Chapter 2 Review

Productivity would likely increase as a result of

• higher taxes.
• expanded production technology.
• decreased training programs.
• lower government spending.

Retail sales include

• taxes collected.
• companies buying new equipment.
• borrowing by a business.
• school supplies bought by students.

Equity refers to

• reduced spending by government.
• ownership in a company or other asset.
• borrowing to finance a capital project.
• increased government taxes.

If you purchase a bond from a business, you own a part of that business.

• True
• False

If a company has higher earnings, less people will want to buy its stock.

• True
• False

When consumers increase their borrowing, interest rates tend to decline.

• True
• False

The phase of the business cycle in which unemployment is highest is

• recovery
• recession
• prosperity
• depression

People with poor credit ratings pay a higher interest rate to borrow money than people with good credit ratings.

• True
• False

In the United States, the labor force consist of all people above age ___ who are actively working or seeking work.

• 21
• 18
• 16
• 14

The money for capital projects usually comes from

• personal savings
• stock investments
• bonds
• all are correct answers