Question 1

Other things equal, short-term loans usually have lower rates of interest than do long-term loans.

Accepted Answer

A) True 
 B)False

Question 2

Entrepreneurs normally do all of the following except

Accepted Answer

A)  taking the initiative in combining other resources to produce goods or services.
B)  making the basic, nonroutine policy decisions for their organization.
C)  bearing the risks involved in introducing new products or production innovations.
D)  getting hired as a top executive in established corporations.E) A) and D)
F) A) and C)

Question 3

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. The number of investment projects this firm would undertake will decrease from 4 to 2 if the interest rate in the loanable funds market

Accepted Answer

A)  increases from 10 percent to 20 percent.
B)  decreases from 20 percent to 10 percent.
C)  decreases from 15 percent to 10 percent.
D)  increases from 15 percent to 20 percent.E) C) and D)
F) B) and D)

Question 4

In Progress and Poverty (1879) , Henry George argued for

Accepted Answer

A)  a progressive income tax.
B)  a heavy tax on land-rent income.
C)  a flat tax.
D)  a subsidy for land.E) All of the above
F) A) and C)

Question 5

If the inflation rate is 10 percent, what is a bank's real rate of return on a loan of $100 at 10 percent interest?

Accepted Answer

A)  $100
B)  $10
C)  10 percent
D)  0 percentE) B) and D)
F) B) and C)

Question 6

Which of the following is correct?

Accepted Answer

A)  Money is a resource, but real capital is not.
B)  Real capital is a resource, but money is not.
C)  Neither money nor real capital is a resource.
D)  Both money and real capital are resources.E) A) and C)
F) All of the above

Question 7

If the interest rate is 5 percent, what is the present value of $10,000 received three years from now?

Accepted Answer

A)  $8,638
B)  $9,000
C)  $11,600
D)  $11,000E) B) and D)
F) All of the above

Question 8

Refer to the demand schedule and possible supply schedules, A-D. There would be no incentive function performed by price in which of the given resource supply schedules?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) All of the above
F) C) and D)

Question 9

Economists would not consider which one of the following to be a productive economic resource?

Accepted Answer

A)  land
B)  capital goods
C)  money
D)  entrepreneurshipE) None of the above
F) A) and C)

Question 10

For all practical purposes, the supply of land is

Accepted Answer

A)  almost perfectly inelastic.
B)  negatively sloped.
C)  relatively elastic.
D)  perfectly elastic.E) A) and D)
F) A) and C)

Question 11

One effect of a usury law is that it will

Accepted Answer

A)  benefit lenders.
B)  penalize borrowers.
C)  increase the efficiency of investment.
D)  subsidize borrowers with high incomes.E) All of the above
F) A) and B)

Question 12

Refer to the table representing Kara's bank account. If the $3,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell D

Accepted Answer

A)  cannot be determined.
B)  is $472.88.
C)  is $165.38.
D)  is $307.50.E) A) and B)
F) B) and C)

Question 13

Some countries have negative nominal interest rates. Which of the following statements about this situation is not true?

Accepted Answer

A)  A saver or lender will get back less than the amount she invested.
B)  This is mostly a result of deliberate central bank policies.
C)  Consumers are expected to save more and consume less.
D)  Consumers are expected to borrow more and spend more.E) A) and D)
F) A) and B)

Question 14

For a given future value and interest rate, the discounted present value will become larger as the time period gets longer.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  $100 per acre.
B)  $300 per acre.
C)  $200 per acre.
D)  $400 per acre.E) All of the above
F) C) and D)

Question 16

Suppose that the available quantity of a certain type of farmland is 400,000 acres, and the demand for this land is given in the table. How much of the farmland will be rented?

Accepted Answer

A)  200,000 acres
B)  300,000 acres
C)  400,000 acres
D)  500,000 acresE) A) and B)
F) B) and D)

Question 17

Currently, capitalist income, that is, corporate profits, interest, and rent, accounts for about what percentage of the income paid to American resource suppliers?

Accepted Answer

A)  10 percent
B)  20 percent
C)  50 percent
D)  80 percentE) C) and D)
F) B) and D)

Question 18

Refer to the diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures (a) , (b) , and (c) . Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures, we

Accepted Answer

A)  the land shown in both Figures (a) and (b) is a "free good."
B)  the land shown in Figure (a) only is a "free good."
C)  the land shown in all three figures is a "free good."
D)  land is not a "free good" in any of the three figures.E) A) and D)
F) A) and B)

Question 19

Economic profits are not payments received for

Accepted Answer

A)  taking uninsurable risks in a firm.
B)  making products or production innovations.
C)  starting up a business.
D)  working for someone else.E) A) and D)
F) A) and C)

Question 20

Economists who have studied the composition of "proprietor's income" have found that this income item is made up of

Accepted Answer

A)  wages and profits, mostly wages.
B)  interest and profits, mostly profits.
C)  rent and interest, mostly interest.
D)  wages and interest, mostly wages.E) B) and D)
F) A) and B)

Exam 18: Rent, Interest, and Profit

Other things equal, short-term loans usually have lower rates of interest than do long-term loans.

Correct Answer
verified

Economists who have studied the composition of "proprietor's income" have found that this income item is made up of

Correct Answer
verified

Some countries have negative nominal interest rates. Which of the following statements about this situation is not true?

Correct Answer
verified

If the inflation rate is 10 percent, what is a bank's real rate of return on a loan of $100 at 10 percent interest?

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

If the interest rate is 5 percent, what is the present value of $10,000 received three years from now?

Correct Answer
verified

Suppose that the available quantity of a certain type of farmland is 400,000 acres, and the demand for this land is given in the table. How much of the farmland will be rented?

Correct Answer
verified

Refer to the diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures (a) , (b) , and (c) . Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures, we

Correct Answer
verified

In Progress and Poverty (1879) , Henry George argued for

Correct Answer
verified

Entrepreneurs normally do all of the following except

Correct Answer
verified

For all practical purposes, the supply of land is

Correct Answer
verified

One effect of a usury law is that it will

Correct Answer
verified

Refer to the table representing Kara's bank account. If the $3,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell D

Correct Answer
verified

Currently, capitalist income, that is, corporate profits, interest, and rent, accounts for about what percentage of the income paid to American resource suppliers?

Correct Answer
verified

Refer to the demand schedule and possible supply schedules, A-D. There would be no incentive function performed by price in which of the given resource supply schedules?

Correct Answer
verified

Economic profits are not payments received for

Correct Answer
verified

Economists would not consider which one of the following to be a productive economic resource?

Correct Answer
verified

For a given future value and interest rate, the discounted present value will become larger as the time period gets longer.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 18: Rent, Interest, and Profit

Other things equal, short-term loans usually have lower rates of interest than do long-term loans.

Correct AnswerverifiedShow Answer

Economists who have studied the composition of "proprietor's income" have found that this income item is made up of

Correct AnswerverifiedShow Answer

Some countries have negative nominal interest rates. Which of the following statements about this situation is not true?

Correct AnswerverifiedShow Answer

If the inflation rate is 10 percent, what is a bank's real rate of return on a loan of $100 at 10 percent interest?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

If the interest rate is 5 percent, what is the present value of $10,000 received three years from now?

Correct AnswerverifiedShow Answer

Suppose that the available quantity of a certain type of farmland is 400,000 acres, and the demand for this land is given in the table. How much of the farmland will be rented?

Correct AnswerverifiedShow Answer

Refer to the diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures (a) , (b) , and (c) . Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures, we

Correct AnswerverifiedShow Answer

In Progress and Poverty (1879) , Henry George argued for

Correct AnswerverifiedShow Answer

Entrepreneurs normally do all of the following except

Correct AnswerverifiedShow Answer

For all practical purposes, the supply of land is

Correct AnswerverifiedShow Answer

One effect of a usury law is that it will

Correct AnswerverifiedShow Answer

Refer to the table representing Kara's bank account. If the $3,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell D

Correct AnswerverifiedShow Answer

Currently, capitalist income, that is, corporate profits, interest, and rent, accounts for about what percentage of the income paid to American resource suppliers?

Correct AnswerverifiedShow Answer

Refer to the demand schedule and possible supply schedules, A-D. There would be no incentive function performed by price in which of the given resource supply schedules?

Correct AnswerverifiedShow Answer

Economic profits are not payments received for

Correct AnswerverifiedShow Answer

Economists would not consider which one of the following to be a productive economic resource?

Correct AnswerverifiedShow Answer

For a given future value and interest rate, the discounted present value will become larger as the time period gets longer.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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