Question 1

Relative to a perfectly competitive market for an exhaustible resource,the monopolist charges a __________ price and uses the resource more __________.

Accepted Answer

A monopolist has the power to control the price and output of a resource. In the case of an exhaustible resource, the monopolist will likely charge a higher price because they have a market power advantage. Additionally, the monopolist is likely to use the resource more slowly because they want to maximize their profits and extend the life of the resource.

Question 2

You are the owner of a rare bottle of wine valued at $332.There are no costs associated with storing or selling the wine.Next year you expect the wine to increase in value to $350.If the interest rate is 10 percent

Accepted Answer

The answer of You are the owner of a rare...

Question 3

If individuals are convinced that the government will take care of all their medical needs after they retire,then

Accepted Answer

If individuals are convinced that the government will take care of all their medical needs after retirement, they will be less likely to save money for healthcare expenses. This will decrease the supply of loanable funds as people will not be interested in investing and saving. Therefore, the supply of loanable funds will shift leftward.

Question 4

If individuals start paying off the large amount of credit card debt they now hold,

Accepted Answer

The answer of If individuals start paying off the large...

Question 5

Use the following statements to answer this question: I.Corporate paper rates are typically less than one percent higher than Treasury bill rates.
II.Treasury bill rates may be viewed a short-term,risk-free rates.

Accepted Answer

Both statements are true. Statement I indicates that corporate paper rates are slightly higher compared to Treasury bill rates. Statement II mentions that Treasury bill rates are considered short-term and risk-free. Therefore, both statements are correct.

Question 6

Suppose new oil reserves are discovered that were not previously known.What happens to the user cost of oil?

Accepted Answer

The user cost of oil decreases as new reserves are discovered because the supply of oil increases, leading to a decrease in commodity prices. This, in turn, reduces the user cost of oil.

Question 7

When the government runs a large deficit,

Accepted Answer

When the government runs a large deficit, it needs to borrow more to finance this deficit, increasing the demand for loanable funds, which shifts the demand curve rightward.

Question 8

According to the economics of exhaustible resources,if the interest rate increases,

Accepted Answer

If the interest rate increases, it becomes more expensive to borrow money. As a result, companies may choose to extract resources and bring them to the market sooner rather than waiting and incurring the higher cost of borrowing later. Therefore, an exhaustible resource will be used up sooner.

Question 9

The prime rate

Accepted Answer

The answer of The prime rate
...

Question 10

Interest rates are determined by the supply and demand for

Accepted Answer

Interest rates are determined by the supply and demand for loanable funds. Loanable funds refer to the amount of money available for lending in a financial market. When there is a high demand for loanable funds, interest rates tend to rise because lenders can charge borrowers more for the use of their money. Conversely, when there is a low demand for loanable funds, interest rates tend to fall because lenders must offer competitive rates to attract borrowers. The supply of loanable funds is also a factor in interest rate determination, as it reflects the availability of money for lending.

Question 11

If individuals decide to save more for retirement,

Accepted Answer

When individuals decide to save more for retirement, their demand for loans decreases. This means they will deposit more money into savings accounts, which increases the supply of loanable funds. Therefore, the supply of loanable funds will shift rightward.

Question 12

If technological breakthroughs in the internet cause large numbers of firms to consider investment projects they hadn't previously thought of,then

Accepted Answer

An increase in the number of firms considering investment projects will cause a shift in the demand for loanable funds to the right. This will lead to an increase in interest rates as the demand for credit will exceed the supply.

Question 13

Which of the following is NOT true about commercial paper?

Accepted Answer

The answer of Which of the following is NOT true...

Question 14

If average Americans start to pay off the huge credit card debt they now hold,then

Accepted Answer

Paying off credit card debt reduces the demand for loanable funds, which, in turn, causes interest rates to fall due to decreased competition for those funds.

Question 15

If technological breakthroughs in the computer and software industries cause large numbers of firms to consider investment projects they hadn't previously thought of,

Accepted Answer

When new investment opportunities arise, firms will need more funds to finance those projects, which will increase their demand for loanable funds. Therefore, the demand for loanable funds will shift rightward. The supply of loanable funds is not affected by technological breakthroughs, so options A and B are incorrect. Option E is unlikely because an excess demand for loanable funds would result in an increase in interest rates, which would discourage some firms from borrowing and investing. Option D is also incorrect because a leftward shift in the demand for loanable funds would imply that fewer firms want to borrow money, which is not consistent with the assumption that new investment opportunities are emerging.

Question 16

The demand for loanable funds slopes

Accepted Answer

The answer of The demand for loanable funds slopes
...

Question 17

The difference between a Treasury bill and a Treasury bond is that the bill

Accepted Answer

The key difference between a Treasury bill and a Treasury bond is the length of the maturity period. A Treasury bill is a short-term investment with a maturity period of one year or less, while a Treasury bond is a long-term investment with a maturity period of ten to thirty years. None of the other options given accurately describe the difference between a bill and a bond.

Question 18

If the U.S.government retires the national debt,then

Accepted Answer

Retiring the national debt means the government will no longer need to borrow money, leading to a decrease in the demand for loanable funds. With a decrease in demand, interest rates are likely to fall.

Question 19

If we start to think that Medicare will pay for all of our medical needs as we age,then our likely actions will lead to:

Accepted Answer

The answer of If we start to think that Medicare...

Question 20

As firms' expected profit from new capital projects falls,

Accepted Answer

If firms' expected profit from new capital projects falls, they will likely decrease their demand for loanable funds to finance those projects. This will result in a leftward shift of the demand for loanable funds curve.

Quiz 15: Investment,time and Capital Markets

Relative to a perfectly competitive market for an exhaustible resource,the monopolist charges a price and uses the resource more .