Contemporary Economics 2nd Edition William A. McEachern - Solutions

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List some of the economic factors that make the airline industry different from other industries and some that make it the same as far as economic analysis is concerned.
How were airline ticket prices set during the period of regulation? From an economic point of view, what would be the predicted outcome of setting prices in this way?
What are some trends with respect to consolidation in the industry? At airports? How is this demonstrated in the HHI?
What are the top five busiest airports in terms of passengers? International passengers?Cargo?
Which regions serve the largest number of passengers? Movements? Cargo?
Identify some of the characteristics of the US airline industry before deregulation.a How did this era affect airlines and passengers?b Was deregulation successful?c What are direct and indirect economic impacts related to air transportation and how do they differ? Provide an example of each.
For many Americans, the goal of owning their own home is a major motivator for saving money. Access EconData Online at thomsonedu.com/school/econxta. Click on“Housing Starts” under “Hot Data” and read the article. Then click on “Updates” and read about the concept of the “ownership
Choose a Medical Insurance Policy Suppose ten years in the future you are married and have two young children. You are a successful computer consultant and earn a good income. Your spouse stays home to care for the children. Because you are self-employed, you must purchase your own medical
Should You Withdraw Funds Early? Last year you deposited $1,000 in a five-year CD that paid an APY of 4.2 percent. One year later, interest rates have risen and new fouryear CDs pay 6.5 percent. If you withdraw your deposit early, you will be charged a penalty equal to all the interest you earned
What does term life insurance provide?a. a death benefit as well as a method to save and invest moneyb. only a way to save and invest moneyc. only a death benefitd. an amount of value that can be cashed in when a person reaches a certain age
True or False All people need to buy insurance, even if the premiums drastically cut their current standard of living.
What type of insurance is life insurance?a. property insuranceb. liability insurancec. personal insuranced. universal insurance
A(n) _________?________ insurance policy provides protection for damage to your home and protection if you cause injury to others.
True or False An umbrella policy protects homeowners from floods.
What type of insurance protects things you own from loss?a. property insuranceb. liability insurancec. personal insuranced. universal insurance
What type of insurance protects you from losses when you injure other people or damage other people’s property?a. property insuranceb. liability insurancec. personal insuranced. universal insurance
True or False To set premiums, insurance companies must project the probability of a loss being suffered as well as the probable cost of that loss, should it occur.
True or False All financial planners must pass a qualifying exam and be licensed by the federal government.
True or False A no-load mutual fund is less costly to invest in than a load fund.
Which of the following people should invest in stocks through a mutual fund?a. Jose, who enjoys following the stock market and choosing stocks he likesb. Keisha, who is a professional full-service stockbrokerc. Harold, who has a little money to investd. Debbie, who has no money to invest
Which of the following refers to shares of stock in large, successful, established corporations?a. growth stockb. blue chip stockc. venture stockd. guaranteed stock
Investing in a wide variety of firms to reduce the overall risk of owning stock is called ________?________.
True or False A corporate bond represents partial ownership of a corporation.
You should always _______?_______ your accounts by comparing the records you have of the transactions with those printed on the monthly statement you receive from the bank.
Which of the following refers to the amount banks charge each month to keep a checking account open?a. service feeb. carrying feec. support feed. maintenance fee
True or False In general, the greater the risk you take when you make an investment, the smaller the amount you will earn from it.
Which of the following accounts pays interest that changes daily if necessary to reflect changes in the prevailing interest rate in the economy?a. savings accountsb. money market accountsc. checking accountsd. certificates of deposit
Income earned from funds that are not spent is called a(n) ____?____.
It generally is easier to follow a savings plan whena. you have set clear goals for your financial future.b. your monthly income is less than your monthly expenses.c. your bank increases the interest rate it pays on customer’s deposits.d. your income has recently changed.
True or False When you save, you trade the satisfaction of buying something now for the satisfaction you may receive from buying something else in the future.
Demographics Drivers who are most likely to be involved in automobile accidents are either relatively young or quite old. And, although drivers are involved in more accidents as they grow old, these accidents usually result in fewer injuries and less property damage than accidents involving young
Although most financial experts agree that buying life insurance is a wise choice, most Americans do without this type of protection. As a matter of fact, the number of policies in force has fallen in some recent years. Use data in the table to draw a line graph that shows the number of new life
In what way is buying insurance protection a trade-off?
Why do parents with young children need to purchase at least some life insurance?
What are the two primary types of personal insurance?
What is the difference between property insurance and liability insurance?
Explain how insurance policyholders share their risk?
Entrepreneurship Assume that you have saved $500,000. You want to use your savings and to raise another $1 million to start a business that manufactures and sells baseball bats. You could borrow funds from a bank, form a corporation, and sell stock to the public or sell corporate bonds that your
There are many ways to judge how the stock market is doing. One of the most popular is to examine the Dow Jones Industrial Average (DJIA). This index averages the stock value of 30 large corporations that represent a cross-section of the U.S. economy. The DJIA does not provide information about
Why should people be careful when they choose a financial planner?
What sort of information might you learn by reading The Wall Street Journal or similar financial publications?
What would cause the price of a “used” corporate bond to increase on the secondary bond market?
Why shouldn’t a person invest in only one or two stocks?
What causes the market price of a particular stock to change?
What are the differences between the two types of corporate stock?
Mathematics Calculate the value of a $4,000 deposit that was made two years ago in a CD that has an Annual Percentage Yield (APY) of 5.0 percent.To make this calculation, multiply the original deposit by 1.05 twice (once for each year the funds were on deposit). Now complete the same calculation
History For many years during the nineteenth century, there was no effective federal regulation of banks in the United States. There also was no deposit insurance. If a bank failed, there was a good chance that its depositors would lose part or all of their savings. Explain why many people kept
Use data from the table to construct a line graph that shows how the value of U.S.savings bonds owned by individuals has changed in recent years. In which years were more bonds redeemed (cashed in)than were purchased? Can you think of any reasons why the total should have fallen in these years?
What is the difference between the way that money market and ordinary savings accounts pay interest?
What two costs do most depositors pay to open and use a checking account?
What is the greatest advantage of making payments with checks rather than cash?
Why do certificates of deposit pay a higher rate of interest than other types of accounts?
Give two reasons why you should not store your savings in a box under your bed.
Why is it important to set your financial goals before you create a savings plan?
You are talking on your cell phone while driving, and you run into your neighbor. Who pays for the damages?
Would you rather own blue chip stocks or growth stocks, and what’s the difference?
Why are higher-income families more likely to own corporate stock?
Should the government continue to sell savings bonds?
How can you tell if you’re reading a scam e-mail?
Why should you keep track of the deposits and withdrawals you make from your bank accounts?
Why is keeping your savings in a bank a better idea than storing it in a box under your bed?
Access EconDebate Online at thomsonedu.com/school/econxtra. Read the policy debate entitled “Should anti-pollution standards be strengthened?” Analyze this issue from both points of view, and write one or two paragraphs summarizing each side. Then write a paragraph explaining your point of view
Write a Letter to the CPSC Imagine that you recently purchased a Golden Glow gas grill for your patio. You followed the directions carefully when you assembled the grill. But when you went to light it, there was a small explosion and a ball of fire appeared below the grill next to the gas
Evaluate a Food Label Copy the nutritional label for a food product you frequently consume, such as a breakfast cereal or frozen pizza. List all items on the label that you recognize and understand along with their definitions. Make a second list of items that you do not recognize or understand.
Decide How Much to Pay You just received your monthly credit-card statement. The balance you owe is $228.39. You have $239.00 in your checking account and only $4.00 in your wallet. You could pay the entire amount to avoid an interest payment. That would leave you with almost no ready cash for
Choose Cash or Credit You would like to purchase a used car for $4,000. You have $1,000 for a down payment, sales tax, and other fees. You still need to borrow $3,500. The dealer offers to arrange a loan that will require you to pay $110 per month for the next three years. If you agree to this, how
Which federal agency will provide consumers with an ID Theft Affidavit to use to notify financial institutions?a. FDAb. FTCc. EPAd. FCC
Which federal agency protects consumers from a toy that could cause a child to choke?a. the Consumer Product Safety Commission (CPSC)b. the Food and Drug Administration (FDA)c. the Environmental Protection Agency(EPA)d. the Federal Trade Commission (FTC)
If the Federal Trade Commission finds that a business is making false claims in its advertising, it may issue a __?__ against the firm.
Which federal agency protects consumers from unsafe food?a. the Consumer Product Safety Commission (CPSC)b. the Food and Drug Administration (FDA)c. the Environmental Protection Agency(EPA)d. the Federal Trade Commission (FTC)
True or False All states and many local governments have agencies that are responsible for protecting consumers.
True or False It is a good idea to review your credit file at least once a year.
True or False If you find you cannot make a payment on a loan, you should go on vacation until you have enough money to pay your debt.
Which of the following is a good way for a young person to begin to establish a positive credit history?a. Always save and pay cash for things you buy.b. Borrow to buy one expensive item and then pay off the loan over many years.c. Save regularly and use your savings to back a small loan that you
Your credit __?__ is a number assigned to you in your credit file that indicates whether you are a good or bad credit risk.
Which of the following is not one of the three Cs of credit?a. credit ratingb. capacityc. capitald. character
True or False Credit bureaus gather, maintain, and share financial information about almost every adult in the United States.
Which of the following is an example of a consumer loan?a. A construction firm borrows $150,000 to build a house.b. A worker borrows $2,000 to buy a set of tools he needs to build the house.c. A husband and wife borrow $200,000 to buy a house.d. A husband and wife charge the price of a table for
Why is the amount you borrow likely to be less than the amount you must repay?a. Prices are likely to go up in the future.b. You must pay interest on the funds you borrow.c. The money you borrow will be taxed.d. Your income is likely to be greater in the future.
True or False A decision to use cash to make a purchase is always better for a consumer than a decision to use credit.
When you comparison-shop you should choose the product that you thinka. has the best value per dollar spent.b. has the best quality.c. has the best style or appearance.d. has the lowest price.
True or False A one-month budget worksheet includes predictions of your expected income, saving, and spending for a month.
Before you buy a product, you should ask yourself each of the following questions excepta. Do I really need this product?b. Can I afford to pay for this product?c. Will this product impress my friends?d. Is this the best deal available for this product?
__?__ goals are things you hope to accomplish within a year or less.
Which of the following should be included as predicted income when you create your personal budget for next year?a. the amount you have deposited in your checking accountb. the amount you expect to earn from working as a lifeguard next summerc. the amount your grandmother gave you for your birthday
Government Congress created government agencies that are responsible for protecting consumers. Some argue that these agencies are weak because many representatives and senators in Congress receive large campaign contributions from big businesses. Evaluate this point of view. Do you think big
Many who study the earth’s environment worry about the possible increase in average temperatures that has been called global warming. They suggest that the gradual melting of the earth’s ice caps can be linked directly to higher temperatures. The primary cause of global warming is thought to be
What should you do if you become a victim of identity theft?
What are two examples of rights and responsibilities consumers have in our economy?
What responsibility does the Federal Trade Commission have for advertising, and what power does it have to enforce its decisions?
Why wasn’t the Pure Food and Drug Act of 1906 effective when it was first passed?
Why is the need for government consumer protection unlikely to decrease in the future?
History Before the 1960s, consumer use of credit cards was limited. Cards that were available generally were issued by individual stores and could be used only in the issuing store. Describe how stores have benefited from the growth of consumers’ use of credit cards since the 1960s. What new
The amount of money consumers owe through various types of consumer sales credit has grown in recent years. Use the data in the table to construct a line graph that shows this growth. Evaluate the importance of this growth to the U.S. economy. Total Outstanding Consumer Sales Credit Year Amount of
Why do many experts recommend that consumers limit their use of credit?
What is the difference between a credit rating and a credit score?
Identify and define each of the three Cs of credit.
What are the two major costs involved in using credit, and how can consumers manage these costs effectively?
Why is the interest rate for secured loans usually lower than that for unsecured loans?
Name, define, and give an example of each of the two basic sources of consumer credit.

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Contemporary Economics 2nd Edition William A. McEachern - Solutions

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