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A change in the expected rate of inflation from 3 percent to 5 percent will a.increase th

A change in the expected rate of inflation from 3 percent to 5 percent will

a.increase the real interest rate by 2 percentage points.

b.decrease the real interest rate by 3 percentage points.

c.increase the nominal interest rate by 2 percentage points.

d.decrease the nominal interest rate by 2 percentage points.

 

 

 

132.Firm X competes for the monopoly right to produce and sell widgets by expending resources to lobby politicians. The government decides to award the monopoly right to the firm. Which of the following is false?

a.The resources used to affect the transfer are expended in a socially wasteful manner.

b.The resources used to affect the transfer are better used from society's point of view in the production of goods and services.

c.The resources used to affect the transfer are not used in a wasteful manner from the firm's point of view.

d.The rent the firm consequently earns is real economic rent.

e.None of the above; all of the above are true.

 

 

 

133.In economics, the word "interest" refers to the

a.return earned by capital as an input in the production process.

b.return earned by land as an input in the production process.

c.price for credit or loanable funds.

d.price consumers pay to use the money supply.

e.a and c

 

 

 

134.What does it mean if a woman has a positive rate of time preference?

a.She prefers to arrive early (instead of on time) to an employee interview.

b.She prefers to buy resources before they rise in price.

c.She prefers earlier availability of goods over later availability of goods.

d.She prefers "having more time" to "having less time."

e.none of the above

 

 

 

135.Jones has a high rate (of positive) time preference and Smith has a low rate (of positive) time preference. Which man is more likely to take out a loan to buy a car now?

a.Smith, because he prefers earlier availability of goods to later availability of goods.

b.Jones, because he prefers earlier availability of goods to later availability of goods.

c.Smith, because he prefers earlier availability of goods more than Smith prefers earlier availability of goods.

d.Jones, because he prefers earlier availability of goods more than Smith prefers earlier availability of goods.

e.There is not enough information to answer the question.

 

 

 

136.John is willing to give up 2 apples tomorrow to get one apple today, whereas Bill is willing to give up only 1.5 apples tomorrow to get one apple today. It follows that

a.John has a higher rate of time preference than Bill, because he is willing to give up more tomorrow to get something today.

b.Bill has a higher rate of time preference than John, because he is willing to give up less tomorrow to get something today.

c.if we factor in the price of apples, John and Bill (probably) have the same rate of time preference.

d.Bill has a lower rate of time preference than John, because he is willing to give up more tomorrow for something today.

e.John has a lower rate of time preference than John, because he is willing to give up more tomorrow to get something today.

 

 

 

137.There are two societies, A and B, that are alike in every way but one. In society A, people have a high rate of time preference, and in society B, people have a low rate of time preference. It follows that

a.the demand for consumption loans will probably be lower in A than B.

b.interest rates will be lower in B than A.

c.there will be more saving in A than B.

d.b and c

e.none of the above

 

 

 

138.What is a roundabout method of production?

a.It refers to an inefficient way of producing goods.

b.It refers to the production of capital goods that are used to enhance productive capabilities.

c.It refers to hiring more workers and using fewer capital goods.

d.It refers to producing more consumer goods and fewer capital goods.

e.none of the above

 

 

 

139.If roundabout methods of production did not ultimately __________, they would probably not be employed.

a.decrease taxes

b.increase consumption

c.decrease interest rates

d.lower inflation

e.increase the number of persons working

 

 

 

140.If the demand for consumption loans rises, this could be the result of

a.the discovery of new roundabout methods of production.

b.a higher rate of time preference in society.

c.an increase in (people) saving.

d.a higher interest rate.

e.a and c

Dec 09 2019 Read more Less More

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