Deck 25: Real Estate and the Economy

Question 1

Federal tax laws have traditionally allowed owners of investment properties to deduct all of the following EXCEPT

A) depreciation on land.
B) maintenance costs.
C) operating costs.
D) ad valorem taxes.

Answer 1

A
Federal tax laws have traditionally not allowed owners of investment properties to deduct depreciation on land.

Question 2

When a government prints more money than is necessary for economic growth, the result is

A) a short-term drop in interest rates.
B) a long-term drop in interest rates.
C) both a and b.
D) neither a nor b.

Answer 2

C
When a government prints more money than is necessary for economic growth, the result is a short-term drop in interest rates and a long-term drop in interest rates.

Question 3

Generally, for every job created by a base industry, there will be created in service industries approximately

A) an equal number of jobs.
B) two jobs.
C) one job for every two persons employed in the base industry.
D) four jobs.

Answer 3

B
Generally, for every job created by a base industry, there will be approximately two jobs created in service industries.

Question 4

The ECOA has contributed to greater numbers of homeowners among

A) single persons.
B) divorced persons.
C) employed women.
D) all of the above.

Question 5

Typically, most families acquire their largest and most expensive housing between ages

A) 25 to 35.
B) 45 to 55.
C) 35 to 45.
D) over age 60.

Question 6

Commercial property has a useful life under IRS guidelines of

A) 15 years.
B) 27 years.
C) 39 years.
D) 19 years.

Question 7

When the supply and demand relationship in a market is unbalanced because of excess supply, it is to the advantage of

A) buyers.
B) sellers.
C) sellers of services only.
D) buyers of services only.

Question 8

Which of the following terms would not apply to an industry that produces goods or services that are locally consumed ?

A) Service industry
B) Accessory industry
C) Secondary industry
D) Filler industry

Question 9

In order to keep prices from falling in an economy that is growing at a 4 percent rate, which of the following is necessary?

A) A 4% decrease in the money supply
B) A constant, unchanging money supply
C) A 2% increase in the money supply
D) A 4% increase in the money supply

Question 10

Which has the greatest effect upon the interest rate an individual must pay for a real estate mortgage loan?

A) Federal governmental borrowing
B) State governmental borrowing
C) Local governmental borrowing
D) Competition form commercial and industrial borrowers

Question 11

All of the following have made home purchases by persons of modest income easier EXCEPT

A) FHA loan insurance programs.
B) creation of extra money by the federal reserve.
C) VA loan guarantee programs.
D) income tax deductions for mortgage loan interest and taxes.

Question 12

Generally, a person's peak earning years occur at ages

A) 25-35 years.
B) 35-45 years.
C) 45-55 years.
D) 60 years.

Question 13

From an investor's point of view, which is the most attractive allowable depreciation period for an investment property?

A) 40 years
B) 30 years
C) 27.5 years
D) 15 years

Question 14

When there is a sudden increase in the demand for housing in a community, the price of existing housing will

A) rise slowly over the next 12 months.
B) rise rapidly, then fall slightly as supply catches up with demand.
C) not reflect the increased demand for approximately 12 months.
D) none of the above.

Question 15

Under federal tax laws that allow homeowners to deduct mortgage loan interest, what would be the after-tax cost to a homeowner in the 28 percent tax bracket of a home mortgage loan made at a 12 percent rate of interest?

A) 3.36 percent
B) 8.64 percent
C) 9.5 percent
D) 8.0 percent

Question 16

Industries which produce goods and services for export are referred to by all of the following terms EXCEPT

A) base industries.
B) export industries.
C) primary industries.
D) backbone industries.

Question 17

Real estate values are affected by the federal government's

A) tax rules.
B) laws.
C) deficits.
D) all of the above.

Question 18

The real estate brokerage industry is an example of a

A) base industry.
B) secondary industry.
C) export industry.
D) primary industry.

Question 19

The Texagum manufacturing Company, which was the largest employer in the city of Westview, recently closed its plant in that city. This will probably result in

A) declining real estate values.
B) A slow-down in the construction of new homes.
C) A decline in the population of Westview.
D) All of the above.

Question 20

The post-World War II baby boom includes persons aged

A) 30 to 40 in 1960.
B) 35 to 40 in 1985.
C) 50 to 60 in 1980.
D) none of the above.

Question 21

During the period from 1975 to 1980, the attractiveness of real estate as an investment was enhanced by all of the factors below EXCEPT

A) tax deductions for interest on mortgage loans.
B) rapidly appreciating property values.
C) capital gains tax treatment of sales.
D) declining interest rates for mortgage loans.

Question 22

Over a period of years, the supply of residential housing is one of temporary shortages and temporary excesses.

Question 23

Inflation brought on by increased effort necessary to produce the same quantity of a good or service is known as

A) demand-pull inflation.
B) real-cost inflation.
C) cost-push inflation.
D) monetary inflation.

Question 24

Real-cost inflation can be cooled by environmental controls and depletion of natural resources.

Question 25

Cost-push inflation is the result of

A) increased manufacturing costs.
B) increased demand for a product.
C) changes in the money supply.
D) changes in interest rates.

Question 26

When too much money chases too few goods, it is known as

A) cost-push inflation.
B) demand-pull inflation.
C) real-cost inflation.
D) deflation.

Question 27

The existence of a base industry is essential to the economic health of a community.

Question 28

The real cost of interest is the

A) rate stated on the promissory note.
B) inflation-adjusted cost.
C) annual percentage rate.
D) rate stated on the promissory note plus any discounts.

Question 29

The tourist industry in Florida or oil wells on Alaska's North Slope would be examples of base industries.

Question 30

Demand-pull inflation has little to do with

A) manufacturing costs.
B) the availability of money.
C) buyers bidding against each other.
D) too much money chasing too few goods.

Question 31

By 1985, the market for residential housing for first-time buyers was strongest for the sale of

A) condominium units.
B) large single-family houses of more than 1600 square feet.
C) smaller single-family houses of approximately 1000 square feet.
D) cooperative housing.

Question 32

Through the Federal Reserve Banks, the Federal Reserve Board can create money.

Question 33

The advent of the secondary mortgage market

A) made available previously untapped sources of money for real estate mortgage loans.
B) contributed to real estate speculation and inflation in the late 1970s.
C) both a and b.
D) neither a nor b.

Question 34

By the year 1980, in order to curb inflation, the policy of the Federal Reserve became one of

A) generous monetary growth.
B) negative monetary growth.
C) restrained monetary growth.
D) constant, no-growth monetary supply.

Question 35

The extent to which regions and cities are vulnerable to changes in the economic base depends on the number and kinds of base industries that are present.

Question 36

A dramatic increase in the birth rate will have an immediate effect on the demand for housing but will have no long-range effect.

Question 37

Federal tax treatment of expenses and profits from real estate investments has little effect on what a person will pay for a property.

Question 38

Which of the following is more likely to be the LEAST demanding of appreciation potential in the ownership of real estate?

A) The owner of a rental residence
B) An owner who occupies a property as a principal
C) A business which owns apartment buildings
D) A corporation which owns office buildings

Question 39

Communities which are suffering from an economic depression caused by a decline in demand for the products of a single base industry tend to derive little benefit from diversification of their economic base.

Question 40

A community's economic base is determined by its ability to produce goods and/or services for consumption within the local area.

Question 41

To ____________________ the debt is the creation of money by the Federal Reserve to purchase Treasury securities.

Question 42

Ultimately, interest rates for real estate mortgage loans are determined by the marketplace.

Question 43

Through the Federal Reserve Banks, the Federal Reserve Board can create money but cannot destroy money.

Question 44

When there are higher prices due to greater effort needed to produce the same product today it is called ____________________ inflation.

Question 45

The dependency on the number of base industries present and the ability of those industries to continue to consistently export their products is called ____________________.

Question 46

____________________ inflation results from increasing the money supply faster than increases in goods and services to buy.

Question 47

Over a period of years, there will be periods of rapid price changes mixed with periods of mild price changes.

Question 48

The existence of a base industry is essential to the maintenance of local real estate values.

Question 49

The creation of excessive amounts of money by the government would have little effect on monetary inflation.

Question 50

The Federal Reserve Board influences the national economy by adjusting interest rates.

Question 51

The Federal Reserve Board's objectives for the American economy include high employment, stable prices, and steady growth in productive capacity.

Question 52

Monetary inflation can be controlled by keeping the growth in the monetary supply parallel to the growth in productivity.

Question 53

The future demand for housing as seen by looking at the population and the ability of people to obtain income at various age levels is known as ____________________ demand.

Question 54

Price changes for developed real property can be rapid and dramatic over short periods of time and create ____________________ demand.

Question 55

The Federal Reserve Board, through the Federal Reserve Banks, has the ability, through ____________________ policy, to create and destroy money.

Question 56

The employment ____________________ describes the number of people employed in local service industries as a function of the number of people employed in a base industry.

Question 57

Expectations about inflation tend to parallel actual changes.

Question 58

____________________ inflation results in higher prices due to increased costs of labor and supplies.

Question 59

The extent to which regions and cities are vulnerable to changes in the economic base has little to do with the ability of base industries to consistently export their products.

Question 60

Higher prices due to buyers bidding against each other causes ____________________ inflation.

Question 61

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
requirement for housing based on age and income patterns

Question 62

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
higher prices due to greater effort needed to produce the same product today

Question 63

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
an industry that produces goods or services for export from the region;also called primary or export industries

Question 64

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
dependency on the number of base industries present and the ability of those industries to continue to consistently export their products

Question 65

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
price changes for developed real property can be rapid and dramatic over short periods of time

Question 66

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
higher prices due to increased costs of labor and supplies

Question 67

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
describes the number of people employed in local service industries as a function of the number of people employed in a base industry

Question 68

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
producers of goods and services that are not exported;also called service or filler industries

Question 69

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
higher prices due to buyers bidding against each other

Question 70

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
governing board of the nation's central bank

Question 71

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
future demand for housing as seen by looking at the population and the ability of people to obtain income at various age levels

Question 72

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
population distribution based on year of birth

Question 73

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
the ability of a region to export goods and services to other regions

Question 74

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
the requirement for housing in a community

Question 75

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
the creation of money by the Federal Reserve to purchase Treasury securities

Question 76

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
inflation-adjusted

Question 77

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
results from increasing the money supply faster than increases in goods and services to buy

Question 78

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
an industry that produces goods or services to sell to local residents

Question 79

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
availability of housing in a community

Question 80

Choose the one most appropriate answer for each.
a.age distribution
k.monetary inflation
b.base industry
l.monetize the debt
c.buying pattern
m.primary industry
d.cost-push inflation
n.real
e.demand
o.real-cost inflation
f.demand-pull inflation
p.secondary industry
g.economic base
q.service industry
h.employment multiplier
r.short-run demand
i.Federal Reserve Board
s.supply
j.long-run demand
t.vulnerability
industries that produce goods and services for export;also called base or export industries.