Relating to the Economics in Practice on Page 253: Which

question 198

Multiple Choice

Relating to the Economics in Practice on page 253: Which of the following would be an expected result of increased government subsidies for ethanol, a fuel produced from corn?

• A) an increase in the price of gasoline made in part from ethanol
• B) an increase in the price of land used to farm corn
• C) decreases in the price of land used to farm grains other than corn
• D) a decrease in the production of corn relative to other grains

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Definitions:

Straight-line Amortization

A method of evenly spreading out the cost of an intangible asset over its useful life.

Interest Payment

The amount paid at regular intervals (often annually or semi-annually) on a debt instrument such as a bond or loan, based on the interest rate and the principal amount.

Discount on Bonds Payable

Represents the difference when bonds are sold for less than their face (or par) value, indicating that the bond's market rate of interest is higher than its coupon rate.

Par Value

Par value is the face value of a bond or the stock value stated in the corporate charter, below which shares cannot be issued.