MBF_GE_Micro_TBII_Ch17
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MBF_GE_Micro_TBII_Ch17

Course Number: ECON 302, Spring 2013

College/University: University of Sharjah

Word Count: 7803

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File: Chapter 17 Rent, Interest, and Profit Multiple Choice [QUESTION] 1. If a factor of production has a fixed total supply, then payments to that factor constitute: A) Wages B) Economic rent C) Normal profits D) Interest payments Answer: B Topic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 2. Which of the following resources is a free and...

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Chapter File: 17 Rent, Interest, and Profit Multiple Choice [QUESTION] 1. If a factor of production has a fixed total supply, then payments to that factor constitute: A) Wages B) Economic rent C) Normal profits D) Interest payments Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 2. Which of the following resources is a free and non-reproducible gift of nature? A) Labor B) Entrepreneurship C) Capital D) Land Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 3. Pure economic rent is the price of a resource with a perfectly: A) Elastic demand schedule B) Elastic supply schedule C) Inelastic supply schedule D) Inelastic demand schedule Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 4. Which of the following factors does not cause changes in land rent? A) Demand for land B) Supply of land C) Prices of the products produced from the land D) Prices of other resources employed along with land Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic Reference: 17-5 Use the following to answer question 5: [QUESTION] 5. What line in the above graph would best represent the supply curve for land? A) 1 B) 2 C) 3 D) 4 Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-5 Reference: 17-6 Use the following to answer questions 6-8: Use the following demand schedule and possible supply schedules, A-D, to answer the next question(s). [QUESTION] 6. Refer to the above schedules. There would be no incentive function performed by price in which of the given resource supply schedules? A) A B) B C) C D) D Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-6 [QUESTION] 7. Refer to the above schedules. Suppose that price influences the availability of the economic resource, and the equilibrium price is $2. Which resource supply schedule would apply in this case? A) A B) B C) C D) D Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-6 [QUESTION] 8. Refer to the above schedules. Suppose that the supply of a resource is given by the schedule that exhibits a zero price elasticity. If demand for the resource increases from the original demand schedule by 20 units at each price, then the equilibrium economic rent would be: A) $4 B) $3 C) $2 D) $1 Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-6 [QUESTION] 9. Which of the following does not explain differences in rent for different parcels of land? A) Productivity differences B) Demand differences C) Supply-elasticity differences D) Marginal-revenue-product differences Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 10. If the payment to an input is a pure economic rent, then reducing that payment will: A) Not influence the availability of the input B) Increase the quantity supplied of the input C) Decrease the quantity supplied of the input D) Decrease the demand for the input Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 11. The supply curve for a productive resource wherein price provides an incentive function is: A) Vertical B) Horizontal C) Upsloping to the right D) Downsloping to the right Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 12. The aggregate economic rent received by a productive resource will decrease, ceteris paribus, whenever the: A) Demand for the resource increases B) Price of the resource decreases C) Demand for the resource decreases D) Supply curve shifts to the right Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 13. Which of the following resource payments is considered by economists as surplus payments? A) Wages for labor B) Rent for land C) Interest for capital D) Profits for entrepreneurship Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 14. Which statement is correct? A) Rent performs an incentive function, but not a rationing function B) The transactions demand for money is highly sensitive to changes in the rate of interest C) Economic profits would tend to expand in a purely competitive, static economy D) Demand is the "active," and supply the "passive," determinant of land rent Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 15. David Ricardo, a nineteenth-century economist, wrote, "The price of corn is not high because a rent is paid, but a rent is paid because the price of the corn is high." Which of the following correctly explains Ricardo's assertion? A) The high rents landowners charge tenant farmers cause high corn prices B) If landowners weren't so greedy and lowered the rents they charge tenant farmers, the price of corn would fall C) If the price of corn rises because of increased demand for corn, land rents will rise to absorb most of the extra revenue received by tenant corn farmers D) If the price of corn rises, all other things being equal, increases in rent will cause some tenant farmers to stop growing corn Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 2 Understand AACSB: Analytic [QUESTION] 16. The reason why socialists favor the nationalization of land is that: A) Land is a scarce resource B) The rent received by landowners does not represent anything they produced C) There is a fixed total supply of land D) Land is not a productive resource Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 2 Understand AACSB: Reflective Thinking [QUESTION] 17. In a market system, private ownership of land leads to the following results, except: A) Payments for land may be used by the government to further the wellbeing of the nation B) Land rent would reflect the opportunity cost of land C) Land would be allocated to its best possible uses D) It would aid economic growth and development because land rents would reflect changes in tastes and technologies Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Reflective Thinking [QUESTION] 18. The prices paid to a productive resource usually perform an incentive function except with what resource? A) Land B) Labor C) Capital D) Entrepreneurial ability Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic Land taxation [QUESTION] 19. In Progress and Poverty, Henry George argued for: A) A progressive income tax B) A heavy tax on land-rent income C) A flat tax D) A subsidy for land Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 20. What economist is associated with the "single-tax" movement? A) Adam Smith B) Karl Marx C) Frank Knight D) Henry George Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 21. Henry George and the single-tax movement believed in all of the following, except: A) Rental income is unfair because landlords do not really earn it from any productive effort B) Rental income should be taxed heavily, and should be the primary source of revenues for the government C) Taxing rental income would adversely affect allocative efficiency because the tax would change how landlords use their land D) The single-tax on rent would not adversely impact the societys productive efficiency Register to View Answer Topic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 22. Henry George claimed that land-rent taxes would not impair economic efficiency because: A) They do not result in a change in the amount of land available B) Landowners are, as a group, financially secure and able to pay the taxes C) The supply of land is infinitely elastic D) Rents represent a small part of income paid to American resource suppliers, so taxes on wages and salaries are more disruptive Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 23. Major criticism of the single-tax movement include the following, except: A) It is impractical because most income payments are a mixture of interest, rent, wages, and profits B) It is inefficient because the land-rent tax will distort the use of land resources, thereby preventing allocative efficiency C) It is unfair because there are other unearned incomes besides land rent D) It is inadequate because current levels of government spending are too big to be sufficiently funded by rent tax alone Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic Reference: 17-24 Use the following to answer questions 24-26: Suppose that the quantity of a certain type of farmland available is 400,000 acres, and the demand for this land is given in the table below. [QUESTION] 24. Refer to the above table. What will be the equilibrium economic rent per acre? A) $100 B) $200 C) $300 D) $400 Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-24 [QUESTION] 25. Refer to the above table. How much of the farmland will be rented? A) 200,000 acres B) 300,000 acres C) 400,000 acres D) 500,000 acres Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-24 [QUESTION] 26. Refer to the above table. If landowners were taxed at a rate of $150 per acre for their land, what would be the economic rent on this land after taxes and how many acres would be rented? A) $50 and 400,000 acres B) $400 and 50,000 acres C) $150 and 400,000 acres D) $250 and 50,000 acres Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-24 [QUESTION] 27. To an individual firm or landowner, land rents do not appear to be a surplus because: A) Land is a productive resource B) A given parcel of land has alternative uses, and rent represents a real cost of production C) They do not understand that the supply of land, in total, is perfectly inelastic D) Landowners are, politically and economically, a powerful and well organized special interest group Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic Interest [QUESTION] 28. The price paid for the use of money is: A) Commission B) Royalty C) Interest D) Rent Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 29. If you pay $2,640 annually on a $22,000 loan A and pay $1,800 on a $12,000 loan B, then the interest rate is: A) 12 percent on loan A and 18 percent on loan B B) 10 percent on loan A and 15 percent on loan B C) 12 percent on loan A and 15 percent on loan B D) 15 percent on loan A and 12 percent on loan B Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 30. Which would be considered to be an economic resource? A) Rent B) Money C) Interest D) Capital Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 31. Economists would not consider which one of the following to be a productive economic resource? A) Land B) Capital goods C) Money D) Entrepreneurship Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 32. Most borrowers value money for: A) Its own sake B) What it can buy C) What it can produce D) What they have to pay for it Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 2 Understand AACSB: Reflective Thinking [QUESTION] 33. Which of the following interest rates is usually the highest? A) 30-year mortgage rate B) 20-year Treasury bond rate C) Consumer credit-card rate D) Prime rate of banks Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 34. Interest rates of various loans vary over a wide range due to differences in: A) Risk characteristics B) Maturity of the loan C) Loan size D) Lender characteristics Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Reflective Thinking [QUESTION] 35. Other things equal, the interest rate on a loan will be smaller: A) The greater the risk involved B) The smaller the amount of the loan C) The longer the length of the loan D) If the loan interest is exempt from taxation Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 36. Other things equal, the interest rate on a loan will be larger: A) The less the risk involved B) The larger the amount of the loan C) The longer the length of the loan D) If loan interest is exempt from taxation Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 37. Other things equal, the interest rate on a loan will be larger: A) The higher the risk involved B) The larger the amount of the loan C) The shorter the length of the loan D) If loan interest is exempt from taxation Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 38. A bank charges one borrower (A) 8 percent interest per year and another borrower (B) 10 percent interest per year. Which of the following is a reason for the higher interest rate for B? A) A is borrowing the money for a longer period than B B) A is borrowing a larger amount than B C) B is using the money for a less risky project than A D) B has a better credit rating than A Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 39. The pure rate of interest in economic models is best approximated by the: A) 1-month Treasury bills B) Prime interest rate C) Federal funds rate D) 20-year Treasury bond rate Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic Loanable funds theory of interest [QUESTION] 40. The demand curve for loanable funds represents the behavior of: A) Lenders B) Savers C) Borrowers D) Bankers Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 2 Understand AACSB: Knowledge [QUESTION] 41. The supply curve for loanable funds is upward-sloping because: 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 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 2 Understand AACSB: Knowledge Reference: 17-42 Use the following to answer questions 42-44: [QUESTION] 42. Refer to the market for loanable funds, as shown in the above graph. A decline in the interest rate is likely to: A) Lower capital investment B) Increase the quantity of loanable funds demanded C) Come about when there is a shortage of loanable funds D) Result from an increase in the desire of firms to borrow funds Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-42 [QUESTION] 43. Refer to the market for loanable funds, as shown in the above graph. Suppose investors who borrow money in the loanable funds market become quite nervous and pessimistic about the economy in general, and expected returns on investments in particular. We would expect to see a(n): A) Lower equilibrium interest rate B) Rightward shift of the supply curve C) Rightward shift of the demand curve D) Increase in the equilibrium quantity of loanable funds Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-42 [QUESTION] 44. Refer to the market for loanable funds, as shown in the above graph. Suppose the market for loanable funds is originally in equilibrium at interest rate i0 and quantity Q0. In the next period, the equilibrium interest rate increases to i1 and quantity decreases to Q1. Which of the following could be the cause of this shift? A) Households decide to save less B) Households decide to save more C) Investors become less optimistic D) Investors become more optimistic Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-42 Reference: 17-45 Use the following to answer questions 45-49: The schedule shows various interest rates, the associated quantity demanded of loanable funds, and the quantity supplied of loanable funds in billions of dollars at those interest rates. [QUESTION] 45. Refer to the above table and information. What is the equilibrium interest rate? A) 4 percent B) 6 percent C) 8 percent D) 10 percent Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-45 [QUESTION] 46. Refer to the above table and information. At an interest rate of 8 percent, there will be: A) An excess supply of loanable funds of 440 billion B) An excess supply of loanable funds of 140 billion C) An excess demand for loanable funds of 140 billion D) An excess demand for loanable funds of 294 billion Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-45 [QUESTION] 47. Refer to the above table and information. At an interest rate of 4 percent, there will be: A) An excess supply of loanable funds of 140 billion B) An excess supply of loanable funds of 360 billion C) An excess demand for loanable funds of 140 billion D) An excess demand for loanable funds of 500 billion Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-45 [QUESTION] 48. Refer to the above table and information. If technology improved and the demand for loanable funds increases by $140 billion at each interest rate, the new equilibrium interest rate will be: A) 2 percent B) 4 percent C) 8 percent D) 10 percent Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-45 [QUESTION] 49. Refer to the above table and information. If changes in tax laws make households save more by $140 billion at each interest rate, then the new equilibrium interest rate would be: A) 2 percent B) 4 percent C) 8 percent D) 10 percent Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-45 [QUESTION] 50. The supply of loanable funds is an upward-sloping curve because the: A) Higher the interest rate, the more households consume, and the more households save B) Higher the interest rate, the less households consume, and the more households save C) Lower the interest rate, the more households consume, and the more households save D) Lower the interest rate, the less households consume, and the more households save Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 51. Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10,000 for the year. The machine costs $8,000 and has a useful life of one year. The interest rate is 20 percent. This investment should: A) Be undertaken because the rate of return is 2 percent greater than the interest rate B) Be undertaken because the rate of return is 5 percent greater than the interest rate C) Be undertaken because the rate of return is 7 percent greater than the interest rate D) Not be undertaken because the rate of return is 7 percent less than the interest rate Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 52. Which will increase the supply of loanable funds? An increase in the: A) Rates of return on potential investments B) Productivity of business firms C) Demand for business products D) Savings of households Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 53. Which factor will increase the demand for loanable funds? A) A change in the tax law to exempt savings from taxation B) Expansion of social insurance to cover more fully the cost of retirement C) A general business recession that produces high rates of unemployment D) A technological advance that increases returns on investments Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 54. A decrease in the supply of loanable funds and an increase in the demand for loanable funds will: A) Increase the interest rate and the quantity of funds loaned B) Decrease the interest rate and the quantity of funds loaned C) Increase the interest rate, but the quantity of funds loaned may either increase or decrease D) Decrease the interest rate, but the quantity of funds loaned may either increase or decrease Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 55. There will be pressure on the interest rate for loanable funds to increase when: A) Supply increases B) Demand decreases C) Quantity supplied exceeds quantity demanded D) Quantity demanded exceeds the quantity supplied Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 56. An increase in the demand for loanable funds may be caused by a(n): A) Increase in the availability of loanable funds B) Increase in consumers' willingness to save C) Increase in business borrowing D) Decrease in the interest rate Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 57. If an economic expansion in the economy caused an increase in the demand for loanable funds, what would be the effect on the interest rate and the quantity of funds loaned in the credit market? A) Interest rates would increase and the quantity of funds loaned would decrease B) Interest rates would decrease and the quantity of funds loaned would increase C) Interest rates and the quantity of funds loaned would decrease D) Interest rates and the quantity of funds loaned would increase Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 58. Which would cause an increase in interest rates in credit markets? A) A decrease in business demand for credit B) An increase in the supply of consumer saving C) An increase in the supply of business saving D) An increase in consumer demand for credit Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 59. Suppose many businesses want to increase their stock of capital goods and decide to borrow funds to do it. Which would be the likely result of this event? A) Interest rates would increase B) Interest rates would decrease C) The equilibrium quantity of loanable funds would decrease D) The equilibrium quantity of loanable funds would remain unchanged Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 60. If a firm buys a new computer system that costs $12,000 a year it can reduce the firm's cost by $900 a year. The firm should borrow funds and purchase this machine if it can negotiate an annual interest rate on the loan between: A) 6 and 7 percent B) 8 and 9 percent C) 10 and 12 percent D) 13 and 14 percent Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 61. A firm wants to borrow funds to purchase a new piece of equipment that costs $20,000 and has a useful life of one year. The investment is expected to produce an additional $1,500 in total revenue. The firm will most likely make the investment if the interest rate is: A) 6 percent B) 8 percent C) 10 percent D) 12 percent Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Reference: 17-62 Use the following to answer questions 62-64: It shows the projected rate of return number and of investment projects which might be undertaken by a small firm. Each project requires an investment of $1,000. [QUESTION] 62. Refer to the above table and information. If the interest rate increases from 5 percent to 15 percent, the quantity demanded of loanable funds for this firm: A) Increases by $1,000 B) Increases by $3,000 C) Decreases by $2,000 D) Decreases by $3,000 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-62 [QUESTION] 63. Refer to the above table and information. If the interest rate increases from 10 percent to 25 percent, the quantity demanded of loanable funds for this firm: A) Increases by $1,000 B) Increases by $3,000 C) Decreases by $3,000 D) Decreases by $4,000 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-62 [QUESTION] 64. Refer to the above table and information. If the interest rate decreases from 25 percent to 20 percent, the quantity demanded of loanable funds for this firm: A) Increases by $1,000 B) Increases by $3,000 C) Decreases by $3,000 D) Decreases by $4,000 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-62 [QUESTION] 65. Profit-maximizing businesses will buy more new machinery only if: A) The interest rate increases B) Labor costs are low and expected to fall C) The expected rate of return is greater than the interest rate D) The present value of the new machinery is lower than its purchase price Register to View Answer Topic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 66. Which statement about interest rates is false? A) Interest rates typically reflect the risk involved in extending a loan B) Interest rates are affected by households' spending decisions C) The equilibrium interest rate is determined by the intersection of the supply and demand schedules for loanable funds D) The supply of loanable funds is independent of the rate of interest Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 67. Which factor will decrease the demand for loanable funds? A) A change in the tax law to exempt savings from taxation B) Expansion of social insurance to cover more fully the cost of retirement C) A general business recession that produces high rates of unemployment D) A technological advance that increases returns on investments Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 68. A decrease in saving that leads to an increase in the interest rate will: A) Decrease the amount of investment spending B) Only result in a surplus of loanable funds C) Shift the demand for loanable funds to the right, increasing net investment D) Shift the demand for loanable funds to the left, causing a decrease in investment Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 69. As interest rates decrease, the: A) Cost of current relative to future consumption increases B) Cost of current relative to future consumption decreases C) Cost of current consumption relative to future consumption remains the same D) Desire of many individuals to save increases Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 70. A firm considering whether to borrow money to purchase a capital good will compare the rate of interest for the loan with the: A) Opportunity cost of the capital good B) Rate of return on the investment C) Length of the investment D) Treasury bill rate Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 71. Which expression is used to calculate the future value of an amount of money? A) Present Value x (1+interest rate)time B) Present Value / (1+interest rate)time C) Present Value x (1+time)interest rate D) (1+interest rate)time / Present Value Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 72. Which expression is used to calculate the present value of an amount of money? A) Future Value x (1+interest rate)time B) Future Value / (1+interest rate)time C) Future Value x (1+time)interest rate D) (1+interest rate)time / Future Value Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 73. If the interest rate is 15%, what is the future of value of $10,000 two years from now? A) $13,225 B) $225 C) $13,000 D) $7,576 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 74. If the interest rate is 5%, what is the future value of $5,000 three years from now? A) $4,310 B) $5,500 C) $5,010 D) $5,788 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 75. If the interest rate is 10%, what is the present value of $25,000 received two years from now? A) $20,000 B) $20,661 C) $30,250 D) $30,000 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 76. If the interest rate is 5%, what is the present value of $10,000 received three years from now? A) $8,638 B) $9,000 C) $11,600 D) $11,000 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Reference: 17-77 Use the following to answer questions 77-79: The following table applies to a loan with interest rate of 5% per period: 77. Refer to the table. What value goes on the cell labeled W? A) $205 B) $105 C) $210 D) $2,205 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer to: 17-77 [QUESTION] 78. Refer to the table. What value goes on the cell labeled X? A) $2,200 B) $2,315.25 C) $2,210 D) $2,205 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Ana Application lytic Refer to: 17-77 [QUESTION] 79. Refer to the table. What value goes on the cell labeled Z? A) $2,200 B) $2,315.25 C) $2,210 D) $2,205 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer to: 17-77 [QUESTION] 80. Government monetary authorities manipulate the supply of money in the economy primarily to: A) Ensure high profits for commercial banks B) Provide sufficient currency to individuals and businesses to conduct their daily business C) Keep the dollar strong measured against the currencies of foreign nations D) Influence the interest rate and the levels of investment, output, and prices in the economy Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic Reference: 17-81 Use the following to answer questions 81-83: Answer the next question(s) using the following table with investment-demand in an economy. [QUESTION] 81. Refer to the above table. If the interest rate is 15 percent: A) $400 billion of investment will be undertaken B) $460 billion of investment will be undertaken C) $530 billion of investment will be undertaken D) $600 billion of investment will be undertaken Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-81 [QUESTION] 82. Refer to the above table. An increase in the interest rate from 15% to 19% percent would: A) Increase investment by $90 billion B) Decrease investment by $90 billion C) Decrease investment by $110 billion D) Decrease investment by $140 billion Register to View AnswerTopic: Interest Difficulty: 3 Hard Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-81 [QUESTION] 83. Refer to the above table. Assume that investment demand decreased by $100 billion in the investment-demand schedule. What expected rate of return and interest rate would create $430 billion of investment? A) 13 percent B) 15 percent C) 17 percent D) 19 percent Register to View Answer Topic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-81 [QUESTION] 84. It will be most likely that an industry would borrow funds to expand capital facilities when the: 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 Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic Nominal and real interest rates [QUESTION] 85. If the desired real rate of interest is 5 percent and the expected rate of inflation is 15 percent, what is the nominal rate of interest? A) 5 percent B) 10 percent C) 15 percent D) 20 percent Register to View AnswerTopic: Nominal and real interest rates Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 86. 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? A) $100 B) $10 C) 10 percent D) 0 percent Register to View Answer Topic: Nominal and real interest rates Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 87. If you pay $1,980 annually on an $18,000 loan and the rate of inflation is 3 percent, then the: A) Real rate of interest is 8 percent B) Nominal rate of interest is 8 percent C) Real rate of interest is 11 percent D) Nominal rate of interest is 14 percent Register to View AnswerTopic: Nominal and real interest rates Difficulty: 3 Hard Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 88. If you pay $10,625 annually on a $125,000 loan and the rate of inflation is 3 percent, then the: A) Real rate of interest is 4.5 percent B) Nominal rate of interest is 8.5 percent C) Real rate of interest is 6.5 percent D) Nominal rate of interest is 11.5 percent Register to View AnswerTopic: Nominal and real interest rates Difficulty: 3 Hard Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Usury laws [QUESTION] 89. A usury law is a law that sets the: A) Federal funds rate B) Maximum interest rate at which loans can be made C) Spread between the prime rate of interest and credit card rates D) Interest paid on 90-day Treasury bills and 30-year bonds of the U.S. government Register to View AnswerTopic: Usury laws Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 90. For a usury law to be effective, the interest rate must be: A) Determined by borrowing and lending B) Set at the market equilibrium interest rate C) Set above the market equilibrium interest rate D) Set below the market equilibrium interest rate Register to View AnswerTopic: Usury laws Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 91. One effect of a usury law is that it will: A) Benefit lenders B) Penalize borrowers C) Increase the efficiency of investment D) Subsidize borrowers with high incomes Register to View AnswerTopic: Usury laws Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic Reference: 17-92 Use the following to answer questions 92-94: Answer the next question(s) using the following table. Figures are in billions of dollars. [QUESTION] 92. Refer to the above table. The equilibrium interest rate and quantity of loanable funds demanded and supplied in this market will be: A) 8 percent and $140 billion B) 10 percent and $140 billion C) 12 percent and $180 billion D) 14 percent and $240 billion Register to View AnswerTopic: Usury laws Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-92 [QUESTION] 93. Refer to the above table. If the government passes a usury law that sets the interest rate 4% below the market equilibrium, the interest rate will be: A) 6 percent B) 8 percent C) 10 percent D) 12 percent Register to View AnswerTopic: Usury laws Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-92 [QUESTION] 94. Refer to the above table. A usury law that sets the interest rate 2% below the market rate of interest will result in a shortage of funds of: A) $120 billion B) $80 billion C) $40 billion D) $20 billion Register to View AnswerTopic: Usury laws Difficulty: 3 Hard Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-92 Reference: 17-95 Use the following to answer questions 95-96: [QUESTION] 95. Refer to the above graph of the supply and demand for loanable funds. Assume that the government sets a 10% limit on the interest rate that banks can charge to customers for credit card loans. In this case, the quantity of loanable funds: 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 Register to View AnswerTopic: Usury laws Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-95 [QUESTION] 96. Refer to the above graph of the supply and demand for loanable funds. A limit of 10% on the interest rate that banks can charge for loans will: A) Have an equal effect on borrowers and lenders B) Save borrowers 5 percent and cost lenders 5 percent on the amount loaned C) Give lenders a premium of 5 percent and cost borrowers 5 percent on the amount loaned D) Save borrowers 10 percent and cost lenders 10 percent on the amount loaned Register to View AnswerTopic: Usury laws Difficulty: 3 Hard Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-95 Reference: 17-97 Use the following to answer questions 97-99: Answer the next question(s) using the following table. Figures are in billions of dollars. [QUESTION] 97. Refer to the above table. The equilibrium interest rate and quantity of loanable funds demanded and supplied in this market will be: A) 8 percent and $14 billion B) 10 percent and $18 billion C) 12 percent and $22 billion D) 14 percent and $26 billion Register to View AnswerTopic: Usury laws Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-97 [QUESTION] 98. Refer to the above table. If the government passes a usury law that sets the interest rate 6 percent below the market equilibrium, the interest rate will be: A) 6 percent B) 8 percent C) 10 percent D) 12 percent Register to View AnswerTopic: Usury laws Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic Refer To: 17-97 [QUESTION] 99. Refer to the above table. A usury law that sets the interest rate 4 percent below the market rate of interest will result in a shortage of loanable funds of: A) $10 billion B) $14 billion C) $20 billion D) $30 billion Register to View AnswerTopic: Usury laws Difficulty: 3 Hard Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Application Refer To: 17-97 Profit [QUESTION] 100. Economists claim that a farmer who owns her land and provides all her own labor, and calculates her profits from the farm by subtracting explicit costs from total revenues, will always: A) Overstate her accounting profits B) Understate her accounting profits C) Overstate her economic profits D) Understate her economic profits Register to View AnswerTopic: Economic Profit Difficulty: 2 Medium Learning Objective: 17-04 Blooms: Level 2 Understand AACSB: Analytic [QUESTION] 101. Entrepreneurs normally do all of the following except: A) Take the initiative in combining other resources to produce goods or services B) Make the basic, nonroutine policy decisions for their organization C) Bear the risks involved in introducing new product or production innovations D) Get hired as a top executive in established corporations Register to View AnswerTopic: Economic Profit Difficulty: 3 Hard Learning Objective: 17-04 Blooms: Level 2 Understand AACSB: Analytic [QUESTION] 102. Economic profits are not payments received for: A) Taking uninsurable risks in a firm B) Making product or production innovations C) Starting up a business D) Working for someone else Register to View AnswerTopic: Economic Profit Difficulty: 3 Hard Learning Objective: 17-04 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 103. The minimum rate of return or payment necessary to keep an entrepreneur in some specific enterprise is referred to as: A) The pure rate of interest B) The real interest rate C) Economic profit D) Normal profit Register to View AnswerTopic: Economic Profit Difficulty: 1 Easy Learning Objective: 17-04 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 104. Economic profits: A) Are identical to accounting profits B) Must be earned by every firm which continues to produce in the long run C) Serve no useful economic purpose and should never occur in a competitive economy D) Serve in the short run as an incentive to guide production decisions, but indicate the existence of barriers to entry in the long run Register to View AnswerTopic: Economic Profit Difficulty: 2 Medium Learning Objective: 17-04 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 105. Which would usually not be an entrepreneurial function? A) Introducing a new product in a business B) Assuming uninsurable risks of a business C) Combining and directing resources in an uncertain business environment D) Directing the accounting department of a Fortune 500 corporation Register to View AnswerTopic: Economic Profit Difficulty: 2 Medium Learning Objective: 17-04 Blooms: Level 2 Understand AACSB: Reflective Thinking [QUESTION] 106. Entrepreneurs can generate economic profits by all of the following, except: A) Developing popular new products B) Reducing production costs below rivals costs C) Creating and maintaining monopoly power in its market D) Laying off workers in order to cut costs Register to View AnswerTopic: Economic Profit Difficulty: 1 Easy Learning Objective: 17-04 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 107. All of the following are insurable business risks, except: A) Changes in consumer tastes B) Changes in government policies C) Economic recession D) Accidents to employees Register to View AnswerTopic: Economic Profit Difficulty: 2 Medium Learning Objective: 17-04 Blooms: Level 3 Apply AACSB: Reflective Thinking [QUESTION] 108. All of the following statements about economic profits are correct, except that they: A) Act as a signal to producers who make decisions about how to allocate scarce resources B) Are influenced by the degree of monopoly power C) Represent a reward for risk taking D) Are an explicit cost of production Register to View AnswerTopic: Economic Profit Difficulty: 3 Hard Learning Objective: 17-04 Blooms: Level 1 Remember AACSB: Analytic Income shares [QUESTION] 109. Proprietors income refers to income received by: A) Corporate executives B) Owners of small unincorporated enterprises C) Workers hired by small businesses D) Interns in businesses Register to View AnswerTopic: Income Shares Difficulty: 1 Easy Learning Objective: 17-05 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 110. Since 1900, the relative share of income earned by Americans as "wages and salaries" in a typical year has been about: A) 20-30 percent B) 40-50 percent C) 70-80 percent D) 80-90 percent Register to View AnswerTopic: Income Shares Difficulty: 1 Easy Learning Objective: 17-05 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 111. The share oftotal income for capitalists in America (in the form of rent, interest, and profits) has been about: A) 20 percent B) 40 percent C) 50 percent D) 75 percent Register to View AnswerTopic: Income Shares Difficulty: 1 Easy Learning Objective: 17-05 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 112. Interest rates are the payments needed to entice individuals to: A) Accept insurable risk B) Accept uninsurable risk C) Sacrifice their present consumption D) Sacrifice their future consumption Register to View Answer Topic: Interest Rates Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 113. Economists who have studied the composition of proprietors income have found that this income item is made up of: A) Wages and profits, mostly wages B) Interest and profits, mostly profits C) Rent and interest, mostly interest D) Wages and interest, mostly wages Register to View AnswerTopic: Income Shares Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic True/False [QUESTION] 114. Economic rent is the payment to a resource which has a perfectly inelastic demand curve. Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 115. Reducing the payment of economic rents to land will decrease the quantity of land supplied. Register to View AnswerTopic: Economic Rent Difficulty: 2 Medium Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 116. As viewed by society, economic rent is not a cost but rather a surplus payment. Register to View AnswerTopic: Economic Rent Difficulty: 3 Hard Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 117. The demand side, not supply, is the major factor determining how high lands rent will be. Register to View AnswerTopic: Economic Rent Difficulty: 1 Easy Learning Objective: 17-01 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 118. The demand for loanable funds represents the lenders or savers. Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 119. The quantity of loanable funds supplied is inversely related to the interest rate. Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 120. An increase in the demand for loanable funds would tend to lower the interest rate. Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 121. If people become thriftier and save more, the loanable funds theory predicts that the equilibrium interest rate would decrease. Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 122. If the expected rates of return on investments increase, the loanable funds theory predicts that the equilibrium interest rate would decrease. Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 123. An increase in the rates of return on investments would most likely increase the supply of loanable funds. Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-02 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 124. Other things equal, short-term loans usually have lower rates of interest than do long-term loans. Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 125. For a given future value, the higher is the interest rate, the higher will be the present value. Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 126. In time-value of money calculations, discounting is the reverse of discounting. Register to View Answer Topic: Interest Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 127. For a given future value and interest rate, the discounted present value will become larger as the time period gets longer. Register to View AnswerTopic: Interest Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 128. A firm will undertake investments as long as the expected rate of return is less than the interest rate. Register to View AnswerTopic: Interest Difficulty: 1 Easy Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 129. 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. Register to View AnswerTopic: Nominal and real interest rates Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 3 Apply AACSB: Analytic [QUESTION] 130. If the nominal rate of interest is 8 percent and the inflation rate is 4 percent, the real rate of interest is 4 percent. Register to View AnswerTopic: Nominal and real interest rates Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 131. Usury laws will result in a surplus of loanable funds and nonmarket rationing in credit markets. Register to View AnswerTopic: Usury laws Difficulty: 2 Medium Learning Objective: 17-03 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 132. Normal profit is considered an economic cost. Register to View AnswerTopic: Economic Profit Difficulty: 2 Medium Learning Objective: 17-04 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 133. The payment for taking risks in owning and running a business is economic profit. Register to View AnswerTopic: Economic Profit Difficulty: 2 Medium Learning Objective: 17-04 Blooms: Level 1 Remember AACSB: Analytic [QUESTION] 134. Labor's share of income earned by Americans is smaller than the share of capital. Register to View AnswerTopic: Income Shares Difficulty: 2 Medium Learning Objective: 17-05 Blooms: Level 1 Remember AACSB: Analytic

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Washington - CSE - 143
14:10 The heart knoweth his own bitterness; and a stranger doth notintermeddle with his joy.14:11 The house of the wicked shall be overthrown: but the tabernacleof the upright shall flourish.14:12 There is a way which seemeth right unto a man
Assabet Valley Voc Hs - AP ENG - s
\/ n) \/ p forany integers m,n,p. This is called associativity of \/. State where you use this property.Hint: You may need to use the property that m \/ 0 = m for positive m. State whereyou use this property.Associative listsQ2 (35 points) This
Shanghai Jiao Tong University - ECE - 186
GWU - BADM - 4101
amily.Different people have different views on what is ethical and what is unethical, but I thinkmy mother’s action is definitely ethical. Ethics is the sense of care and responsibility. It is ourhuman nature that drives us to do things like hel
University of Sharjah - ECON - 302
File: Chapter 18 Natural Resource and Energy EconomicsMultiple Choice[QUESTION]1. The key demand-side factors that affect the depletion of finite natural resources are:A) Population and productivityB) Productivity and per capita consumptionC) Per ca
University of Sharjah - ECON - 302
File: Chapter 19 Public Finance: Expenditures and TaxesMultiple Choice[QUESTION]1. Public finance is the sub-discipline of economics that studies the various ways in which:A) The general public acquire financing for their purchasesB) Governments rais
University of Sharjah - ECON - 302
File: Chapter 20 Asymmetric Information, Voting, and Public ChoiceMultiple ChoiceInformation Failures[QUESTION]1. Asymmetric information in a market transaction occurs when there is unequal knowledgepossessed by the:A) Buyer and the governmentB) Se
University of Sharjah - ECON - 302
File: Chapter 21 Antitrust Policy and RegulationMultiple ChoiceThe Antitrust Laws[QUESTION]1. Laws and government actions designed to prevent monopoly and to promote competition arethe focus of:A) Social regulationB) Industrial regulationC) Antitr
University of Sharjah - ECON - 302
File: Chapter 22 Agriculture: Economics and PolicyMultiple ChoiceEconomics of Agriculture[QUESTION]1. Farm commodities are usually sold in:A) Monopolistically competitive or oligopolistic markets, while food-product markets are highlycompetitiveB)
University of Sharjah - ECON - 302
File: Chapter 23 Income Inequality, Poverty, and DiscriminationMultiple ChoiceFacts about Income Inequality[QUESTION]1. The average household income in the United States in 2008 was:A) $34,231B) $51,999C) $68,424D) $80,250Answer: CTopic: Facts a
University of Sharjah - ECON - 302
File: Chapter 24 Health CareMultiple ChoiceThe Health Care Industry[QUESTION]1. The health care industry encompasses the following sectors, except:A) Medical laboratoriesB) Nursing homesC) Nonprescription drugsD) Health clubsAnswer: DTopic: The
University of Sharjah - ECON - 302
File: Chapter 25 ImmigrationMultiple ChoiceNumber of Immigrants[QUESTION]1. Between 2000 and 2009, legal immigration averaged about:A) 500,000 per yearB) 1 million per yearC) 1.5 million per yearD) 2.5 million per yearAnswer: BTopic: Number of I
University of Sharjah - ECON - 302
File: Content Options for Instructors (COI1) The United States in the Global EconomyMultiple Choice[QUESTION]1. When a U.S. business builds a manufacturing plant in another country, this situation would bean example of a:A) Trade flowB) Labor flowC
University of Sharjah - ECON - 302
Test Bank 3for use withMicroeconomics: Global EditionNineteenth EditionbyCampbell R. McConnellUniversity of Nebraska-LincolnStanley L. BruePacific Lutheran UniversitySean M. FlynnScripps Collegewith special contribution byRandy GrantLinfield
University of Sharjah - ECON - 302
CHAPTER 1Limits, Alternatives, and ChoicesA. Short-Answer, Essays, and Problems1. What is a brief definition of economics? What are the conditions that give rise to this definition?2. What are the three interrelated features of the economic perspectiv
University of Sharjah - ECON - 302
CHAPTER 2The Market System and the Circular FlowA. Short-Answer, Essays, and Problems1. Explain the term laissez faire capitalism.2. Explain what is meant by a command economy.3. Evaluate the statement: The government should have no place in a capita
University of Sharjah - ECON - 302
CHAPTER 3Demand, Supply, and Market EquilibriumA. Short-Answer, Essays, and Problems1. Explain what is meant by a competitive market.2. Define demand.3. State the law of demand and explain why the other-things-equal assumption is critical to it.4. G
University of Sharjah - ECON - 302
CHAPTER 4ElasticityA. Short-Answer, Essays, and Problems1. What is the main difference between the law of demand and the price elasticity of demand?2. The following data shows the relationship between price and quantity demanded at four different pric
University of Sharjah - ECON - 302
CHAPTER 5Market Failures: Public Goods and ExternalitiesA. Short-Answer, Essays, and Problems1. Explain the two types of market failure and given an example of each one.2. Define consumer surplus.3. Are consumer surplus and equilibrium price directly
University of Sharjah - ECON - 302
CHAPTER 6International TradeA. Short-Answer, Essays, and Problems1. What are the major imports and exports of the United States?2. Cite three important reasons why nations trade.3. The international flow of goods helps compensate for the internationa
University of Sharjah - ECON - 302
CHAPTER 7The Balance of Payments, Exchange Rates,and Trade DeficitsA. Short-Answer, Essays, and Problems1. Define international trade and international financial transactions. Give an example of each one.2. What are the major components of the curren
University of Sharjah - ECON - 302
CHAPTER 8The Economics of Developing CountriesA. Short-Answer, Essays, and Problems1. What is the extent of income inequality among nations? Explain, citing relevant data on incomes receivedby populations and total GDP in the United States and develop
University of Sharjah - ECON - 302
CHAPTER 9Consumer BehaviorA. Short-Answer, Essays, and Problems1. Describe the law of diminishing marginal utility. On what assumptions is this law based?2. What is the difference between total utility and marginal utility?3. Can marginal utility be
University of Sharjah - ECON - 302
CHAPTER 10Businesses and the Costs of ProductionA. Short-Answer, Essays, and Problems1. Why are costs important in economics?2. Why dont economists use the same cost data as accountants use?3. What is the real cost of putting an unemployed laborer to
University of Sharjah - ECON - 302
CHAPTER 11Pure Competition in the Short RunA. Short-Answer, Essays, and Problems1. How does pure competition differ from other basic market models?2. What are some examples of the four different market structures?3. What are four characteristics of p
University of Sharjah - ECON - 302
CHAPTER 12Pure Competition in the Long RunA. Short-Answer, Essays, and Problems1. What is the major difference between the long run and the short run in pure competition? Explain in termsof the number of firms and the flexibility of firms.2. Is there
University of Sharjah - ECON - 302
CHAPTER 13Pure MonopolyA. Short-Answer, Essays, and Problems1. What are the major characteristics of pure monopoly?2. What are the major barriers to entry that explain the existence of monopoly?3. What is the relationship between economies of scale a
University of Sharjah - ECON - 302
CHAPTER 14Monopolistic Competition and OligopolyA. Short-Answer, Essays, and Problems1. What are the major features of monopolistic competition compared to pure competition and puremonopoly?2. Pure competition or pure monopoly industries will tend to
University of Sharjah - ECON - 302
CHAPTER 14 WebTechnology, R&D, and EfficiencyNote: This bonus web chapter is available on the Instructors Resource CD or in the Connect library(http:/connect.mcgraw-hill.com).A. Short-Answer, Essays, and Problems1. Give a definition of technological
University of Sharjah - ECON - 302
CHAPTER 15The Demand for ResourcesA. Short-Answer, Essays, and Problems1. What are four significant reasons for studying resource pricing?2. The theory of resource pricing is sometimes referred to by economists as the theory of income distribution.Wh
University of Sharjah - ECON - 302
CHAPTER 16Wage DeterminationA. Short-Answer, Essays, and Problems1. When economists refer to labor, what type of workers are they referring to?2. What do wages and wage rates mean in economics? How do they differ from labor earnings?3. What is the di
University of Sharjah - ECON - 302
CHAPTER 17Rent, Interest, and ProfitA. Short-Answer, Essays, and Problems1. What determines the economic rent for land? Explain from a supply and demand perspective.2. How does the supply of land differ from the supply of most labor? How will the effe
University of Sharjah - ECON - 302
CHAPTER 18Natural Resource and Energy EconomicsA. Short-Answer, Essays, and Problems1. Describe the changes in population and living standards since 1800. What implications do these changesraise about standards of living today?2. Explain the view of
University of Sharjah - ECON - 302
CHAPTER 19Public Finance: Expenditures and TaxesA. Short-Answer, Essays, and Problems1. Briefly describe the role of government in the economy. How are these government activities financed?2. The circular flow diagram below includes business, househol
University of Sharjah - ECON - 302
CHAPTER 20Asymmetric Information, Voting, and Public ChoiceA. Short-Answer, Essays, and Problems1. What are information problems affecting sellers? Give an example that illustrates how these types ofproblems are resolved.2. Why would the establishmen
University of Sharjah - ECON - 302
CHAPTER 21Antitrust Policy and RegulationA. Short-Answer, Essays, and Problems1. What are the basic purposes of antitrust policy?2. Briefly describe the historical background that gave rise to antitrust and regulation in the United States.3. What wer
University of Sharjah - ECON - 302
CHAPTER 22Agriculture: Economics and PolicyA. Short-Answer, Essays, and Problems1. Describe the diversity in the agriculture industry as it relates to farm commodities.2. What is the difference between farm commodities and food products? How does the
University of Sharjah - ECON - 302
CHAPTER 23Income Inequality, Poverty, and DiscriminationA. Short-Answer, Essays, and Problems1. How equal is the distribution of personal income by households in the United States?2. Complete the following table of the distribution of personal income
University of Sharjah - ECON - 302
CHAPTER 24Health CareA. Short-Answer, Essays, and Problems1. Describe the health care industry.2. What are the two major problems facing the health care system?3. Describe the major spending categories and percentage for health care spending.4. What
University of Sharjah - ECON - 302
CHAPTER 25ImmigrationA. Short-Answer, Essays, and Problems1. What is the difference between legal and illegal immigration?2. What are the two types of legal immigration in the United States?3. Describe the number of legal and unauthorized immigrants
University of Sharjah - ECON - 302
Pre-Test Chapter 1 McConnell 19thed. 1. When economists say that people act rationally in their self interest, they mean that individuals: A. look for and pursue opportunities to increase their utility. B. generally disregard the interests o
University of Sharjah - ECON - 302
Pre-Test Chapter 2 McConnell 19thed 1. Of the following countries, which one best exhibits the characteristics of a market economy? A. Canada. B. Cuba. C. North Korea. D. China. 2. Broadly defined, competition involves:
University of Sharjah - ECON - 302
Pre-Test Chapter 3 McConnell 19thed1. The relationship between quantity supplied and price is _ and the relationship betweenquantity demanded and price is _. A. direct, inverse B. inverse, direct C. inverse, inverse D. direct, di
University of Sharjah - ECON - 302
Pre-Test Chapter 4 McConnell 19ed 1. The basic formula for the price elasticity of demand coefficient is: A. absolute decline in quantity demanded/absolute increase in price. B. percentage change in quantity demanded/percentage change in price
University of Sharjah - ECON - 302
Pre-Test Chapter 6 1. Which of the following statements is most accurate about advanced economies? A. Economies experience a positive growth trend over the short run, but experience significant variability in the long run. B. Economies experien
University of Sharjah - ECON - 302
Pre-Test Chapter 7 1. Refer to the above data. The value for X is: A. 15. B. 5. C. 55.D. 10. 2. Refer to the above data. The value for Z is: A. -5. B. +5. C. 10. D. zero. 3. The above data
University of Sharjah - ECON - 302
Pre-Test Chapter 8 The following is cost information for the Creamy Crisp Donut Company:Entrepreneur's potential earnings as a salaried worker = $50,000Annual lease on building = $22,000Annual revenue from operations = $380,000Payments to workers
University of Sharjah - ECON - 302
Pre-Test Chapter 9 1. An industry comprised of a small number of firms, each of which considers the potential reactionsof its rivals in making price-output decisions is called: A. monopolistic competition. B. oligopoly. C. pure monopol
University of Sharjah - ECON - 302
Pre-Test Chapter 13 1. Over the long run, real earnings per worker can increase only at about the same rate as theeconomy's rate of growth of: A. total output. B. stock of capital. C. output per worker. D. international trade.
University of Sharjah - ECON - 302
Pre-Test Chapter 14 1. The incentive function of prices: A. indicates that price increases bring forth more of a resource. B. is the idea that competitive markets will always clear. C. applies to all resources. D. only applies to l
FSU - STA - 5440
FSU - STA - 5440
Homework 2 SolutionsSeptember 22, 2012STA 4442/5440Solutions to the problems from Sheldon and Ross10. Let P (A) be the probability that a student wears a ring. Let P (B ) be the probabilitythat a student wears a necklace. Then from the information gi
FSU - STA - 5440
Homework 3 SolutionsSeptember 23, 2012STA 4442/5440Solutions of problems from Sheldon Ross book (8th Edition) Chapter 311. Let B be the event that both cards are aces, As the event that the ace of spades ischosen and A the event that at least one ace
FSU - STA - 5440
FSU - STA - 5440
FSU - STA - 5440
FSU - STA - 5440
Homework 7 SolutionsOctober 29, 2012STA 4442/5440Solutions of problems from Sheldon Ross book (8th Edition) Chapter 55.6.a) Apply integration by parts twice to obtain,E [X ] =14x2 ex/2 dx = 40b) By symmetry of f (x) about x = 0, E [X ] = 0.c)
FSU - STA - 5440
Homework 8 SolutionsNovember 14, 2012STA 4442/54406.24 (a)P (N = n) = pn 1 (1 p0 )0PP(b) P (X = j ) = 1 P (N = n, X = j ) = 1 pnn=1n=1 01pj =pj(1 p0 )(c)P (N = n, X = j ) = pn 1 pj = P (N = n)P (X = j )0(d) and (e) It might seem intuitivel
FSU - STA - 5440
FSU - STA - 5440
FSU - STA - 5440
STA 4442/5440 Midterm 1September 26, 2012Name:FSUID:Please sign the following pledge and read all instructions carefully before starting the exam.Pledge: I have neither given nor received any unauthorized aid in completing this exam, and I havecondu