Question 1: Which of the following statements is true?
A. Shareholders as a group have little or no ability to force managers to pursue maximization of the firm’s value
B. The effectiveness of a board of directors in monitoring managers will be enhanced by appointing members from the firm who are well-informed about the management problems facing the firm
C. Reducing the amount of debt financing can reduce the divergence between the shareholders’ interests and the owner’s interested
D. Equity ownership by managers is thought to be one of the most effective corporate control mechanisms
E. All of the above are true
Question 2: Typically unemployment _________ during a recession and _________ during an expansion.
A. Rises; rises even more
B. Rises; falls
C. Rises; does not change
D. Falls; rises
E. Falls; falls even more
Question 3: Monetary policy refers to
A. Decisions to determine the government’s budget
B. Policy directed toward increasing exports and reducing imports
C. The determination of the nation’s money supply
D. Policies to reduce the power of unions and monopolies
E. Government policies aimed at changing the underlying structure or institutions of the economy
Question 4: Holding all else constant, an increase in the preferences of Americans for Mexican goods will _________ the supply of dollars in the foreign exchange market and _________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. Increase; increase
B. Increase; decrease
C. Not change; not change
D. Decrease; increase
E. Decrease; decrease