Question 1

"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 2

The largest single share of all income earned by Americans consists of

Accepted Answer

A) wages and salaries. 
B) interest. 
C) rents. 
D) corporate profits. 
A) wages and salaries. 
B) interest. 
C) rents. 
D) corporate profits.

Question 3

A given future value of money would have a smaller present value if

Accepted Answer

A) the interest rate used in discounting is higher. 
B) the length of time over which it is "discounted" is shorter. 
C) the interest rate is zero. 
D) there is no compounding of interest. 
A) the interest rate used in discounting is higher. 
B) the length of time over which it is "discounted" is shorter. 
C) the interest rate is zero. 
D) there is no compounding of interest.

Question 4

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

The supply curve for loanable funds is upward-sloping because

Accepted Answer

A) lenders are more willing to lend at lower, rather than higher, interest rates. 
B) lenders are more willing to lend at higher, rather than lower, interest rates. 
C) borrowers are more willing to borrow at lower, rather than higher, interest rates. 
D) borrowers are more willing to borrow at higher, rather than lower, interest rates. 
A) lenders are more willing to lend at lower, rather than higher, interest rates. 
B) lenders are more willing to lend at higher, rather than lower, interest rates. 
C) borrowers are more willing to borrow at lower, rather than higher, interest rates. 
D) borrowers are more willing to borrow at higher, rather than lower, interest rates.

Question 6

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 7

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 8

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 9

The rent paid for the pasture land used to graze cattle would increase if

Accepted Answer

A) the productivity of the land increased. 
B) people decided to consume more beef. 
C) oil deposits were discovered on the land. 
D) any of these occurred. 
A) the productivity of the land increased. 
B) people decided to consume more beef. 
C) oil deposits were discovered on the land. 
D) any of these occurred.

Question 10

The economist who advocated a single tax on land was

Accepted Answer

A) Adam Smith. 
B) John Maynard Keynes. 
C) Henry George. 
D) Milton Friedman. 
A) Adam Smith. 
B) John Maynard Keynes. 
C) Henry George. 
D) Milton Friedman.

Question 11

Normal profit is considered an economic cost.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the graph of the supply and demand for loanable funds. Assume that the government sets a 10 percent limit on the interest rate that banks can charge to customers for credit card loans. In this case, the quantity of loanable funds

Accepted Answer

A) demanded will exceed the quantity supplied by $150 billion. 
B) demanded will exceed the quantity supplied by $100 billion. 
C) demanded will exceed the quantity supplied by $50 billion. 
D) supplied will exceed the quantity demanded by $50 billion. 
A) demanded will exceed the quantity supplied by $150 billion. 
B) demanded will exceed the quantity supplied by $100 billion. 
C) demanded will exceed the quantity supplied by $50 billion. 
D) supplied will exceed the quantity demanded by $50 billion.

Question 13

The value today of a specific sum of money to be received in the future is referred to as

Accepted Answer

A) the future value of that sum of money. 
B) the present value of that sum of money. 
C) compound interest. 
D) the time-value of money. 
A) the future value of that sum of money. 
B) the present value of that sum of money. 
C) compound interest. 
D) the time-value of money.

Question 14

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 15

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 B

Accepted Answer

A) cannot be determined. 
B) $2,420.00. 
C) $2,220.00. 
D) $2,620.00. 
A) cannot be determined. 
B) $2,420.00. 
C) $2,220.00. 
D) $2,620.00.

Question 16

Defined narrowly as wages and salaries, labor's share of the national income is about

Accepted Answer

A) 71 percent. 
B) 53 percent. 
C) 42 percent. 
D) 89 percent. 
A) 71 percent. 
B) 53 percent. 
C) 42 percent. 
D) 89 percent.

Question 17

The table gives investment-demand in an economy. An increase in the interest rate from 15 percent to 19 percent would

Accepted Answer

A) increase investment by $90 billion. 
B) decrease investment by $90 billion. 
C) decrease investment by $110 billion. 
D) decrease investment by $140 billion. 
A) increase investment by $90 billion. 
B) decrease investment by $90 billion. 
C) decrease investment by $110 billion. 
D) decrease investment by $140 billion.

Question 18

Which of the following does not explain differences in rent for different parcels of land?

Accepted Answer

A) productivity differences 
B) demand differences 
C) supply-elasticity differences 
D) marginal-revenue-product differences 
A) productivity differences 
B) demand differences 
C) supply-elasticity differences 
D) marginal-revenue-product differences

Question 19

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. 
A) vertical. 
B) horizontal. 
C) upward sloping to the right. 
D) downward sloping to the right.

Question 20

It is most likely that a firm would borrow funds to expand its capital facilities when the

Accepted Answer

A) pure rate of interest is greater than the real rate of interest. 
B) expected rate of return is greater than the interest rate. 
C) demand for money is greater than the supply of money. 
D) real rate of interest is greater than the nominal rate of interest. 
A) pure rate of interest is greater than the real rate of interest. 
B) expected rate of return is greater than the interest rate. 
C) demand for money is greater than the supply of money. 
D) real rate of interest is greater than the nominal rate of interest.

Exam 18: Rent, Interest, and Profit

"Proprietor's income" refers to income received by

The largest single share of all income earned by Americans consists of

A given future value of money would have a smaller present value if

Entrepreneurs' focus on profit encourages efficiency

The supply curve for loanable funds is upward-sloping because

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

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.

The supply curve of loanable funds is upsloping because

The rent paid for the pasture land used to graze cattle would increase if

The economist who advocated a single tax on land was

Normal profit is considered an economic cost.

Refer to the graph of the supply and demand for loanable funds. Assume that the government sets a 10 percent limit on the interest rate that banks can charge to customers for credit card loans. In this case, the quantity of loanable funds

The value today of a specific sum of money to be received in the future is referred to as

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

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 B

Defined narrowly as wages and salaries, labor's share of the national income is about

The table gives investment-demand in an economy. An increase in the interest rate from 15 percent to 19 percent would

Which of the following does not explain differences in rent for different parcels of land?

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

It is most likely that a firm would borrow funds to expand its capital facilities when the

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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