Economic Thinking Suggests That a Nation in Which Middlemen Are

question 120

Multiple Choice

Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit, and where their activities are heavily restricted by law, will

• A) gain by channeling people's efforts away from unproductive middleman activity toward physical output.
• B) lose the potential gains from trade that would result from lower transaction costs emanating from middleman activities.
• C) find that it is richer because the added transaction costs normally imposed by middlemen will be reduced.
• D) gain because the value of total output will rise.

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Definitions:

Accumulated Depreciation

A cumulative account that records the depreciation expense of an asset, reducing its book value over time.

Initial Cost

The original acquisition cost of an asset or investment, prior to any adjustments for depreciation, improvement, or amortization.

Fixed Asset

A Fixed Asset is a long-term tangible piece of property that a company owns and uses in its operations to generate income, and not expected to be consumed or converted into cash within a year.

Straight-Line Depreciation

A plan to allocate the price of a concrete asset in consistent yearly fractions over its lifespan.