QUESTION 16
Which of the following statements is true?
The administrative costs per dollar are greater for a large loan than a small loan.
The risk on a long-term loan is likely to be less than on a short-term loan, ceteris paribus.
a and b
none of the above
1 points
QUESTION 17
If the price for loanable funds is less than the return on capital, then firms will
borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital decreases and its return rises.
borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital increases and its return falls.
not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will fall.
not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will rise.
1 points
QUESTION 18
Economic rent is
the payment a renter pays his or her landlord.
payment in excess of fixed costs.
payment in excess of opportunity costs.
the same as interest if we are discussing a capital good purchase.
none of the above
1 points
QUESTION 19
Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual inflation rate are zero percent. Before you pay back the $1,000 principal and $50 interest, the inflation rate increases to 10 percent. Does anyone lose from this situation?
Nobody loses, because the terms were set before the inflation rate increased, and once the terms are set, inflation does not affect the situation.
You lose, because the dollars that you have borrowed are worth more the higher the inflation rate.
The banker loses, because you will be paying back the loan with dollars that are worth less than the dollars you borrowed.
Both the banker and you lose, for the reasons in answers b and c.
There is not enough information to answer the question.
1 points
QUESTION 20
A change in the expected rate of inflation from 5 percent to 3 percent will
decrease the real interest rate by 2 percentage points.
decrease the real interest rate by 3 percentage points.
increase the nominal interest rate by 2 percentage points.
decrease the nominal interest rate by 2 percentage points.
QUESTION 16
Which of the following statements is true?
| The administrative costs per dollar are greater for a large loan than a small loan. | ||
| The risk on a long-term loan is likely to be less than on a short-term loan, ceteris paribus. | ||
| a and b | ||
| none of the above |
1 points
QUESTION 17
If the price for loanable funds is less than the return on capital, then firms will
| borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital decreases and its return rises. | ||
| borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital increases and its return falls. | ||
| not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will fall. | ||
| not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will rise. |
1 points
QUESTION 18
Economic rent is
| the payment a renter pays his or her landlord. | ||
| payment in excess of fixed costs. | ||
| payment in excess of opportunity costs. | ||
| the same as interest if we are discussing a capital good purchase. | ||
| none of the above |
1 points
QUESTION 19
Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual inflation rate are zero percent. Before you pay back the $1,000 principal and $50 interest, the inflation rate increases to 10 percent. Does anyone lose from this situation?
| Nobody loses, because the terms were set before the inflation rate increased, and once the terms are set, inflation does not affect the situation. | ||
| You lose, because the dollars that you have borrowed are worth more the higher the inflation rate. | ||
| The banker loses, because you will be paying back the loan with dollars that are worth less than the dollars you borrowed. | ||
| Both the banker and you lose, for the reasons in answers b and c. | ||
| There is not enough information to answer the question. |
1 points
QUESTION 20
A change in the expected rate of inflation from 5 percent to 3 percent will
| decrease the real interest rate by 2 percentage points. | ||
| decrease the real interest rate by 3 percentage points. | ||
| increase the nominal interest rate by 2 percentage points. | ||
| decrease the nominal interest rate by 2 percentage points. |
