Question 1

Reference: 1358 
-(Exhibit: The Demand Curve for Capital) In the movement from A to B, a fall in the interest rate of _______ percentage points, resulted in an increase in the _______ for capital of _______ trillion.

Accepted Answer

A)  4; demand; about $2.67
B)  4; quantity demanded; about $2.67
C)  6; demand; about $3.5
D)  2.5; quantity demanded; $4E) None of the above
F) A) and C)

Question 2

A profit-maximizing firm uses additional units of a factor of production until ________ equals _______ .

Accepted Answer

A)  MR; MC
B)  MRP; MP
C)  MP; MR
D)  MRP; MFCE) B) and D)
F) C) and D)

Question 3

The Case in Point on MBAs compares the:

Accepted Answer

A)  gain in human capital from attending business school to the opportunity cost of attending divinity school.
B)  net present value of obtaining an MBA degree from different universities.
C)  rate of return on investing in an MBA with the rate of return one could earn by getting a Ph.D.in economics.
D)  the investment in human capital implied by an MBA degree with the purchase of a car.E) None of the above
F) A) and C)

Question 4

Reference: 1358 
-(Exhibit: The Demand Curve for Capital) The demand curve for capital would shift to the ________ if technological change ________ the marginal product of capital.

Accepted Answer

A)  right; decreased
B)  left; increased
C)  right; increased
D)  none of the above are correctE) A) and B)
F) A) and C)

Question 5

The present value of a future payment is _______ its future dollar amount.

Accepted Answer

A)  exactly the same as
B)  approximately the same as
C)  less than
D)  greater thanE) A) and D)
F) None of the above

Question 6

An increase in the demand for capital will increase the demand for loanable funds and reduce the interest rate.

Accepted Answer

A) True 
 B)False

Question 7

Reference: 1358 
-(Exhibit: The Demand Curve for Capital) A movement from C to B may have been a result of:

Accepted Answer

A)  a decrease in the demand for capital, because expectations regarding the profitability of capital had fallen.
B)  a decrease in the interest rate.
C)  an increase in the interest rate.
D)  Both A and C are correct.E) A) and B)
F) None of the above

Question 8

Unlike the supply of loanable funds, the demand for capital is unrelated to the interest rate.

Accepted Answer

A) True 
 B)False

Question 9

Using slightly different notation than in the text, we could say that the present value (PV) of a payment n years in the future (FV) , given interest rate (r) , is given by the equation:

Accepted Answer

A)  PV = FVn.
B)  PV = 1 ˜ FVn.
C)  PV = FV ˜ (1 + r) .
D)  PV = FV ˜ (1 + r) n.E) A) and D)
F) None of the above

Question 10

A bond is essentially the same thing as a stock.

Accepted Answer

A) True 
 B)False

Question 11

Reference: 13117 1 and quantity of Q1, if the interest rate rises, the supply curve will shift to ________ , the price will _______, and the quantity consumed will _______ . A) S3; rise; decrease B) S2; fall; increase C) the left; rise; decrease D) A and C are correct." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Future Generations and Exhaustible Natural Resources) Given the original price of P1 and quantity of Q1, if the interest rate rises, the supply curve will shift to ________ , the price will _______, and the quantity consumed will _______ .

Accepted Answer

A)  S3; rise; decrease
B)  S2; fall; increase
C)  the left; rise; decrease
D)  A and C are correct.E) B) and D)
F) B) and C)

Question 12

Reference: 1358 
-(Exhibit: The Demand Curve for Capital) The demand curve for capital would shift to the left if the:

Accepted Answer

A)  interest rate rises.
B)  price of capital rises.
C)  price of labor falls.
D)  supply of capital increased.E) A) and B)
F) C) and D)

Question 13

The quantity of the services of a resource that can be consumed in any one period without reducing the stock of the resource in subsequent periods is its:

Accepted Answer

A)  market value.
B)  carrying capacity.
C)  discount rate.
D)  exhaustion factor.E) A) and B)
F) A) and C)

Question 14

The market in which borrowers and lenders meet is called the:

Accepted Answer

A)  loanable funds market.
B)  money market.
C)  stock market.
D)  product market.E) B) and D)
F) B) and C)

Question 15

A decrease in the supply of lonable funds, all other things unchanged, will ________ the interest rate.

Accepted Answer

A)  not change
B)  increase
C)  decrease
D)  not affectE) C) and D)
F) B) and C)

Question 16

A decrease in the demand for capital will lead to a(n) _______ in the demand for loanable funds and a(n) _______ in the interest rate.

Accepted Answer

A)  increase; increase
B)  increase; decrease
C)  decrease; increase
D)  decrease; decreaseE) None of the above
F) B) and C)

Question 17

At ________ interest rates there will be ________ loanable funds demanded.

Accepted Answer

A)  higher; less
B)  lower; less
C)  higher; more
D)  lower; no change inE) A) and D)
F) A) and C)

Question 18

The interest rate is:

Accepted Answer

A)  the total payment made to those who postpone the use of their wealth.
B)  is the payment made for postponing the use of wealth, expressed as a percentage of the amount of wealth whose use is postponed.
C)  is the amount paid to someone for the use of their liabilities.
D)  is not described by any of the above.E) C) and D)
F) B) and D)

Question 19

Which of the following is (are) true?

Accepted Answer

A)  Interest rates can be used to compare values of payments that will occur at different times.
B)  Choices concerning capital and natural resources do not involve the use of interest rates.
C)  The concept of present value cannot be applied to a series of future payments.
D)  A and B are true.E) A) and B)
F) None of the above

Question 20

A decrease in the supply of loanable funds will lead to a(n) ________ in the interest rate and a(n) ________ in the quantity of capital demanded.

Accepted Answer

A)  increase; increase
B)  increase; decrease
C)  decrease; increase
D)  decrease; decreaseE) A) and C)
F) B) and C)

Exam 13: Interest Rates and the Markets for Capital and Natural Resources

The present value of a future payment is _______ its future dollar amount.

Correct AnswerverifiedShow Answer

Reference: 1358 -(Exhibit: The Demand Curve for Capital) The demand curve for capital would shift to the ________ if technological change ________ the marginal product of capital.

Correct AnswerverifiedShow Answer

The interest rate is:

Correct AnswerverifiedShow Answer

A profit-maximizing firm uses additional units of a factor of production until ________ equals _______ .

Correct AnswerverifiedShow Answer

At ________ interest rates there will be ________ loanable funds demanded.

Correct AnswerverifiedShow Answer

Reference: 1358 -(Exhibit: The Demand Curve for Capital) The demand curve for capital would shift to the left if the:

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The Case in Point on MBAs compares the:

Correct AnswerverifiedShow Answer

Using slightly different notation than in the text, we could say that the present value (PV) of a payment n years in the future (FV) , given interest rate (r) , is given by the equation:

Correct AnswerverifiedShow Answer

A bond is essentially the same thing as a stock.

Correct AnswerverifiedShow Answer

A decrease in the supply of lonable funds, all other things unchanged, will ________ the interest rate.

Correct AnswerverifiedShow Answer

The market in which borrowers and lenders meet is called the:

Correct AnswerverifiedShow Answer

Reference: 1358 -(Exhibit: The Demand Curve for Capital) In the movement from A to B, a fall in the interest rate of _______ percentage points, resulted in an increase in the _______ for capital of _______ trillion.

Correct AnswerverifiedShow Answer

Unlike the supply of loanable funds, the demand for capital is unrelated to the interest rate.

Correct AnswerverifiedShow Answer

Which of the following is (are) true?

Correct AnswerverifiedShow Answer

A decrease in the supply of loanable funds will lead to a(n) ________ in the interest rate and a(n) ________ in the quantity of capital demanded.

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A decrease in the demand for capital will lead to a(n) _______ in the demand for loanable funds and a(n) _______ in the interest rate.

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An increase in the demand for capital will increase the demand for loanable funds and reduce the interest rate.

Correct AnswerverifiedShow Answer

Reference: 13117 -(Exhibit: Future Generations and Exhaustible Natural Resources) Given the original price of P1 and quantity of Q1, if the interest rate rises, the supply curve will shift to ________ , the price will _______, and the quantity consumed will _______ .

Correct AnswerverifiedShow Answer

The quantity of the services of a resource that can be consumed in any one period without reducing the stock of the resource in subsequent periods is its:

Correct AnswerverifiedShow Answer

Reference: 1358 -(Exhibit: The Demand Curve for Capital) A movement from C to B may have been a result of:

Correct AnswerverifiedShow Answer

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Reference: 1358 -(Exhibit: The Demand Curve for Capital) The demand curve for capital would shift to the if technological change the marginal product of capital.

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A profit-maximizing firm uses additional units of a factor of production until __ equals _ .

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At interest rates there will be loanable funds demanded.

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Reference: 1358 -(Exhibit: The Demand Curve for Capital) In the movement from A to B, a fall in the interest rate of ___ percentage points, resulted in an increase in the _ for capital of _____ trillion.

Correct Answer
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A decrease in the supply of loanable funds will lead to a(n) in the interest rate and a(n) in the quantity of capital demanded.

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A decrease in the demand for capital will lead to a(n) _ in the demand for loanable funds and a(n) _ in the interest rate.

Correct Answer
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Reference: 13117 -(Exhibit: Future Generations and Exhaustible Natural Resources) Given the original price of P₁ and quantity of Q₁, if the interest rate rises, the supply curve will shift to ____ , the price will _, and the quantity consumed will _____ .

Correct Answer
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