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| 1 | |
The difference between gross investment and net investment is: |
| | A) | depreciation of the existing capital stock. |
| | B) | productive investment. |
| | C) | dwellings. |
| | D) | inventories. |
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| 2 | |
Together, _______ and ____ are the tangible wealth of the economy. |
| | A) | Capital, labour |
| | B) | Capital, land |
| | C) | Land, labour |
| | D) | Enterprise, land |
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| 3 | |
For net investment to be positive, gross investment must be greater than depreciation. |
| | A) | True |
| | B) | False |
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| 4 | |
The cost of using capital services is the ___________ for capital. |
| | A) | depreciation rate |
| | B) | asset rate |
| | C) | rental rate |
| | D) | base rate |
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| 5 | |
The _______ value of a future £1 is the sum that, if lent today, would cumulate to £1 by that date. |
| | A) | past |
| | B) | future |
| | C) | present |
| | D) | additional |
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| 6 | |
Saving is the difference between _______ income and _______ consumption. |
| | A) | current, current |
| | B) | future, current |
| | C) | future, future |
| | D) | current, consumption |
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| 7 | |
The ______________________ of capital is the extra value of the firm’s output when another unit of capital services is used, all other inputs being held fixed. |
| | A) | product |
| | B) | marginal product |
| | C) | marginal value product |
| | D) | marginal revenue value product |
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| 8 | |
The required rental on capital just covers the ________________of owning an asset. |
| | A) | opportunity cost |
| | B) | total cost |
| | C) | marginal cost |
| | D) | average cost |
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| 9 | |
The cost of using capital services is the: |
| | A) | wage rate of capital. |
| | B) | interest charges. |
| | C) | marginal capital cost. |
| | D) | rental rate for capital. |
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| 10 | |
The value of an asset depends upon: |
| | A) | its scrap value. |
| | B) | its depreciation. |
| | C) | the present value of the future stream of income it can earn. |
| | D) | the cost of loans. |
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| 11 | |
The marginal value product of capital is the: |
| | A) | change in a company’s balance sheet when it acquires new plant. |
| | B) | additional value of output from using more capital. |
| | C) | change in a company’s share price. |
| | D) | changing value of the capital stock. |
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| 12 | |
The demand for capital services is derived from a falling MVPK schedule. |
| | A) | True |
| | B) | False |
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| 13 | |
In the short run, the supply of capital is ____________ and in the long run will depend on ____________. |
| | A) | variable, technology |
| | B) | fixed, expectations |
| | C) | fixed, the rental rate of capital |
| | D) | variable, interest rates |
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| 14 | |
If workers get a real wage increase this will likely _______________ and ____________. |
| | A) | encourage the use of more capital in the long run, reduce demand for all inputs |
| | B) | encourage the use of more capital, increase demand for all inputs |
| | C) | encourage the use of less capital, reduce demand for all inputs |
| | D) | encourage the use of less capital, reduce demand for all inputs |
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| 15 | |
The supply elasticity of land is normally greater in the long run than in the short run. |
| | A) | True |
| | B) | False |
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| 16 | |
Land will be allocated between competing uses so that: |
| | A) | housing gets priority. |
| | B) | industry gets priority. |
| | C) | farming gets priority. |
| | D) | the equilibrium rental rate equilibrates total demand with supply. |
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| 17 | |
Different capital intensity in different industries is mainly explained by _________ and _________. |
| | A) | wage differentials, skill levels |
| | B) | technology, the ease of factor substitution |
| | C) | government grants, international competition |
| | D) | patents, skill shortages |
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| 18 | |
The functional distribution of income shows how national income is divided between: |
| | A) | employees. |
| | B) | the population. |
| | C) | the factors of production. |
| | D) | the working population. |
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| 19 | |
The real interest rate tells us how many actual pounds are earned by lending £1 for a year. |
| | A) | True |
| | B) | False |
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| 20 | |
A major cause of income inequality in the UK is trade union power. |
| | A) | True |
| | B) | False |
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