Question 1

The supply curve for a productive resource wherein price provides an incentive function is

Accepted Answer

A)  vertical.
B)  horizontal.
C)  upward sloping to the right.
D)  downward sloping to the right.E) A) and B)
F) None of the above

Question 2

A given future value of money would have a smaller present value if

Accepted Answer

A)  the interest rate used in discounting is higher.
B)  the length of time over which it is "discounted" is shorter.
C)  the interest rate is zero.
D)  there is no compounding of interest.E) All of the above
F) A) and B)

Question 3

The rent paid for the pasture land used to graze cattle would increase if

Accepted Answer

A)  the productivity of the land increased.
B)  people decided to consume more beef.
C)  oil deposits were discovered on the land.
D)  any of these occurred.E) All of the above
F) B) and D)

Question 4

"Proprietor's income" refers to income received by

Accepted Answer

A)  corporate executives.
B)  owners of small, unincorporated enterprises.
C)  workers hired by small businesses.
D)  interns in businesses.E) None of the above
F) B) and C)

Question 5

Refer to the table representing Kara's bank account. If the $2,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell B

Accepted Answer

A)  cannot be determined.
B)  $2,420.00.
C)  $2,220.00.
D)  $2,620.00.E) None of the above
F) A) and C)

Question 6

Which of the following is not a source of loanable funds?

Accepted Answer

A)  the saving of households
B)  business saving
C)  commercial bank lending
D)  government budget deficitsE) A) and B)
F) None of the above

Question 7

When the inflation rate is 4 percent and the nominal interest rate on long-term government bonds is 8 percent, the real interest rate is 12 percent.

Accepted Answer

A) True 
 B)False

Question 8

The supply curve for loanable funds is upward-sloping because

Accepted Answer

A)  lenders are more willing to lend at lower, rather than higher, interest rates.
B)  lenders are more willing to lend at higher, rather than lower, interest rates.
C)  borrowers are more willing to borrow at lower, rather than higher, interest rates.
D)  borrowers are more willing to borrow at higher, rather than lower, interest rates.E) None of the above
F) C) and D)

Question 9

Which of the following does not explain differences in rent for different parcels of land?

Accepted Answer

A)  productivity differences
B)  demand differences
C)  supply-elasticity differences
D)  marginal-revenue-product differencesE) C) and D)
F) B) and D)

Question 10

The supply curve of loanable funds is upsloping because

Accepted Answer

A)  businesses find more investments to be profitable at low interest rates than at high interest rates.
B)  government budget deficits vary inversely with the equilibrium interest rate.
C)  households are willing to save more at high interest rates than they are at low interest rates.
D)  banks lend more at low interest rates than they do at high interest rates.E) None of the above
F) A) and B)

Question 11

The value today of a specific sum of money to be received in the future is referred to as

Accepted Answer

A)  the future value of that sum of money.
B)  the present value of that sum of money.
C)  compound interest.
D)  the time-value of money.E) A) and B)
F) A) and C)

Question 12

The largest single share of all income earned by Americans consists of

Accepted Answer

A)  wages and salaries.
B)  interest.
C)  rents.
D)  corporate profits.E) B) and C)
F) A) and C)

Question 13

Defined narrowly as wages and salaries, labor's share of the national income is about

Accepted Answer

A)  71 percent.
B)  53 percent.
C)  42 percent.
D)  89 percent.E) C) and D)
F) B) and D)

Question 14

It is most likely that a firm would borrow funds to expand its capital facilities when the

Accepted Answer

A)  pure rate of interest is greater than the real rate of interest.
B)  expected rate of return is greater than the interest rate.
C)  demand for money is greater than the supply of money.
D)  real rate of interest is greater than the nominal rate of interest.E) A) and B)
F) All of the above

Question 15

Entrepreneurs' focus on profit encourages efficiency

Accepted Answer

A)  at the expense of employees.
B)  except in a market system.
C)  when properly regulated by the government.
D)  by encouraging the entrepreneur to use the MB = MC rule for every aspect of the business.E) C) and D)
F) B) and D)

Question 16

Refer to the graph of the supply and demand for loanable funds. Assume that the government sets a 10 percent limit on the interest rate that banks can charge to customers for credit card loans. In this case, the quantity of loanable funds

Accepted Answer

A)  demanded will exceed the quantity supplied by $150 billion.
B)  demanded will exceed the quantity supplied by $100 billion.
C)  demanded will exceed the quantity supplied by $50 billion.
D)  supplied will exceed the quantity demanded by $50 billion.E) A) and C)
F) C) and D)

Question 17

Normal profit is considered an economic cost.

Accepted Answer

A) True 
 B)False

Question 18

The table gives investment-demand in an economy. An increase in the interest rate from 15 percent to 19 percent would

Accepted Answer

A)  increase investment by $90 billion.
B)  decrease investment by $90 billion.
C)  decrease investment by $110 billion.
D)  decrease investment by $140 billion.E) C) and D)
F) A) and B)

Question 19

Which of the following is considered to be an economic resource?

Accepted Answer

A)  rent
B)  money
C)  interest
D)  capitalE) A) and B)
F) All of the above

Question 20

The economist who advocated a single tax on land was

Accepted Answer

A)  Adam Smith.
B)  John Maynard Keynes.
C)  Henry George.
D)  Milton Friedman.E) C) and D)
F) B) and D)

Exam 18: Rent, Interest, and Profit

Refer to the graph of the supply and demand for loanable funds. Assume that the government sets a 10 percent limit on the interest rate that banks can charge to customers for credit card loans. In this case, the quantity of loanable funds

Correct AnswerverifiedShow Answer

When the inflation rate is 4 percent and the nominal interest rate on long-term government bonds is 8 percent, the real interest rate is 12 percent.

Correct AnswerverifiedShow Answer

The supply curve for a productive resource wherein price provides an incentive function is

Correct AnswerverifiedShow Answer

The supply curve for loanable funds is upward-sloping because

Correct AnswerverifiedShow Answer

Which of the following is not a source of loanable funds?

Correct AnswerverifiedShow Answer

The rent paid for the pasture land used to graze cattle would increase if

Correct AnswerverifiedShow Answer

The value today of a specific sum of money to be received in the future is referred to as

Correct AnswerverifiedShow Answer

It is most likely that a firm would borrow funds to expand its capital facilities when the

Correct AnswerverifiedShow Answer

Which of the following is considered to be an economic resource?

Correct AnswerverifiedShow Answer

Refer to the table representing Kara's bank account. If the $2,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell B

Correct AnswerverifiedShow Answer

The largest single share of all income earned by Americans consists of

Correct AnswerverifiedShow Answer

A given future value of money would have a smaller present value if

Correct AnswerverifiedShow Answer

The supply curve of loanable funds is upsloping because

Correct AnswerverifiedShow Answer

Which of the following does not explain differences in rent for different parcels of land?

Correct AnswerverifiedShow Answer

Defined narrowly as wages and salaries, labor's share of the national income is about

Correct AnswerverifiedShow Answer

"Proprietor's income" refers to income received by

Correct AnswerverifiedShow Answer

Normal profit is considered an economic cost.

Correct AnswerverifiedShow Answer

Entrepreneurs' focus on profit encourages efficiency

Correct AnswerverifiedShow Answer

The economist who advocated a single tax on land was

Correct AnswerverifiedShow Answer

The table gives investment-demand in an economy. An increase in the interest rate from 15 percent to 19 percent would

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified