Chapters 11-13
A craft union represents workers:A)of a specific occupation.B)in a specific industry.C)who work specifically in the government sector.D)who contract on a fee-for-service basis.
a
A decrease in the demand for human capital will _____ its rate of return and _____ the amount of investment.A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
a
A periodic fixed payment made to a bondholder expressed as a percent of its face value is the bond's:A) coupon rate. B) case value. C) maturity date. D) yield.
a
A(n) _____ shop is one in which workers must belong to the union before they can be hired.A) closed B) union C) agency D) open
a
According to Gary Becker's theory on economic discrimination, employers who successfully discriminate in their hiring practices will:A)earn less profits because they must pay more for labor.B)earn more profits because the pool of potential workers would expand .C)earn more profits because discrimination results in lower labor costs.D)have no effect on a firm's ability to earn profits.
a
Bonds are BEST described as a type of:A)debt capital.C)both debt capital and equity capital.B)equity capital.D)neither debt capital nor equity capital.
a
Entrepreneurs:A)receive profits as rewards for risks they assume in producing goods and services.B)combine only certain factors of production to produce goods and services.C)do not have to worry about innovation.D)do not consider the desires of consumers.
a
If a bank reserves the right to repossess an automobile if the car loan is not paid, the car is serving as:A) collateral. B) financial capital. C) loanable funds. D) physical capital.
a
If someone offers to pay you $1,200 in three years at the going interest rate of 4%, what is the present value for this future payment?A) $1,066.80 B) $1,109.47 C) $1,153.85 D) $3,000.00
a
If the supply of loanable funds increases, the marginal revenue product of capital (MRPK) that would be needed in order to break even would:A) fall. B) stay the same. C) rise. D) become negative.
a
If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the demand curve for labor is:A) elastic. B) inelastic. C) unitary. D) horizontal.
a
The cost of capital can be measured by:A) interest. B) profit. C) rent. D) surplus.
a
The price of land is primarily determined by shifts in:A) demand. B) supply. C) demand and supply. D) factors other than demand or supply.
a
What is the present value of $5,000 received in two years if the interest rate is 7%?A) $4,367.19 B) $5,724.50 C) $4,672.90 D) $5,350.00
a
When interest rates rise, how does this affect the present value of human capital investment?A)It makes human capital investment less worthwhile.B)It makes human capital investment more worthwhile.C)It raises the present value.D)It has no effect on present value and human capital investment.
a
Which labor supply curves will bend backward at high wages?A)only the individual labor supply curveB)only the market labor supply curveC)both the individual and market labor supply curveD)neither the individual nor the market labor supply curve
a
A college degree helping a student convince potential employers that she is intelligent and hard-working is an example of:A)on-the-job training.C)investment in human capital.B)signaling.D)labor-market discrimination.
b
If a company is on the verge of bankruptcy and has lost its ability to issue bonds or stock due to a lack of confidence by investors, which source of financial capital might still be available?A)treasury bondsC)collateralB)private equity fundingD)bank loans at reasonable lending rates
b
If unions are successful at restricting the supply of unionized workersand increasing the demand for them:A)no wage differential will exist between union workers and non-union workers.B)the wage differential between union workers and non-union workers will increase.C)the wage differential between union workers and non-union workers will decrease.D)consumers will buy the union label.
b
Investment in human capital is investment in _____ that improves the productivity of labor.A)plant and equipmentC)land and natural resourcesB)education and trainingD)entrepreneurs
b
Non-work-related activities are known in economics as:A) inefficient. B) leisure. C) nonwage income. D) personal satisfaction.
b
Suppose that the government eases restrictions on the immigration of scientists and engineers. What would happen in the labor market for these professions, all else equal?A)equilibrium wages would rise and labor quantity would fallB)equilibrium wages would fall and labor quantity would riseC)both equilibrium wages and labor quantity would fallD)both equilibrium wages and labor quantity would rise
b
The _____ explains why individuals would prefer work to leisure when wages rise.A) income effect B) substitution effect C) money effect D) complement effect
b
The market value of a firm (the price per share multiplied by the number of shares) is called its:A) coupon rate. B) market cap. C) IPO. D) private equity.
b
Which factor would shift the market labor supply curve to the right?A)a more stringent immigration policyB)a reduction in nonwage incomeC)an increase in the market wage rateD)an increase in wages in alternative jobs using the same skills
b
Which of these is NOT an intellectual property right?A) a patent B) a government subsidy C) a trademark D) a copyright
b
A firm will take on more investment projects as:A)the cost of capital rises.B)the rate of return on projects falls.C)interest rates fall.D)the marginal revenue product of capital decreases.
c
An important tradeoff that entrepreneurs face in their decision making is _____ versus _____.A) profit; revenues B) costs; resources C) profit; risk D) efficiency; equity
c
Gary Becker's theory of economic discrimination explains how firms that discriminate will:A)attract the most productive workers.C)have higher labor costs.B)gain market share.D)have higher profits.
c
If Larry is given a $2-per-hour pay increase, and in response, he decides to work less overtime, then:A)Larry's labor supply curve is flat.B)Larry's labor supply curve is upward sloping.C)the income effect is dominating the substitution effect.D)the substitution effect is dominating the income effect.
c
If the discount rate _____, the present value today _____.A)decreases; decreasesC)increases; decreasesB)decreases; stays the sameD)increases; stays the same
c
If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is:A) 50. B) 0.5. C) 2. D) 10.
c
In economics, the term "land" refers to:A)only a physical area of the Earth's surface.B)only natural resources.C)both a physical area of the Earth's surface and natural resources.D)neither a physical area of the Earth's surface nor its natural resources.
c
Industrial agglomeration:A)describes geographical clusters of industries that choose to locate close to a resource that they all use.B)leads to lower rents.C)describes geographical clusters of firms within an industry that choose to locate close to one another.D)is illegal in the United States.
c
Investment in human capital includes all these, EXCEPT:A)undertaking an apprenticeship.C)buying stocks and bonds.B)obtaining on-the-job training.D)paying college tuition.
c
The rate of return approach:A)does not consider the present value concept.B)is better than the present value approach.C)determines the rate of interest when the net present value is zero.D)does not consider the cost of capital.
c
Venture capital firms primarily invest in _____, while private equity firms tend to invest in _____.A)mature firms; mature firmsC)start-ups; mature firmsB)mature firms; start-upsD)start-ups; start-ups
c
When a bond's rating goes from AAA to C, this means that the price of the bonds already issued will likely _____, which will _____ its yield.A) rise; increase B) rise; decrease C) fall; increase D) fall; decrease
c
When the individual labor supply curve is backward bending, the _____ effect dominates and higher wages lead to _____ hours worked.A) income; more B) substitution; more C) income; fewer D) substitution; fewer
c
Which of these would NOT be categorized as "land" as a factor of production?A)a cornfield that is owned by a farming co-opC)an axe used to cut down trees in a forestB)a coal mine in West VirginiaD)a stream that contains an abundance of trout
c
Which theory of economic discrimination states that women tend to have to work in certain low-paying jobs, leading to a wage differential versus men?A)the insider-outsider theoryC)the job crowding hypothesisB)Becker's theory of discriminationD)the dual labor market hypothesis
c
A bond has a face value of $10,000, a coupon rate of interest of 6%, and an annual interest payment of $600. The bond matures on January 20, 2035. Yesterday the bond sold for $10,700 in the secondary bond market. What is the current yield on the bond?A)7% B) 6.5% C) 6% D) 5.6%
d
According to human capital theory, younger workers have a:A)higher opportunity cost of going to college, because their earning power is so low.B)higher opportunity cost of going to college, because the present value of current earnings is high.C)lower opportunity cost of going to college, so they will probably be less likely to attend college.D)lower opportunity cost of going to college, so they will be more likely to attend college.
d
According to the concept of present value, the value of $250 today is:A)less than $250 to be received in six months.C)equal to $250 to be received in one year.B)equal to $250 in six months.D)more than $250 to be received in six months.
d
Brett won a scholarship competition that will award him with $1,000 today and another $1,000 next year. What is the present value of the scholarship money if the interest rate is 10%?A) $2,000B) $2,100 C) $1,736 D) $1,909
d
Factory jobs are no longer plentiful in the United States. This is due to all of these EXCEPT:A)a shift to service industries.B)growth in international trade.C)the transformation of the manufacturing process through the growth of the Internet.D)more foreign direct investment into the United States.
d
If Moody's changes a bond's rating from Caa to Aaa (the bond becomes less risky), we expect to see that bond's:A)yield to increase.C)face value to increase.B)coupon rate to decrease.D)yield to decrease.
d
If an asset pays $300 per year forever, what is this asset worth in terms of present value if the interest rate is 6%?A)$500 B) $1,800 C) $3,000 D) $5,000
d
In competitive labor markets, we assume that:A)firms operate in markets with many sellers and few buyers.B)workers have differentiated skills.C)firms operate in markets with few sellers and many buyers.D)information in the industry is widely available and accurate.
d
Jessica learned that she must pay union dues even though she is not a part of the union. Her workplace is a(n) _____ shop.A) closed B) union C) open D) agency
d
Suppose that a law passes that causes working conditions throughout the economy to improve. The labor supply curve should shift _____ and the number of workers available at any given wage rate will _____.A) left; decrease B) left; increase C) right; decrease D) right; increase
d
Suppose that the labor force participation rate increases. The labor supply curve should shift _____ and the number of workers available at any given wage rate will _____.A) left; decrease B) left; increase C) right; decrease D) right; increase
d
The annual return to a bond is called the:A) face value. B) coupon rate. C) maturity date. D) yield.
d
Unions tend to _____ wage differentials between a union and non-union sector by _____ entry into union-sector jobs.A)decrease; promotingC)increase; promotingB)decrease; restrictingD)increase; restricting
d
What would happen to wages and labor if worker safely regulations were abolished, making work conditions more dangerous?A)both wages and labor quantity would riseB)both wages and labor quantity would fallC)wages would fall and labor quantity would riseD)wages would rise and labor quantity would fall
d
When an individual labor supply curve bends backward, this means that the:A)substitution effect is the only effect that occurs.B)income effect is the only effect that occurs.C)substitution effect is stronger than the income effect.D)income effect is stronger than the substitution effect.
d
Which event will NOT shift the labor supply curve to the right?A)an increase in the populationB)delayed retirement by large portions of senior citizensC)an increase in non-wage benefits, such as a new 50% discount on merchandiseD)a boom in the stock market that increases income from investments
d
Which form of financial capital involves giving up ownership in a company?A) a bank loan B) a corporate bond C) a perpetuity bond D) shares of stock
d
Which of these is NOT an example of an intellectual property right?A)a copyright on a short novel you plan to publishB)a trademark on the McDonald's logoC)a patent on a new skateboard featureD)the name of a famous basketball player
d
Which of these will cause a shift in the labor demand curve?A)a change in the demandfor the final productB)a change in the productivity of laborC)a change in the price of a complementary inputD)All of the answers are correct.
d
