Question 1

The demand for land is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) upsloping. 
D) downsloping. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) upsloping. 
D) downsloping.

Question 2

Which of the following is not a component of the demand for loanable funds?

Accepted Answer

A) household purchases of housing and durable consumer goods 
B) business purchases of capital goods 
C) government financing of the public debt 
D) household saving 
A) household purchases of housing and durable consumer goods 
B) business purchases of capital goods 
C) government financing of the public debt 
D) household saving

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

(Consider This) 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. 
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.

Question 5

An increase in the expected rates of return on investments would most likely increase the supply of loanable funds.

Accepted Answer

A) True 
 B)False

Question 6

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.Accessibility: Keyboard Navigation Blooms: Understand 
A) vertical. 
B) horizontal. 
C) upward sloping to the right. 
D) downward sloping to the right.Accessibility: Keyboard Navigation Blooms: Understand

Question 7

The pure rate of interest in economic models is best approximated by the

Accepted Answer

A) 1-month Treasury bills. 
B) prime interest rate. 
C) federal funds rate. 
D) 20-year Treasury bond rate. 
A) 1-month Treasury bills. 
B) prime interest rate. 
C) federal funds rate. 
D) 20-year Treasury bond rate.

Question 8

The supply of loanable funds is an upward-sloping curve because the

Accepted Answer

A) higher the interest rate, the more households consume and the more households save. 
B) higher the interest rate, the less households consume and the more households save. 
C) lower the interest rate, the more households consume and the more households save. 
D) lower the interest rate, the less households consume and the more households save. 
A) higher the interest rate, the more households consume and the more households save. 
B) higher the interest rate, the less households consume and the more households save. 
C) lower the interest rate, the more households consume and the more households save. 
D) lower the interest rate, the less households consume and the more households save.

Question 9

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.Difficulty: 02 Medium 
A) rates of return on potential investments. 
B) productivity of business firms. 
C) demand for business products. 
D) savings of households.Difficulty: 02 Medium

Question 10

Other things equal, the shorter the loan period and the larger the loan size, the higher is the interest rate charged by the lender.

Accepted Answer

A) True 
 B)False

Question 11

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. 
A) supply increases. 
B) demand decreases. 
C) quantity supplied exceeds quantity demanded. 
D) quantity demanded exceeds the quantity supplied.

Question 12

Economists claim that a farmer who owns her land, provides all her own labor, and calculates her profits from the farm by subtracting explicit costs from total revenues will

Accepted Answer

A) overstate her accounting profits. 
B) understate her accounting profits. 
C) overstate her economic profits. 
D) understate her economic profits. 
A) overstate her accounting profits. 
B) understate her accounting profits. 
C) overstate her economic profits. 
D) understate her economic profits.

Question 13

Suppose that in some year nominal interest rates are less than the rate of inflation.This means that

Accepted Answer

A) money demand exceeds money supply. 
B) real interest rates are negative. 
C) real interest rates are positive and unusually high. 
D) real interest rates exceed nominal interest rates. 
A) money demand exceeds money supply. 
B) real interest rates are negative. 
C) real interest rates are positive and unusually high. 
D) real interest rates exceed nominal interest rates.

Question 14

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

Question 15

Henry George claimed that land-rent taxes would not impair economic efficiency because

Accepted Answer

A) they do not result in a change in the amount of land available. 
B) landowners are, as a group, financially secure and able to pay the taxes. 
C) the supply of land is infinitely elastic. 
D) rents represent a small part of income paid to American resource suppliers, so taxes on wages and salaries are more disruptive. 
A) they do not result in a change in the amount of land available. 
B) landowners are, as a group, financially secure and able to pay the taxes. 
C) the supply of land is infinitely elastic. 
D) rents represent a small part of income paid to American resource suppliers, so taxes on wages and salaries are more disruptive.

Question 16

"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. 
A) corporate executives. 
B) owners of small, unincorporated enterprises. 
C) workers hired by small businesses. 
D) interns in businesses.

Question 17

The prices paid to a productive resource usually perform an incentive function except with what resource?

Accepted Answer

A) land 
B) labor 
C) capital 
D) entrepreneurial ability 
A) land 
B) labor 
C) capital 
D) entrepreneurial ability

Question 18

Usury laws will result in a shortage of loanable funds and nonmarket rationing in credit markets.

Accepted Answer

A) True 
 B)False

Question 19

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. 
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.

Question 20

The real rate of interest is the interest rate

Accepted Answer

A) charged on long-term government bonds. 
B) associated with a riskless loan. 
C) that large commercial banks charge their best customers. 
D) after adjustment has been made for inflation. 
A) charged on long-term government bonds. 
B) associated with a riskless loan. 
C) that large commercial banks charge their best customers. 
D) after adjustment has been made for inflation.

Exam 18: Rent, Interest, and Profit

The demand for land is

Which of the following is not a component of the demand for loanable funds?

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

(Consider This) Entrepreneurs' focus on profit encourages efficiency

An increase in the expected rates of return on investments would most likely increase the supply of loanable funds.

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

The pure rate of interest in economic models is best approximated by the

The supply of loanable funds is an upward-sloping curve because the

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

Other things equal, the shorter the loan period and the larger the loan size, the higher is the interest rate charged by the lender.

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

Economists claim that a farmer who owns her land, provides all her own labor, and calculates her profits from the farm by subtracting explicit costs from total revenues will

Suppose that in some year nominal interest rates are less than the rate of inflation.This means that

Economic profit might result from

Henry George claimed that land-rent taxes would not impair economic efficiency because

"Proprietor's income" refers to income received by

The prices paid to a productive resource usually perform an incentive function except with what resource?

Usury laws will result in a shortage of loanable funds and nonmarket rationing in credit markets.

The supply curve of loanable funds is upsloping because

The real rate of interest is the interest rate

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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