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| 1 | |
Use the following diagrams to answer the next question.
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Refer to the diagrams. These diagrams illustrate three grades of land available for development of a new shopping complex. The same amount of labor, capital, and other inputs for the shopping complex would be used regardless of which land is chosen. In terms of the land's ability to generate potential revenue for the developers, we can say that: |
| | A) | land in figure a is most productive |
| | B) | land in figure b is most productive |
| | C) | land in figure c is most productive |
| | D) | we cannot compare the productivity of the three grades of land |
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| 2 | |
With respect to land rents: |
| | A) | demand is a passive determinant and supply an active determinant |
| | B) | supply is a passive determinant and demand an active determinant |
| | C) | both supply and demand are active determinants |
| | D) | neither supply nor demand are active determinants |
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| 3 | |
Economic rent is a price paid for a productive resource whose supply is perfectly elastic |
| | A) | True |
| | B) | False |
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| 4 | |
Suppose Congress, in an attempt to increase taxes on the wealthy, passed a law doubling the tax rate on interest income. The effect of this law would be most likely to: |
| | A) | increase the supply of loanable funds and decrease the equilibrium interest rate |
| | B) | decrease the supply of loanable funds and increase the equilibrium interest rate |
| | C) | increase the demand for loanable funds and increase the equilibrium interest rate |
| | D) | decrease the demand for loanable funds and decrease the equilibrium interest rate |
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| 5 | |
Since 1900, combined income from rent, corporate profit, and interest in the U.S. has: |
| | A) | varied inversely with changes in the rate of inflation |
| | B) | increased in proportion to changes in technology |
| | C) | decreased in proportion to the decline in self-employment |
| | D) | remained relatively constant |
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| 6 | |
Depicted graphically, the supply curve of land is: |
| | A) | horizontal |
| | B) | vertical |
| | C) | upward sloping |
| | D) | downward sloping |
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| 7 | |
In year 1, the nominal rate of interest is 7% and the inflation rate is 3%. The real rate of interest in year 1: |
| | A) | is 4% |
| | B) | is 7% |
| | C) | is 10% |
| | D) | cannot be determined from the information given |
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| 8 | |
Broadly defined to include proprietors' income, labor's share of all income earned by Americans is: |
| | A) | about 80%, roughly the same as in 1900 |
| | B) | about 70%, roughly the same as in 1900 |
| | C) | about 80%, somewhat higher than the proportion in 1900 |
| | D) | about 70%, somewhat higher than the proportion in 1900 |
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| 9 | |
Which of the following is not a source of economic profit? |
| | A) | monopoly power |
| | B) | uninsurable risk |
| | C) | innovation |
| | D) | pure competition |
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| 10 | |
In the loanable funds market (all else equal): |
| | A) | a decrease in bank lending will decrease the interest rate |
| | B) | an increase in saving will increase the interest rate |
| | C) | an increase in the productivity of business investments will decrease the interest rate |
| | D) | an increase in government borrowing will increase the interest rate |
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