Capstone 4476 part 2

Question 34. B&N's netted interest income and interest expense, showing net Interest Income of $4,725 for Fiscal 2007. The interest income will:

• increase Operating Profit

• increase Income Taxes

• decrease Earnings per Share

• increase Net Earnings

Question 35. Barnes and Noble experienced record comparable store and online sales and, at the same time, lowered the overall price of their books in 2007, this best reflects that

• prices reflect the value of the good to society and the cost of making the good

• prices are not the best way to allocate resources

• prices only reflect value to the consumer and not producer

• prices reflect value to neither the supplier or producer

Question 36. The book industry's net dollar sales grew at an annual rate of 3.2% in 2006 and 3.9% in 2007. The Consumer Price Index (CPI) for 2005 was 195.3. In 2006, the CPI was 201.8. In 2007, the CPI was 207.342. Based on this information, we can say that the book industry's net dollar sales

• grew at a faster rate than inflation in 2006 and 2007.

• grew at a faster rate than Inflation in 2006, but not in 2007.

• grew at the same rate as inflation in 2006 and 2007.

• grew at a slower rate than inflation in 2006 and 2007.

Question 37. Suppose the book industry sector experiences a slump in sales. If this slump magnifies to the entire economy, what is a larger consequence?

• Aggregate demand will decrease causing a further reduction in output, employment and the price level.

• Aggregate demand will not change as the book industry is not large enough to affect output, employment and the price level.

• The long-run aggregate supply curve will shift left causing output and employment to fall, and the price level to rise.

• Aggregate demand will increase causing a further reduction in output, employment and the price level.

Question 38. Suppose, Congress enacts legislation to help book stores like Barnes and Noble to recover during the recession that began in late 2007. Which of the following policies is likely to have the greatest impact on the company and the economy?

• A corporate tax increase that allows Barnes and Noble to increase its workforce and contribute towards increasing aggregate supply.

• A reduction in the personal income tax.

• A reduction in government spending among various programs.

• A corporate tax decrease that allows Barnes and Noble to increase its workforce and contribute towards decreasing aggregate demand.

Question 39. During a recession, which policy is likely to increase book sales for Barnes and Noble and the economy in general?

• Increasing reserve requirements

• Lowering interest rates through open market operations

• Increasing excess reserve requirements

• Raising interest rates through open market operations

Question 41. On their websites, Barnes and Noble and Amazon offer suggestions of other books related to the ones currently being viewed. If the prices of the suggested books are greater than the currently viewed book, then we can expect a(n) ____ in ____ for the currently viewed book as it is a ___ for the suggested books.

• increase; demand; substitute

• decrease; demand: complement

• increase: supply: substitute

• decrease; supply: substitute

Question 42. In an attempt to promote more readership and greater access to digital technology, the government sets a price ceiling of $100 on the Amazon Kindle that is currently priced at $399. The price ceiling is ___ and will likely cause a _____.

• binding; shortage

• binding; surplus

• non-binding; shortage

• non-binding; surplus

Question 43. The Economic Census reports there were 9.955 book stores in 2007. These book stores also offered a variety of products to consumers. Based on this, we can conclude that book stores best belong to the market structure of:

• perfect competition

• monopoly

• monopolistic competition

• oligopoly

Question 45. As a publicly-owned firm, the primary goal of Barnes & Noble should be to

• Minimize its expected operating costs.

• Maximize its expected EPS.

• Minimize the chances of losses.

• Maximize its shareholders' wealth.