Exam 18: Rent, Interest, and Profit

Economists often speak as if there is a single interest rate when in fact there are many interest rates. What four factors explain the differences in these interest rates?

Which of the following would cause an increase in interest rates in credit markets?

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

Since 1900, the relative share of "wages & salaries, plus proprietors' income" in the total income earned by Americans in a typical year has been about

The real rate of interest is the interest rate

Refer to the table representing Kara's bank account. If the $5,000 was deposited into her account at the beginning of year 1, the value for cell A is

The price paid for the use of money is called

Suppose you borrow $1,000 for a year and the lender discounts $100 of interest at the time the loan is made (giving the borrower only $900). The interest rate on this loan is about

Refer to the table, in which the values for columns (2)through (5)are in acres. If the relevant columns are (1), (2), and (4), land rent will be

Why is money not an economic resource? If it is not productive, then why do businesses want to obtain or borrow it?

What is meant by the term compound interest?

The equilibrium interest rate equates

If Congress were to pass a law exempting interest on saving from taxation, the

In the market for loanable funds,

Landowners will not receive any rent so long as

The demand side, not supply, is the major factor determining how high land's rent will be.

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

The table shows the projected rate of return and number of investment projects that might be undertaken by a small firm. Each project requires an investment of $1,000. If the interest rate increases from 5 percent to 15 percent, the amount of loanable funds demanded by this firm

Pure, or economic, profit is

The marginal revenue product (MRP)of land declines as more land is brought into use. As a result, the