Question 1

A decrease in the supply of loanable funds would tend to lower the interest rate.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following resources is a "free and nonreproducible gift of nature"?

Accepted Answer

A)  labor
B)  entrepreneurship
C)  capital
D)  landE) None of the above
F) A) and C)

Question 3

The present value of $4,000 deposited today at 8 percent interest is $5,038.85 three years from now.

Accepted Answer

A) True 
 B)False

Question 4

What is the difference between insurable and uninsurable risk?

Accepted Answer

Insurable risks are risks for which it i...

Question 5

Which of the following will increase the supply of loanable funds? An increase in the

Accepted Answer

A)  rates of return on potential investments.
B)  productivity of business firms.
C)  demand for business products.
D)  savings of households.E) A) and D)
F) A) and C)

Question 6

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 interest rate Kara is receiving on her account

Accepted Answer

A)  cannot be determined.
B)  is 10.00 percent.
C)  is 5.00 percent.
D)  is 20.00 percent.E) A) and D)
F) All of the above

Question 7

Briefly explain the loanable funds theory of interest rate determination.

Accepted Answer

The loanable funds theory of interest ra...

Question 8

What explains differences in the economic rent charged for two plots of 500 acres of land that are used for growing corn and located in the same county of a state?

Accepted Answer

Land varies widely in terms of productiv...

Question 9

Refer to the table representing Darcy's bank account. If she deposited $1,000 into her account at the beginning of year 1 and made no further deposits or withdrawals, the $1,191 value at the end of year 3 represents the

Accepted Answer

A)  discounted value of the $1,000 deposit made at the beginning of year 1.
B)  present value of the $1,000 deposit made at the beginning of year 1.
C)  future value of the $1,000 deposit made at the beginning of year 1.
D)  present value of the interest earned over the three-year period.E) A) and B)
F) A) and C)

Question 10

Effective usury laws

Accepted Answer

A)  subsidize lenders.
B)  penalize those who borrow at the below-market interest rate.
C)  improve efficiency in investing.
D)  keep some low-income people from obtaining credit and loans.E) All of the above
F) A) and B)

Question 11

Rent performs an incentive function, but no rationing function.

Accepted Answer

A) True 
 B)False

Question 12

Interest is the

Accepted Answer

A)  price paid for the use of money.
B)  opportunity cost of time.
C)  expectation of a future return on investment.
D)  reward for consuming rather than saving.E) B) and D)
F) A) and B)

Question 13

If people became thriftier and saved more, the loanable funds theory predicts that the equilibrium interest rate would decrease.

Accepted Answer

A) True 
 B)False

Question 14

The "future value" of a sum of money refers to

Accepted Answer

A)  the estimated value of that money invested in a stock portfolio at some future date.
B)  the purchasing power of a given amount of money adjusted for price changes.
C)  today's value of a sum of money to be received in the future.
D)  the amount to which some current sum of money will grow over time.E) C) and D)
F) None of the above

Question 15

Describe how the income shares of national income are distributed to "labor" and to "capitalists." How has this distribution changed since 1900?

Accepted Answer

Even with labor income narrowly defined ...

Question 16

Refer to the table representing Kara's bank account. If the $2,000 was deposited into her account at the beginning of year 1, the value for cell A is

Accepted Answer

A)  $10.
B)  $200.
C)  $20.
D)  $100.00E) A) and C)
F) B) and C)

Question 17

Which of the following was not a belief of Henry George and the single-tax movement?

Accepted Answer

A)  Rental income is unfair because landlords do not really earn it from any productive effort.
B)  Rental income should be taxed heavily and should be the primary source of revenues for the government.
C)  Taxing rental income would adversely affect allocative efficiency because the tax would change how landlords use their land.
D)  The single tax on rent would not adversely affect society's productive efficiency.E) A) and C)
F) A) and B)

Question 18

There will be pressure on the interest rate for loanable funds to increase when

Accepted Answer

A)  supply increases.
B)  demand decreases.
C)  quantity supplied exceeds quantity demanded.
D)  quantity demanded exceeds the quantity supplied.E) None of the above
F) C) and D)

Question 19

A unique characteristic of taxes on economic rents is that such taxes

Accepted Answer

A)  stimulate aggregate production.
B)  do not lead to a reallocation of the resource.
C)  are paid by consumers.
D)  are always regressive.E) A) and D)
F) None of the above

Question 20

The share of total income for "capitalists" in America (in the form of rent, interest, and profits) has been about

Accepted Answer

A)  20 percent.
B)  40 percent.
C)  50 percent.
D)  75 percent.E) None of the above
F) C) and D)

Exam 18: Rent, Interest, and Profit

The "future value" of a sum of money refers to

Correct AnswerverifiedShow Answer

What explains differences in the economic rent charged for two plots of 500 acres of land that are used for growing corn and located in the same county of a state?

Correct AnswerverifiedLand varies widely in terms of productiv...View AnswerShow Answer

Which of the following resources is a "free and nonreproducible gift of nature"?

Correct AnswerverifiedShow Answer

Which of the following will increase the supply of loanable funds? An increase in the

Correct AnswerverifiedShow Answer

The share of total income for "capitalists" in America (in the form of rent, interest, and profits) has been about

Correct AnswerverifiedShow Answer

If people became thriftier and saved more, the loanable funds theory predicts that the equilibrium interest rate would decrease.

Correct AnswerverifiedShow Answer

Briefly explain the loanable funds theory of interest rate determination.

Correct AnswerverifiedThe loanable funds theory of interest ra...View AnswerShow Answer

Rent performs an incentive function, but no rationing function.

Correct AnswerverifiedShow Answer

Effective usury laws

Correct AnswerverifiedShow Answer

Describe how the income shares of national income are distributed to "labor" and to "capitalists." How has this distribution changed since 1900?

Correct AnswerverifiedEven with labor income narrowly defined ...View AnswerShow 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, the value for cell A is

Correct AnswerverifiedShow Answer

Refer to the table representing Darcy's bank account. If she deposited $1,000 into her account at the beginning of year 1 and made no further deposits or withdrawals, the $1,191 value at the end of year 3 represents the

Correct AnswerverifiedShow Answer

A decrease in the supply of loanable funds would tend to lower the interest rate.

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 interest rate Kara is receiving on her account

Correct AnswerverifiedShow Answer

Interest is the

Correct AnswerverifiedShow Answer

What is the difference between insurable and uninsurable risk?

Correct AnswerverifiedInsurable risks are risks for which it i...View AnswerShow Answer

A unique characteristic of taxes on economic rents is that such taxes

Correct AnswerverifiedShow Answer

Which of the following was not a belief of Henry George and the single-tax movement?

Correct AnswerverifiedShow Answer

The present value of $4,000 deposited today at 8 percent interest is $5,038.85 three years from now.

Correct AnswerverifiedShow Answer

There will be pressure on the interest rate for loanable funds to increase when

Correct AnswerverifiedShow Answer

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Land varies widely in terms of productiv...
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The loanable funds theory of interest ra...
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Even with labor income narrowly defined ...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Insurable risks are risks for which it i...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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