Preview 3 out of 7 Flashcards
Which of the following are advantages of starting a small firm?

(a) Lending from financial institutions
(b) Having government support
(c) Less time commitment
(d) Lower prices (Highly competitive)
Which of the following are advantages of starting a small firm?

(a) Lending from financial institut...
(b). Having government support

Reasons it's NOT:

(a) Smaller firms tend to have a higher risk due to their unlimited liability. Thus, banks and other financial institutions would not have enough trust in their survival to allow them credit.

(c) Having a smaller firm would require more personal time and attention as it usually does not have enough funds to hire workers, managers, etc.

(d) Large firms have the benefits from Economies of Scale, something small firms do not. Economies of scale help these large firms reduce production costs.
Fill in the blanks:
___________ motive of saving is usually money spent in the near future. It is interest _________.

(a) Speculative; elastic
(b) Precautionary; inelastic
(c) Transionary; inelastic
(d) Speculative; inelastic
Fill in the blanks:
___________ motive of saving is usually money spent in the near future. It is in...
(b) Precautionary; inelastic

Reasons why it is NOT:
(a) The speculative motive is to make future gains from buying financial assets. 

(c) The transactionary motive is money spent on day to day basis

(d) The speculative motive is not interest inelastic. Changes in interest do not affect the amount of money people save for this purpose.

Which is the correct explanation of quantitative easing?

(a) Small niche markets buy government bonds at a lower price in order for them to grow
(b) Commercial banks buy government bonds from the central bank to reduce interest rates
(c) Government buys back government bonds to reduce government budget deficit
(d) Central banks buy government bonds from the private sector to encourage investment and boost aggregate demand
Which is the correct explanation of quantitative easing?

(a) Small niche markets buy government bon...
(d) Central banks buy government bonds from the private sector to encourage investment and boost aggregate demand

* Others have nothing to do with anything