Question 1

Saving is

Accepted Answer

Saving is required for production because it provides the funds that can be invested in the factors of production such as capital goods and materials needed for the production process. Without savings, businesses and individuals would not have the necessary resources to invest in production.

Question 2

The production of capital goods,which are then used to produce consumer goods,is called

Accepted Answer

The process of producing capital goods (like machinery, tools, buildings) for the purpose of producing consumer goods is referred to as roundabout production. This term was coined by the Austrian economist Friedrich Hayek to explain how the use of capital goods in the production process leads to higher levels of efficiency and productivity, despite the longer and more complex process involved.

Question 3

Which of the following is an example of roundabout production?

Accepted Answer

Roundabout production involves using resources to create capital goods, which are then used to produce consumer goods. Robinson Crusoe making a fish net to help him catch more fish per day is an example of roundabout production, as he is using resources to create a capital good (a fish net) that will help him produce more consumer goods (fish). The other options do not involve the creation of a capital good.

Question 4

Harry receives $100 from his grandfather.He has a positive rate of time preference,therefore:

Accepted Answer

A positive rate of time preference means Harry prefers present consumption over future consumption, so he is likely to spend the money today.

Question 5

Another term for an investment good is

Accepted Answer

An investment good is a good used as a capital good or in the production of other goods and services. Therefore, the term "capital" is the best choice as another term for an investment good.

Question 6

For the typical consumer,present consumption is

Accepted Answer

The answer of For the typical consumer,present consumption is
...

Question 7

If an economy increases the amount of roundabout production today,

Accepted Answer

Roundabout production refers to increasing the production of capital goods, which are used to produce consumer goods. Increasing roundabout production today means that more resources are allocated towards producing capital goods, which leads to greater capital accumulation in the future. This can result in increased productivity and higher levels of economic growth in the future.

Question 8

The opportunity cost of producing capital is

Accepted Answer

The answer of The opportunity cost of producing capital is
...

Question 9

Which of the following is not an example of roundabout production?

Accepted Answer

Jimmy's make 'n bake party is not an example of roundabout production because it does not involve the creation of capital goods that can be used to produce more goods or services in the future. It is simply a fundraising event. The other options all involve actions taken to improve productivity or increase output in the future.

Question 10

Production cannot occur without

Accepted Answer

The answer of Production cannot occur without
...

Question 11

Exhibit 13-1
 
-The movement from x to x' in Exhibit 13-1 represents a(n)

Accepted Answer

The answer of Exhibit 13-1
 
-The movement from x to...

Question 12

The benefit of the production of capital is

Accepted Answer

The production of capital goods aims to increase future production of consumption goods, which is beneficial in the long run.

Question 13

Increased saving today means

Accepted Answer

Increased saving today means less consumption today but more in the future. This is because saving allows for investment, which in turn leads to increased production and income in the future, enabling higher consumption levels at that time.

Question 14

Roundabout production occurs when

Accepted Answer

The answer of Roundabout production occurs when
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Question 15

Saving is necessary for production because

Accepted Answer

Production takes time, and saving provides the necessary resources to sustain production activities over time. Without saving, production would be limited to immediate resources, leading to a reduction in the scale and quality of production.

Question 16

If a person produces capital goods,she sacrifices current production of consumer goods in order to obtain the capability of producing more goods and services in the future.This is called roundabout production.

Accepted Answer

This statement accurately describes the concept of roundabout production. By investing resources in the production of capital goods, an individual or business is prioritizing future production potential over present consumption of consumer goods.

Question 17

The production of capital is a form of roundabout production.

Accepted Answer

The production of capital goods involves a long and roundabout process of creating intermediate goods that are used to produce the final capital goods. This is why it is referred to as roundabout production.

Question 18

Goods and activities typically are more highly valued the sooner they can be enjoyed,other things constant,

Accepted Answer

The statement reflects the concept of time preference, which refers to the tendency of people to prefer goods or activities sooner rather than later. This means that individuals value present consumption more than future consumption, due to factors like uncertainty and impatience. Positive interest rates may affect this preference, but the core reason for time preference is related to psychological and behavioral factors of individuals. Therefore, option E is the best choice as it explicitly mentions "positive rates of time preference," which aligns with the given statement.

Question 19

Which of the following is an example of roundabout production?

Accepted Answer

The answer of Which of the following is an example...

Question 20

Because present consumption is more highly valued higher than future consumption,interest is paid.

Accepted Answer

Interest is paid because people value present consumption more than future consumption, so they need an incentive (in the form of interest) to forego present consumption and save for future consumption. This is a fundamental principle of economics known as time preference.

Quiz 13: Capital, interest, and Corporate Finance

Saving is

The production of capital goods,which are then used to produce consumer goods,is called

Which of the following is an example of roundabout production?

Harry receives $100 from his grandfather.He has a positive rate of time preference,therefore:

Another term for an investment good is

For the typical consumer,present consumption is

If an economy increases the amount of roundabout production today,

The opportunity cost of producing capital is

Which of the following is not an example of roundabout production?

Production cannot occur without

Exhibit 13-1 -The movement from x to x' in Exhibit 13-1 represents a(n)

The benefit of the production of capital is

Increased saving today means

Roundabout production occurs when

Saving is necessary for production because

If a person produces capital goods,she sacrifices current production of consumer goods in order to obtain the capability of producing more goods and services in the future.This is called roundabout production.

The production of capital is a form of roundabout production.

Goods and activities typically are more highly valued the sooner they can be enjoyed,other things constant,

Which of the following is an example of roundabout production?

Because present consumption is more highly valued higher than future consumption,interest is paid.