Question 1

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. 
A) stimulate aggregate production. 
B) do not lead to a reallocation of the resource. 
C) are paid by consumers. 
D) are always regressive.

Question 2

To an individual firm or landowner, land rents do not appear to be a surplus because

Accepted Answer

A) land is a productive resource, like the other resources. 
B) a given parcel of land has alternative uses, and rent represents a real cost of production. 
C) they do not understand that the supply of land, in total, is perfectly inelastic. 
D) landowners are, politically and economically, a powerful and well-organized group. 
A) land is a productive resource, like the other resources. 
B) a given parcel of land has alternative uses, and rent represents a real cost of production. 
C) they do not understand that the supply of land, in total, is perfectly inelastic. 
D) landowners are, politically and economically, a powerful and well-organized group.

Question 3

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. 
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.

Question 4

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 5

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 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 deficits 
A) the saving of households 
B) business saving 
C) commercial bank lending 
D) government budget deficits

Question 7

Henry George advocated a single tax on

Accepted Answer

A) real capital. 
B) entrepreneurial profits. 
C) land. 
D) labor income. 
A) real capital. 
B) entrepreneurial profits. 
C) land. 
D) labor income.

Question 8

For a given future value, the higher the interest rate is, the higher the present value will be.

Accepted Answer

A) True 
 B)False

Question 9

In a market system, private ownership of land does not lead to which of the following results?

Accepted Answer

A) Private owners will face no cost in using land for one purpose rather than another. 
B) Land rent reflects the opportunity cost of land. 
C) Land is allocated to its best possible uses. 
D) Private land ownership aids economic growth because land rents reflect changes in tastes and technologies. 
A) Private owners will face no cost in using land for one purpose rather than another. 
B) Land rent reflects the opportunity cost of land. 
C) Land is allocated to its best possible uses. 
D) Private land ownership aids economic growth because land rents reflect changes in tastes and technologies.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The supply of loanable funds is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 12

Present value is the amount to which some current amount of money will grow as interest compounds over time.

Accepted Answer

A) True 
 B)False

Question 13

Most borrowers value money for

Accepted Answer

A) its own sake. 
B) what it can buy. 
C) what it can produce. 
D) what they have to pay for it. 
A) its own sake. 
B) what it can buy. 
C) what it can produce. 
D) what they have to pay for it.

Question 14

If the nominal rate of interest is 8 percent and the real rate of interest is 3 percent, the inflation rate must be 11 percent.

Accepted Answer

A) True 
 B)False

Question 15

Effective usury laws cause

Accepted Answer

A) a surplus in the market for loanable funds. 
B) the quantity of loanable funds demanded to be brought into balance with the quantity supplied. 
C) the quantity of loanable funds demanded to exceed the quantity supplied. 
D) the quantity of loanable funds supplied to exceed the quantity demanded. 
A) a surplus in the market for loanable funds. 
B) the quantity of loanable funds demanded to be brought into balance with the quantity supplied. 
C) the quantity of loanable funds demanded to exceed the quantity supplied. 
D) the quantity of loanable funds supplied to exceed the quantity demanded.

Question 16

Other things equal, interest rates are

Accepted Answer

A) higher on large loans than on small loans. 
B) higher on loans with tax-exempt interest payments. 
C) lower on less risky loans than on riskier loans. 
D) lower on short-term loans than on long-term loans. 
A) higher on large loans than on small loans. 
B) higher on loans with tax-exempt interest payments. 
C) lower on less risky loans than on riskier loans. 
D) lower on short-term loans than on long-term loans.

Question 17

Henry George's single-tax movement was based on the argument that

Accepted Answer

A) the tax structure should consist solely of a highly progressive tax on nonwage incomes. 
B) interest is unearned income and should be taxed away by government. 
C) in less-developed countries the supply of and demand for land will be such that land will be a free good and therefore capable of bearing sizable taxes. 
D) a high tax on land rent is justified because land rent performs no incentive function. 
A) the tax structure should consist solely of a highly progressive tax on nonwage incomes. 
B) interest is unearned income and should be taxed away by government. 
C) in less-developed countries the supply of and demand for land will be such that land will be a free good and therefore capable of bearing sizable taxes. 
D) a high tax on land rent is justified because land rent performs no incentive function.

Question 18

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

Accepted Answer

A) rent 
B) money 
C) interest 
D) capital 
A) rent 
B) money 
C) interest 
D) capital

Question 19

For a given future value and interest rate, the discounted present value will become larger as the time period gets longer.

Accepted Answer

A) True 
 B)False

Question 20

Which expression is used to calculate the present value of an amount of money?

Accepted Answer

A) Future Value × (1 + interest rate)time 
B) Future Value/(1 + interest rate)time 
C) Future Value × (1 + time)interest rate 
D) (1 + interest rate)time/Future Value 
A) Future Value × (1 + interest rate)time 
B) Future Value/(1 + interest rate)time 
C) Future Value × (1 + time)interest rate 
D) (1 + interest rate)time/Future Value

Exam 18: Rent, Interest, and Profit

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

To an individual firm or landowner, land rents do not appear to be a surplus because

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

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

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.

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

Henry George advocated a single tax on

For a given future value, the higher the interest rate is, the higher the present value will be.

In a market system, private ownership of land does not lead to which of the following results?

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

The supply of loanable funds is perfectly elastic.

Present value is the amount to which some current amount of money will grow as interest compounds over time.

Most borrowers value money for

If the nominal rate of interest is 8 percent and the real rate of interest is 3 percent, the inflation rate must be 11 percent.

Effective usury laws cause

Other things equal, interest rates are

Henry George's single-tax movement was based on the argument that

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

For a given future value and interest rate, the discounted present value will become larger as the time period gets longer.

Which expression is used to calculate the present value of an amount of money?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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