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Multiple Choice Pre Quiz
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1

The payment for the use of factors of production are called:
A)interest.
B)rent.
C)pure economic rent.
D)both b and c.
2

The supply of land is _______. Therefore, land will earn _______.
A)elastic; nothing
B)elastic; whatever it can
C)inelastic; nothing
D)inelastic; whatever it can
3

A tax on rent will lead to:
A)deadweight losses.
B)market distortions.
C)no market distortions nor economic inefficiencies.
D)none of the above.
4

Durable goods that are in turn used as productive inputs for further production is called:
A)land.
B)labor.
C)capital.
D)entrepreneurial ability.
5

The _______ is the net dollar return per year for every dollar of invested capital.
A)interest rate
B)rate of return on capital
C)rent
D)all of the above
6

An estimate of the loss in dollar value of a capital good due to obsolescence or wear during a period of time is called:
A)rate of return
B)interest
C)rent
D)depreciation.
7

Which of the following is a capital good:
A)a robot in a factory.
B)workman's compensation insurance.
C)low-skilled workers.
D)all of the above.
8

Land and capital goods like computers, buildings, and automobiles that are used to produce further goods and services are called:
A)malleable assets.
B)financial assets.
C)tangible assets.
D)none of the above.
9

A mortgage is an example of a:
A)malleable asset.
B)financial asset.
C)tangible asset.
D)all of the above.
10

The interest rate is:
A)the financial return on funds.
B)the annual return on borrowed funds.
C)both a and b.
D)neither a nor b.
11

The real interest rate is:
A)the nominal interest rate minus the rate of inflation.
B)the nominal yield on funds.
C)both a and b.
D)neither a nor b.
12

What do economists call the dollar value today of a stream of income over time?
A)the nominal interest rate.
B)the internal rate of return.
C)the present value.
D)a and b, but not c.
13

Which of the following are functions of the interest rate:
A)It rations out society's scarce supply of capital goods.
B)It induces people to sacrifice current consumption in order to increase the stock of capital.
C)both a and b.
D)neither a nor b.
14

The short-run supply of capital is:
A)perfectly inelastic.
B)backward bending.
C)perfectly elastic.
D)unit elastic.
15

Which of the following is correct:
A)Free markets promote efficiency.
B)Capital markets balance saving and investment.
C)Governments can reduce inequality without impairing efficiency.
D)All of the above are correct.





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