Question 1

If labor's share of the income paid to American resource suppliers is broadly defined as the sum of wages and salaries and proprietors' income,we can say that labor's relative share has:

Accepted Answer

A)   remained approximately constant since 1900.
B)   increased dramatically at the expense of capitalist income.
C)   declined by about one-third since 1900.
D)   decreased because of the decline of unionism.E) A) and C)
F) B) and C)

Question 2

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 B)
F) A) and C)

Question 3

The real rate of interest is the interest rate:

Accepted Answer

A)   charged on long-term government bonds.
B)   associated with a riskless loan.
C)   that large commercial banks charge their best customers.
D)   after adjustment has been made for inflation.E) A) and C)
F) B) and C)

Question 4

Effective usury laws cause:

Accepted Answer

A)   a surplus of money in money markets.
B)   the quantity of money demanded to be brought into balance with the quantity supplied.
C)   the quantity of money supplied to exceed the quantity demanded.
D)   a shortage of money in money markets.E) A) and C)
F) None of the above

Question 5

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 percent.E) None of the above
F) A) and B)

Question 6

Critics of a single tax on land oppose the idea because:

Accepted Answer

A)   it would overtax the population.
B)   changes in land ownership would cause the tax burden to fall unfairly on people who did not receive economic rents.
C)   it would disproportionately tax the richest members of society.
D)   it would cause too much land to be brought out of production.E) A) and C)
F) B) and C)

Question 7

Henry George advocated a single tax on:

Accepted Answer

A)   real capital.
B)   entrepreneurial profits.
C)   land.
D)   labor income.E) A) and B)
F) A) and C)

Question 8

If Kelly deposits $10,000 into an account that pays 8 percent interest,compounded annually,and she makes no further deposits or withdrawals,how much will Kelly have in her account at the end of 5 years?

Accepted Answer

A)   $14,000.
B)   $14,482.
C)   $14,693.
D)   $15,000.E) A) and B)
F) B) and D)

Question 9

Some economists advocate taxes on land because such taxes:

Accepted Answer

A)   do not affect the supply of land.
B)   increase the supply of land.
C)   improve the allocation of land by shifting it from low-productivity to high-productivity uses.
D)   have a positive incentive function.E) None of the above
F) A) and C)

Question 10

To say that land rent performs no incentive function means that:

Accepted Answer

A)   higher rental payments will not bring forth a larger quantity of land.
B)   rent is not a cost to specific firms,but it is a cost from the standpoint of the economy as a whole.
C)   rent does not allocate land in terms of productive efficiency.
D)   rent tends to allocate land into the most productive uses.E) A) and B)
F) C) and D)

Question 11

Economic profit affects:

Accepted Answer

A)   the allocation of resources but not the level of resource use.
B)   the level of resource use but not the allocation of resources.
C)   the allocation of resources and the level of resource use.
D)   neither the allocation of resources nor the level of resource use.E) All of the above
F) C) and D)

Question 12

(Last Word) Suppose you deposit $5,000 in a bank that pays 10 percent interest compounded twice a year.The actual annual interest rate you receive is:

Accepted Answer

A)   10 percent.
B)   11 percent.
C)   10.25 percent.
D)   12 percent.E) A) and C)
F) A) and D)

Question 13

In year 1 the price level is constant and the nominal rate of interest is 6 percent.But in year 2 the inflation rate is 3 percent.If the real rate of interest is to remain at the same level in year 2 as it was in year 1,then in year 2 the nominal interest rate must:

Accepted Answer

A)   rise by 9 percentage points.
B)   rise by 3 percentage points.
C)   fall by 3 percentage points.
D)   rise by 6 percentage points.E) A) and D)
F) None of the above

Question 14

The demand for land is:

Accepted Answer

A)   perfectly elastic.
B)   perfectly inelastic.
C)   upsloping.
D)   downsloping.E) A) and B)
F) A) and D)

Question 15

In his book Progress and Poverty,Henry George argued that:

Accepted Answer

A)   poverty is associated with the personal characteristics of individuals and therefore cannot be remedied by government antipoverty programs.
B)   economic rent could be heavily taxed without impairing the supply of land or therefore the productive capacity of the economy.
C)   rents should not be taxed because rental income is the basic source of saving,which ultimately permits a high level of investment and economic growth.
D)   taxes on rents are undesirable because they have a severe disincentive effect on landlords.E) All of the above
F) A) and B)

Question 16

Other things equal,interest rates are:

Accepted Answer

A)   higher on large loans than on small loans.
B)   higher on loans with tax-exempt interest payments.
C)   lower on less risky loans than on riskier loans.
D)   lower on short-term loans than on long-term loans.E) C) and D)
F) B) and D)

Question 17

Rent performs an incentive function,but no rationing function.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following generalizations is false? Other things equal:

Accepted Answer

A)   interest rates are higher if lenders are imperfectly,rather than purely,competitive.
B)   the interest rate is less on small loans than on larger loans.
C)   long-term loans normally command higher interest rates than short-term loans.
D)   the greater the risk on a loan,the greater the interest rate.E) B) and D)
F) B) and C)

Question 19

Other things equal,an increase in the equilibrium interest rate will:

Accepted Answer

A)   increase R&D spending.
B)   rise when the supply of loanable funds increases.
C)   decrease purchases of capital goods and reduce R&D spending.
D)   increase bank lending.E) All of the above
F) A) and D)

Question 20

A normal profit is:

Accepted Answer

A)   the average profitability of a firm over one complete business cycle.
B)   calculated by subtracting explicit costs from total revenue.
C)   the "price" required to retain entrepreneurial talent in some particular line of production.
D)   the amount by which total revenue exceeds total operating costs.E) B) and D)
F) C) and D)

Exam 17: Rent Interest and Profit

Which of the following is correct?

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Henry George advocated a single tax on:

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Rent performs an incentive function,but no rationing function.

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Which of the following generalizations is false? Other things equal:

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In his book Progress and Poverty,Henry George argued that:

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

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If Kelly deposits $10,000 into an account that pays 8 percent interest,compounded annually,and she makes no further deposits or withdrawals,how much will Kelly have in her account at the end of 5 years?

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The demand for land is:

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Critics of a single tax on land oppose the idea because:

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The real rate of interest is the interest rate:

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Some economists advocate taxes on land because such taxes:

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Other things equal,an increase in the equilibrium interest rate will:

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If labor's share of the income paid to American resource suppliers is broadly defined as the sum of wages and salaries and proprietors' income,we can say that labor's relative share has:

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To say that land rent performs no incentive function means that:

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A normal profit is:

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Economic profit affects:

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Effective usury laws cause:

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In year 1 the price level is constant and the nominal rate of interest is 6 percent.But in year 2 the inflation rate is 3 percent.If the real rate of interest is to remain at the same level in year 2 as it was in year 1,then in year 2 the nominal interest rate must:

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Other things equal,interest rates are:

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(Last Word) Suppose you deposit $5,000 in a bank that pays 10 percent interest compounded twice a year.The actual annual interest rate you receive is:

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