Question 1

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 2

"Present value" refers to the:

Accepted Answer

A)  value today of a specific amount of money to be received in the future. 
B)  current value of money held in a bank account. 
C)  amount to which some current amount of money will grow over time. 
D)  interest rate specified when a loan contract is signed. 
A)  value today of a specific amount of money to be received in the future. 
B)  current value of money held in a bank account. 
C)  amount to which some current amount of money will grow over time. 
D)  interest rate specified when a loan contract is signed.

Question 3

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 4

The free-land era of U.S.history reflected a situation in which the quantity of land available at a zero price exceeded the quantity of land demanded.

Accepted Answer

A) True 
 B)False

Question 5

The interest rate is the price paid for the use of money.

Accepted Answer

A) True 
 B)False

Question 6

Broadly defined,labor's share of national income has been remarkably stable since 1900.

Accepted Answer

A) True 
 B)False

Question 7

(Consider This)The story about economist Irving Fisher's conversation with his masseuse illustrates that:

Accepted Answer

A)  other things equal,interest rates are higher on smaller loans than on larger loans. 
B)  interest is a payment required for someone to give up the present use of their money. 
C)  other things equal,longer-term loans have lower interest rates than shorter-term loans. 
D)  real interest rates differ from nominal interest rates. 
A)  other things equal,interest rates are higher on smaller loans than on larger loans. 
B)  interest is a payment required for someone to give up the present use of their money. 
C)  other things equal,longer-term loans have lower interest rates than shorter-term loans. 
D)  real interest rates differ from nominal interest rates.

Question 8

The total supply of land is:

Accepted Answer

A)  upsloping. 
B)  perfectly elastic. 
C)  perfectly inelastic. 
D)  greater in the short run than in the long run. 
A)  upsloping. 
B)  perfectly elastic. 
C)  perfectly inelastic. 
D)  greater in the short run than in the long run.

Question 9

The fact that people prefer present consumption to future consumption results in:

Accepted Answer

A)  an upsloping supply of loanable funds curve. 
B)  a downsloping demand for loanable funds curve. 
C)  a downsloping supply of loanable funds curve. 
D)  an upsloping demand for loanable funds curve. 
A)  an upsloping supply of loanable funds curve. 
B)  a downsloping demand for loanable funds curve. 
C)  a downsloping supply of loanable funds curve. 
D)  an upsloping demand for loanable funds curve.

Question 10

A major purpose of usury laws is to make more funds available to low-income borrowers.Economic analysis suggests that usury laws:

Accepted Answer

A)  are effective in achieving this goal. 
B)  allocate available funds to high-income borrowers. 
C)  have no impact on the allocation of funds between high-income and low-income people. 
D)  help low-income people only when the legal interest rate is above the market rate. 
A)  are effective in achieving this goal. 
B)  allocate available funds to high-income borrowers. 
C)  have no impact on the allocation of funds between high-income and low-income people. 
D)  help low-income people only when the legal interest rate is above the market rate.

Question 11

The incentive function of prices:

Accepted Answer

A)  indicates that price increases bring forth more of that resource. 
B)  is the idea that competitive markets will always clear. 
C)  applies to all resources. 
D)  only applies to land. 
A)  indicates that price increases bring forth more of that resource. 
B)  is the idea that competitive markets will always clear. 
C)  applies to all resources. 
D)  only applies to land.

Question 12

Capitalist income (corporate profits,interest,and rent)has:

Accepted Answer

A)  declined sharply since 1900 because of the growing strength of labor unions. 
B)  remained approximately constant since 1900. 
C)  increased significantly because of rising rents. 
D)  fallen since 1900 because of the declining importance of corporations. 
A)  declined sharply since 1900 because of the growing strength of labor unions. 
B)  remained approximately constant since 1900. 
C)  increased significantly because of rising rents. 
D)  fallen since 1900 because of the declining importance of corporations.

Question 13

The marginal revenue product (MRP)of land declines as more land is brought into production because:

Accepted Answer

A)  land is a "free and nonreproducible gift of nature." 
B)  of diminishing returns. 
C)  land rent has no incentive function. 
D)  the supply of land is fixed. 
A)  land is a "free and nonreproducible gift of nature." 
B)  of diminishing returns. 
C)  land rent has no incentive function. 
D)  the supply of land is fixed.

Question 14

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 15

The equilibrium interest rate equates:

Accepted Answer

A)  nominal and real interest rates. 
B)  the quantities demanded and supplied of loanable funds. 
C)  consumption and saving. 
D)  taxes and government spending. 
A)  nominal and real interest rates. 
B)  the quantities demanded and supplied of loanable funds. 
C)  consumption and saving. 
D)  taxes and government spending.

Question 16

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 17

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 18

Effective usury laws:

Accepted Answer

A)  subsidize lenders. 
B)  penalize those who borrow at the below-market interest rate. 
C)  improve efficiency in investing. 
D)  keep some low-income people from obtaining credit and loans. 
A)  subsidize lenders. 
B)  penalize those who borrow at the below-market interest rate. 
C)  improve efficiency in investing. 
D)  keep some low-income people from obtaining credit and loans.

Question 19

Which of the following statements is correct?

Accepted Answer

A)  Economic profits can properly be regarded as the salaries received by the hired managers of corporations. 
B)  Economic rent is a price paid for productive land resources whose supply is perfectly inelastic. 
C)  Economic profits would be nonexistent in a dynamic,purely competitive economy. 
D)  Economic or pure profit is the minimum return that entrepreneurs must receive to continue in a particular line of production. 
A)  Economic profits can properly be regarded as the salaries received by the hired managers of corporations. 
B)  Economic rent is a price paid for productive land resources whose supply is perfectly inelastic. 
C)  Economic profits would be nonexistent in a dynamic,purely competitive economy. 
D)  Economic or pure profit is the minimum return that entrepreneurs must receive to continue in a particular line of production.

Question 20

Changes in the equilibrium interest rate will:

Accepted Answer

A)  affect both the size of the domestic output and the allocation of capital goods among industries. 
B)  affect the size of the domestic output,but not the allocation of capital goods among industries. 
C)  affect the allocation of capital goods among industries,but not the size of the domestic output. 
D)  have no perceptible effect on either the size of the domestic output or the allocation of capital goods among industries. 
A)  affect both the size of the domestic output and the allocation of capital goods among industries. 
B)  affect the size of the domestic output,but not the allocation of capital goods among industries. 
C)  affect the allocation of capital goods among industries,but not the size of the domestic output. 
D)  have no perceptible effect on either the size of the domestic output or the allocation of capital goods among industries.

Exam 17: Rent Interest and Profit

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

"Present value" refers to the:

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

The free-land era of U.S.history reflected a situation in which the quantity of land available at a zero price exceeded the quantity of land demanded.

The interest rate is the price paid for the use of money.

Broadly defined,labor's share of national income has been remarkably stable since 1900.

(Consider This)The story about economist Irving Fisher's conversation with his masseuse illustrates that:

The total supply of land is:

The fact that people prefer present consumption to future consumption results in:

A major purpose of usury laws is to make more funds available to low-income borrowers.Economic analysis suggests that usury laws:

The incentive function of prices:

Capitalist income (corporate profits,interest,and rent)has:

The marginal revenue product (MRP)of land declines as more land is brought into production because:

The supply curve of loanable funds is upsloping because:

The equilibrium interest rate equates:

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

Economic profit might result from:

Effective usury laws:

Which of the following statements is correct?

Changes in the equilibrium interest rate will:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters