Question 1

If labor's share of the income paid to American resource suppliers is broadly defined as the sum of wages and salaries and proprietors' income, we can say that labor's relative share has

Accepted Answer

A)  remained approximately constant since 1900.
B)  increased dramatically at the expense of capitalist income.
C)  declined by about one-third since 1900.
D)  decreased because of the decline of unionism.E) All of the above
F) A) and B)

Question 2

The basic function of profits and losses is to allocate society's scarce resources to their highest valued uses.

Accepted Answer

A) True 
 B)False

Question 3

Entrepreneurs can generate economic profits by all of the following, except

Accepted Answer

A)  developing popular new products.
B)  reducing production costs below rivals' costs.
C)  creating and maintaining monopoly power.
D)  laying off workers in order to cut costs.E) None of the above
F) All of the above

Question 4

Suppose you borrow $500 and agree to pay this $500 plus $75 of interest at the end of a year. The interest rate is

Accepted Answer

A)  10 percent.
B)  15.0 percent.
C)  12.50 percent.
D)  7.50 percent.E) A) and B)
F) A) and C)

Question 5

Unlike most demand curves, the demand curve for loanable funds is upsloping.

Accepted Answer

A) True 
 B)False

Question 6

The free-land era of U.S. history reflected a situation in which the quantity of land available at a zero price exceeded the quantity of land demanded.

Accepted Answer

A) True 
 B)False

Question 7

Suppose you borrow $500 and agree to pay this $500 plus $75 of interest at the end of a year. The interest rate is

Accepted Answer

A)  10 percent.
B)  15.0 percent.
C)  12.5 percent.
D)  7.5 percent.E) B) and C)
F) B) and D)

Question 8

Money is an economic resource referred to as capital.

Accepted Answer

A) True 
 B)False

Question 9

A decrease in the supply of loanable funds and an increase in the demand for loanable funds will

Accepted Answer

A)  increase the interest rate and the quantity of funds loaned.
B)  decrease the interest rate and the quantity of funds loaned.
C)  increase the interest rate, but the quantity of funds loaned may either increase or decrease.
D)  decrease the interest rate, but the quantity of funds loaned may either increase or decrease.E) B) and C)
F) B) and D)

Question 10

Government monetary authorities manipulate the supply of money in the economy primarily to

Accepted Answer

A)  ensure high profits for commercial banks.
B)  provide sufficient currency to individuals and businesses to conduct their daily business.
C)  keep the dollar strong measured against the currencies of foreign nations.
D)  influence the interest rate and the levels of investment, output, and prices in the economy.E) All of the above
F) B) and D)

Question 11

Refer to the demand schedule and possible supply schedules, A-D. Suppose that price influences the availability of the economic resource, and the equilibrium price is $2. Which resource supply schedule would apply in this case?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) C) and D)
F) A) and C)

Question 12

Economic profit might result from

Accepted Answer

A)  easy entry into industries.
B)  dynamic change and uncertainty.
C)  X-inefficiency.
D)  a decline in entrepreneurship.E) A) and B)
F) A) and C)

Question 13

Refer to the market for loanable funds, as shown in the graph. Suppose investors who borrow money in the loanable funds market become nervous and pessimistic about the economy in general, and expected returns on investments in particular. We would expect to see a(n)

Accepted Answer

A)  lower equilibrium interest rate.
B)  rightward shift of the supply curve.
C)  rightward shift of the demand curve.
D)  increase in the equilibrium quantity of loanable funds.E) A) and B)
F) A) and C)

Question 14

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 D

Accepted Answer

A)  cannot be determined.
B)  is $662.00.
C)  is $242.00.
D)  is $420.00.E) B) and D)
F) None of the above

Question 15

Which of the following statements is correct?

Accepted Answer

A)  Economic profits can properly be regarded as the salaries received by the hired managers of corporations.
B)  Economic rent is a price paid for productive land resources whose supply is perfectly inelastic.
C)  Economic profits would be nonexistent in a dynamic, purely competitive economy.
D)  Economic, or pure, profit is the minimum return that entrepreneurs must receive to continue in a particular line of production.E) None of the above
F) All of the above

Question 16

If you pay $10,625 annually on a $125,000 loan and the rate of inflation is 3 percent, then the

Accepted Answer

A)  real rate of interest is 4.5 percent.
B)  nominal rate of interest is 8.5 percent.
C)  real rate of interest is 6.5 percent.
D)  nominal rate of interest is 11.5 percent.E) None of the above
F) A) and C)

Question 17

A lower equilibrium interest rate

Accepted Answer

A)  increases saving, reduces total spending, and increases total output.
B)  decreases saving, increases total spending, and decreases total output.
C)  increases investment, increases total spending, and increases total output.
D)  decreases investment, decreases total spending, and increases total output.E) None of the above
F) B) and C)

Question 18

Distinguish between the nominal rate of interest and real rate of interest.

Accepted Answer

The nominal interest rate is the interes...

Question 19

Which of the following interest rates is usually the highest?

Accepted Answer

A)  30-year mortgage rate
B)  20-year Treasury bond rate
C)  consumer credit-card rate
D)  prime rate of banksE) C) and D)
F) A) and D)

Question 20

Refer to the market for loanable funds, as shown in the graph. Suppose the market for loanable funds is originally in equilibrium at interest rate i ₀ and quantity Q ₀ . In the next period, the equilibrium interest rate increases to i ₁ and quantity decreases to Q ₁. Which of the following could be the cause of this shift?

Accepted Answer

A)  Households decide to save less.
B)  Households decide to save more.
C)  Investors become less optimistic.
D)  Investors become more optimistic.E) A) and D)
F) B) and C)

Exam 18: Rent, Interest, and Profit

Suppose you borrow $500 and agree to pay this $500 plus $75 of interest at the end of a year. The interest rate is

Correct Answer
verified

Economic profit might result from

Correct Answer
verified

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 D

Correct Answer
verified

Correct Answer
verified

If you pay $10,625 annually on a $125,000 loan and the rate of inflation is 3 percent, then the

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Distinguish between the nominal rate of interest and real rate of interest.

Correct Answer
verified
The nominal interest rate is the interes...
View Answer

Which of the following interest rates is usually the highest?

Correct Answer
verified

Suppose you borrow $500 and agree to pay this $500 plus $75 of interest at the end of a year. The interest rate is

Correct Answer
verified

Refer to the market for loanable funds, as shown in the graph. Suppose investors who borrow money in the loanable funds market become nervous and pessimistic about the economy in general, and expected returns on investments in particular. We would expect to see a(n)

Correct Answer
verified

Refer to the demand schedule and possible supply schedules, A-D. Suppose that price influences the availability of the economic resource, and the equilibrium price is $2. Which resource supply schedule would apply in this case?

Correct Answer
verified

Unlike most demand curves, the demand curve for loanable funds is upsloping.

Correct Answer
verified

Entrepreneurs can generate economic profits by all of the following, except

Correct Answer
verified

The free-land era of U.S. history reflected a situation in which the quantity of land available at a zero price exceeded the quantity of land demanded.

Correct Answer
verified

Money is an economic resource referred to as capital.

Correct Answer
verified

The basic function of profits and losses is to allocate society's scarce resources to their highest valued uses.

Correct Answer
verified

If labor's share of the income paid to American resource suppliers is broadly defined as the sum of wages and salaries and proprietors' income, we can say that labor's relative share has

Correct Answer
verified

A decrease in the supply of loanable funds and an increase in the demand for loanable funds will

Correct Answer
verified

Government monetary authorities manipulate the supply of money in the economy primarily to

Correct Answer
verified

A lower equilibrium interest rate

Correct Answer
verified

Exam 18: Rent, Interest, and Profit

Suppose you borrow $500 and agree to pay this $500 plus $75 of interest at the end of a year. The interest rate is

Correct AnswerverifiedShow Answer

Economic profit might result from

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 D

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If you pay $10,625 annually on a $125,000 loan and the rate of inflation is 3 percent, then the

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Distinguish between the nominal rate of interest and real rate of interest.

Correct AnswerverifiedThe nominal interest rate is the interes...View AnswerShow Answer

Which of the following interest rates is usually the highest?

Correct AnswerverifiedShow Answer

Suppose you borrow $500 and agree to pay this $500 plus $75 of interest at the end of a year. The interest rate is

Correct AnswerverifiedShow Answer

Refer to the market for loanable funds, as shown in the graph. Suppose investors who borrow money in the loanable funds market become nervous and pessimistic about the economy in general, and expected returns on investments in particular. We would expect to see a(n)

Correct AnswerverifiedShow Answer

Refer to the demand schedule and possible supply schedules, A-D. Suppose that price influences the availability of the economic resource, and the equilibrium price is $2. Which resource supply schedule would apply in this case?

Correct AnswerverifiedShow Answer

Unlike most demand curves, the demand curve for loanable funds is upsloping.

Correct AnswerverifiedShow Answer

Entrepreneurs can generate economic profits by all of the following, except

Correct AnswerverifiedShow Answer

The free-land era of U.S. history reflected a situation in which the quantity of land available at a zero price exceeded the quantity of land demanded.

Correct AnswerverifiedShow Answer

Money is an economic resource referred to as capital.

Correct AnswerverifiedShow Answer

The basic function of profits and losses is to allocate society's scarce resources to their highest valued uses.

Correct AnswerverifiedShow Answer

If labor's share of the income paid to American resource suppliers is broadly defined as the sum of wages and salaries and proprietors' income, we can say that labor's relative share has

Correct AnswerverifiedShow Answer

A decrease in the supply of loanable funds and an increase in the demand for loanable funds will

Correct AnswerverifiedShow Answer

Government monetary authorities manipulate the supply of money in the economy primarily to

Correct AnswerverifiedShow Answer

A lower equilibrium interest rate

Correct AnswerverifiedShow Answer

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The nominal interest rate is the interes...
View Answer

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