91. The movement from x to x' in Exhibit 0195 represents a(n)
a. increase in roundabout production; future ability to produce consumer goods will be higher as a result
b. increase in roundabout production; future ability to produce consumer goods will be lower as a result
c. decrease in roundabout production; future ability to produce consumer goods will be higher as a result
d. decrease in roundabout production; future ability to produce consumer goods will be lower as a result
e. decrease in roundabout production but one that does not have an effect on future ability to produce consumer goods
Ans: a
92. The benefit of the production of capital is
a. decreased current production of consumption goods
b. increased future production of consumption goods
c. the amount of roundabout production
d. abundant capital accumulation
e. the decreased amount of future capital available
Ans: b
93. Interest is a payment for deferred
a. taxation
b. saving
c. consumption
d. investment
e. none of the above
Ans: c
94. Which of the following does not reflect a positive rate of time preference?
a. A couple gets a mortgage for a new house instead of saving up for it.
b. A print shop gives discounts to people who can wait overnight for their copies.
c. Mail companies charge people premiums for packages that must be delivered overnight.
d. Faster computers are more expensive than slower ones, other things equal.
e. Bank Christmas clubs pay no interest.
Ans: e
95. If the interest rate increases from 6 percent to 10 percent per year, each $100 saved will earn
a. $4 per year more than before
b. $6 per year more than before
c. $10 per year more than before
d. $16 per year more than before
e. $60 per year more than before
Ans: a
96. If we assume that a unit of capital will last indefinitely, the marginal rate of return on investment equals the marginal revenue product of capital divided by its marginal resource cost.
a. True
b. False
Ans: a
97. In order to predict marginal rates of return on investment, producers must forecast interest rates.
a. True
b. False
Ans: b
98. The concept of marginal productivity is applicable to
a. all of the following
b. capital
c. entrepreneurial talent
d. land
e. labor
Ans: a
99. Exhibit 0199 shows data on the various dough-mixing machines that a donut shop is considering buying. Assume that any dough-mixing machine is expected to last indefinitely, that operating expenses are negligible, and that the price of donuts is expected to remain constant in the future. If the interest rate is 8 percent and the firm has $3,000 on hand, what should it do?
a. Buy the machine with the three-quart bowl, which costs $3,000.
b. Save $3,000 at the interest rate of 8 percent.
c. Buy the machine with the one-quart bowl and save the extra $2,000.
d. Buy the machine with the two-quart bowl and save the extra $1,000.
e. Buy two machines, with one-quart and two-quart bowls.
Ans: c
100. IBM's marginal rate of return on investment curve equals its
a. supply of loanable funds curve
b. supply of investment curve
c. marginal revenue product curve
d. marginal revenue cost curve
e. investment demand curve
Ans: e
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a. increase in roundabout production; future ability to produce consumer goods will be higher as a result
b. increase in roundabout production; future ability to produce consumer goods will be lower as a result
c. decrease in roundabout production; future ability to produce consumer goods will be higher as a result
d. decrease in roundabout production; future ability to produce consumer goods will be lower as a result
e. decrease in roundabout production but one that does not have an effect on future ability to produce consumer goods
Ans: a
92. The benefit of the production of capital is
a. decreased current production of consumption goods
b. increased future production of consumption goods
c. the amount of roundabout production
d. abundant capital accumulation
e. the decreased amount of future capital available
Ans: b
93. Interest is a payment for deferred
a. taxation
b. saving
c. consumption
d. investment
e. none of the above
Ans: c
94. Which of the following does not reflect a positive rate of time preference?
a. A couple gets a mortgage for a new house instead of saving up for it.
b. A print shop gives discounts to people who can wait overnight for their copies.
c. Mail companies charge people premiums for packages that must be delivered overnight.
d. Faster computers are more expensive than slower ones, other things equal.
e. Bank Christmas clubs pay no interest.
Ans: e
95. If the interest rate increases from 6 percent to 10 percent per year, each $100 saved will earn
a. $4 per year more than before
b. $6 per year more than before
c. $10 per year more than before
d. $16 per year more than before
e. $60 per year more than before
Ans: a
96. If we assume that a unit of capital will last indefinitely, the marginal rate of return on investment equals the marginal revenue product of capital divided by its marginal resource cost.
a. True
b. False
Ans: a
97. In order to predict marginal rates of return on investment, producers must forecast interest rates.
a. True
b. False
Ans: b
98. The concept of marginal productivity is applicable to
a. all of the following
b. capital
c. entrepreneurial talent
d. land
e. labor
Ans: a
99. Exhibit 0199 shows data on the various dough-mixing machines that a donut shop is considering buying. Assume that any dough-mixing machine is expected to last indefinitely, that operating expenses are negligible, and that the price of donuts is expected to remain constant in the future. If the interest rate is 8 percent and the firm has $3,000 on hand, what should it do?
a. Buy the machine with the three-quart bowl, which costs $3,000.
b. Save $3,000 at the interest rate of 8 percent.
c. Buy the machine with the one-quart bowl and save the extra $2,000.
d. Buy the machine with the two-quart bowl and save the extra $1,000.
e. Buy two machines, with one-quart and two-quart bowls.
Ans: c
100. IBM's marginal rate of return on investment curve equals its
a. supply of loanable funds curve
b. supply of investment curve
c. marginal revenue product curve
d. marginal revenue cost curve
e. investment demand curve
Ans: e
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