Question 1

On the surface, Usury laws are designed to protect consumers from exorbitant interest rates.

Accepted Answer

A) True 
 B)False

Question 2

Mr.Paque is a bear hunter for timber companies that want to diminish damage to trees done by bears in the spring.Due to a reduction in the bear population between 1995 and 2005, Mr.Paque finds fewer bears each year and additional hours spent hunting produce fewer additional bears.This means that Mr.Paque's (i) overall productivity has fallen; (ii) marginal product has fallen.

Accepted Answer

A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii 
A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii

Question 3

Which is not a reason the demand curve for loanable funds slopes down?

Accepted Answer

A) The value of the MRP in terms of today's money shrinks as the interest rate rises. 
B) Future returns must be discounted more when the interest rate rises. 
C) As the interest rate rises, more and more investments become unprofitable. 
D) Production becomes more profitable in the future, reducing required inputs today. 
A) The value of the MRP in terms of today's money shrinks as the interest rate rises. 
B) Future returns must be discounted more when the interest rate rises. 
C) As the interest rate rises, more and more investments become unprofitable. 
D) Production becomes more profitable in the future, reducing required inputs today.

Question 4

The rent earned on marginal land is

Accepted Answer

A) zero. 
B) the average of all qualities of land. 
C) above the average of all qualities of land. 
D) below the average of all qualities of land. 
A) zero. 
B) the average of all qualities of land. 
C) above the average of all qualities of land. 
D) below the average of all qualities of land.

Question 5

The marginal productivity theory is irrelevant to organizing production in a socialist society.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that the rate of interest increases.What will happen to the discounted present value of an investment?

Accepted Answer

A) It will increase. 
B) It will decrease. 
C) It will remain unchanged. 
D) It depends on the magnitude of the change. 
A) It will increase. 
B) It will decrease. 
C) It will remain unchanged. 
D) It depends on the magnitude of the change.

Question 7

Capital is to investment as

Accepted Answer

A) a flow is to a rate. 
B) a flow is to a stock. 
C) a stock is to a flow. 
D) a stock is to a bond. 
A) a flow is to a rate. 
B) a flow is to a stock. 
C) a stock is to a flow. 
D) a stock is to a bond.

Question 8

Price ceilings can be used to lower usurious interest rates.

Accepted Answer

A) True 
 B)False

Question 9

The marginal productivity theory of distribution holds that

Accepted Answer

A) each factor is paid what it deserves. 
B) the owner of each factor is paid the amount that the factor contributes to earnings. 
C) each factor's income depends on how hard it works. 
D) each factor receives an equal share of the revenue from production. 
A) each factor is paid what it deserves. 
B) the owner of each factor is paid the amount that the factor contributes to earnings. 
C) each factor's income depends on how hard it works. 
D) each factor receives an equal share of the revenue from production.

Question 10

Which of the following is usually a durable good?

Accepted Answer

A) A unit of labor 
B) The interest rate 
C) A depletable resource 
D) A capital good 
A) A unit of labor 
B) The interest rate 
C) A depletable resource 
D) A capital good

Question 11

The loan supply curve has a positive slope

Accepted Answer

A) for all savers. 
B) only for savers with fixed accumulation targets. 
C) for all savers except those with fixed accumulation goals. 
D) only for those contemplating retirement. 
A) for all savers. 
B) only for savers with fixed accumulation targets. 
C) for all savers except those with fixed accumulation goals. 
D) only for those contemplating retirement.

Question 12

The change in the capital stock is the return on investment.

Accepted Answer

A) True 
 B)False

Question 13

At the Trolley House bar even the worst bartender makes $50 in tips a night, but most make $100.Tom, however, is the rare bartender who do fancy tricks with the bottles and make snazzy jokes.Tome earns $250 in tips per night.Tom's economic rent is

Accepted Answer

A) $50. 
B) $150. 
C) $200. 
D) $250. 
A) $50. 
B) $150. 
C) $200. 
D) $250.

Question 14

A "single tax" on land was proposed in the nineteenth century by

Accepted Answer

A) Lloyd George. 
B) Henry George. 
C) George Washington. 
D) George Sands. 
A) Lloyd George. 
B) Henry George. 
C) George Washington. 
D) George Sands.

Question 15

Entrepreneurship is

Accepted Answer

A) restricted to perfect competition. 
B) occurs only in well-functioning markets. 
C) the process of planting new crops. 
D) the process of taking business risks. 
A) restricted to perfect competition. 
B) occurs only in well-functioning markets. 
C) the process of planting new crops. 
D) the process of taking business risks.

Question 16

An increase in rent will ordinarily lead to

Accepted Answer

A) an increase in usage of land that was formerly idle. 
B) a decrease in total land employed. 
C) less-intensive usage of land. 
D) a decrease in the income of landlords. 
A) an increase in usage of land that was formerly idle. 
B) a decrease in total land employed. 
C) less-intensive usage of land. 
D) a decrease in the income of landlords.

Question 17

Interest payments account for about ___ percent of U.S.national income.

Accepted Answer

A) 1 
B) 3 
C) 9 
D) 12 
A) 1 
B) 3 
C) 9 
D) 12

Question 18

Factor demand is based on

Accepted Answer

A) marginal productivity theory. 
B) the law of supply. 
C) game theory. 
D) the principle of economies of scale. 
A) marginal productivity theory. 
B) the law of supply. 
C) game theory. 
D) the principle of economies of scale.

Question 19

Suppose that a community seeks to preserve air quality, and zones a "green belt" around the city, which prevents property development within the belt.What is the most likely result of this law?

Accepted Answer

A) Interest rates will increase. 
B) Labor income will increase. 
C) Economic rent will increase. 
D) Profits will increase. 
A) Interest rates will increase. 
B) Labor income will increase. 
C) Economic rent will increase. 
D) Profits will increase.

Question 20

Activist capitalists who seek out or create earnings opportunities and assume risk, for which they receive profits, are called

Accepted Answer

A) rent seekers. 
B) entrepreneurs. 
C) muckrakers. 
D) marginalists. 
A) rent seekers. 
B) entrepreneurs. 
C) muckrakers. 
D) marginalists.

Exam 18: Pricing the Factors of Production

On the surface, Usury laws are designed to protect consumers from exorbitant interest rates.

Which is not a reason the demand curve for loanable funds slopes down?

The rent earned on marginal land is

The marginal productivity theory is irrelevant to organizing production in a socialist society.

Suppose that the rate of interest increases.What will happen to the discounted present value of an investment?

Capital is to investment as

Price ceilings can be used to lower usurious interest rates.

The marginal productivity theory of distribution holds that

Which of the following is usually a durable good?

The loan supply curve has a positive slope

The change in the capital stock is the return on investment.

At the Trolley House bar even the worst bartender makes $50 in tips a night, but most make $100.Tom, however, is the rare bartender who do fancy tricks with the bottles and make snazzy jokes.Tome earns $250 in tips per night.Tom's economic rent is

A "single tax" on land was proposed in the nineteenth century by

Entrepreneurship is

An increase in rent will ordinarily lead to

Interest payments account for about ___ percent of U.S.national income.

Factor demand is based on

Suppose that a community seeks to preserve air quality, and zones a "green belt" around the city, which prevents property development within the belt.What is the most likely result of this law?

Activist capitalists who seek out or create earnings opportunities and assume risk, for which they receive profits, are called

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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