@TCP
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Accounting depreciation 20,000 :/
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Normal profit 30,000 Lk~ho?^`
Forgone interest 12,000 k9)jjR*XxG
A. 38,000. .^N/peU q
B. 43,000. 0.dgoq 3u
C. 73,000. .}'qUPNR
3. The belief that the economy is self-regulating is least associated with: RMX:9aQ3F
A. classical macroeconomics. d_4T}% q
B. Keynesian macroeconomics. ~3WM5 fv
C. monetarist macroeconomics. szsk;a
4. Why are some items extracted from broad-based price indices for the purpose of inflation targeting? The extracted items: El S 9?Q+
A. generate too much volatility. X g<*@4RD8
B. are not measured with sufficient accuracy. l CAIK
C. are not considered items to be applicable to households. 5Ycco,x
1，B is correct. The income elasticity of demand measures the effect of income changes on demand and is the appropriate measure in this case. The price elasticity of demand measures the effect of price changes on demand. The cross-elasticity of demand measures the effect of price changes in substitutes and complementary products on demand. u1t% (_h
2，B is correct. 200,000 - 100,000 - 15,000 - 30,000 - 12,000 - 43,000. [E+$?a=
Economic depreciation is the change in market value of an asset over a period, and is the implicit cost of using the asset. Normal profit, the return that an entrepreneur can expect to receive on average, is part of a firm’s opportunity cost because it is the cost of a forgone alternative. The forgone interest is the opportunity cost of using funds to purchase capital rather than an asset such as government bonds. MxWy*|J}
3，B is correct. A Keynesian macroeconomist believes that left alone, the economy would rarely operate at full employment and that to achieve and maintain full employment, active help from fiscal policy and monetary policy is required. 8d?g]DEN)6
4，A is correct. The extracted items (e.g., food and fuel) create too much volatility. k9$K}
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