Question 1

0 / 2 points
Interest is the:


a) price paid for the use of money.



b) opportunity cost of time.



c) expectation of a future return on investment.



d) reward for consuming rather than saving.

View Feedback
Question 2

2 / 2 points
Capitalist income (corporate profits, interest, and rent) has:


a) declined sharply since 1900 because of the growing strength of labor unions.



b) remained approximately constant since 1900.



c) increased significantly because of rising rents.



d) fallen since 1900 because of the declining importance of corporations.

View Feedback
Question 3

2 / 2 points
Usury laws:


a) allocate funds from low-productivity to high-productivity investments.



b) establish a legal ceiling on interest rates.



c) make more funds available to low-income borrowers.



d) create a surplus of loanable funds.

View Feedback
Question 4

2 / 2 points
Insurance tends to drive up health care costs by encouraging greater use of health care resources. Why
has this occurred in the United States, but not in Canada or the United Kingdom?


a) There is no health care insurance in Canada or the United Kingdom.



b) Canada and the United Kingdom use nonprice rationing to contain costs.



c)
Canada and the United Kingdom have better health care technology that allows them to
achieve lower costs than the United States.



d) Only private insurance creates an incentive to overuse health care resources.

View Feedback
Question 5

2 / 2 points
Which of the following is a provision of the Patient Protection and Affordable Care Act?


a)
Insurance companies may not legally deny coverage to anyone on the basis of a preexisting
medical condition.



b)
Every firm must purchase health insurance for their employees or face a $2,000 fine per
employee.



c)
Every individual must purchase their own health insurance for themselves and their
dependents or pay a fine.



d)
Adult children of parents with employer-provided health insurance can remain covered by
their parents' insurance through age 35.

View Feedback
Question 6

2 / 2 points
Pure or economic profit is:


a) the amount by which accounting profits exceed normal profits.



b) determined by subtracting explicit costs from total revenue.



c) the return required to retain entrepreneurial talent in some particular line of production.



d) the return to any resource the supply of which is perfectly inelastic.

View Feedback
Question 7

2 / 2 points
Between 1960 and 2009, U.S. health care spending as percentage of domestic output:


a) more than tripled.



b) doubled.



c) declined by one-half.



d) remained relatively constant.

View Feedback
Question 8

2 / 2 points
Roughly what portion of U.S. total health spending is paid for by private and public insurance?


a) one-tenth



b) one-fourth



c) four-fifths



d) one-half

View Feedback
Question 9

2 / 2 points
A unique characteristic of taxes on economic rents is that such taxes:


a) stimulate aggregate production.



b) do not lead to a reallocation of the resource.



c) are paid by consumers.



d) are always regressive.

View Feedback
Question 10

2 / 2 points
Which of the following statements is correct?


a) Limited access to the health care system is a major cause of rising health care costs.



b) Rising health care costs are a major cause of limited access to the health care system.



c) Rising health care costs have forced employers to raise real wages above labor productivity.



d)
The tax subsidy which government provides for health care causes health care to be
underconsumed.

View Feedback
Question 11

2 / 2 points
The rent paid for the pasture land used to graze cattle would increase if:


a) the productivity of the land increased.



b) people decided to consume more beef.



c) oil deposits were discovered on the land.



d) any of the above occurred.

View Feedback
Question 12

2 / 2 points
Employer-provided private health insurance:


a) is unique to the United States and not typically found in other countries.



b) is the most common form of health care provision in industrialized countries.



c)
substantially reduces the cost of health care provision relative to national health insurance
schemes.



d) provides a small percentage of health care spending in the United States.

View Feedback
Question 13

2 / 2 points
As a percentage of GDP, U.S. health care spending is:


a)
higher than that for Germany and Japan, but lower than that of the United Kingdom and
Sweden.



b) 17% which is higher than for any other major industrial country.



c) lower than that for Canada.



d) nearly identical to that of the other major industrial nations.

View Feedback
Question 14

2 / 2 points
Other things equal, and given that the elasticity of demand for health care is 0.2, a 10 percent increase
in the price of health care in the United States will reduce the quantity of health care demanded by
about:


a) 1 percent.



b) 2 percent.



c) 5 percent.



d) 10 percent.

View Feedback
Question 15

2 / 2 points
In the market for loanable funds:


a) an increase in bank lending will increase the interest rate.



b) a decrease in saving will reduce the interest rate.



c) an increase in borrowing for investment will increase the interest rate.



d) a decrease in government borrowing will increase the interest rate.

View Feedback
Question 16

2 / 2 points


Refer to the above diagram. Suppose that the demand for loanable funds is D
0
and the supply of
loanable funds initially is S
0
. If the supply of loanable funds declines to S
1
, the equilibrium interest rate
will:


a) decrease from G to F.



b) increase from E to F.



c) decrease from F to E.



d) increase from F to G.

View Feedback
Question 17

2 / 2 points
The availability of health insurance tends to:


a)
decrease the demand for health care and cause an underallocation of resources to the
health care industry.



b)
increase the quantity of health care demanded and cause an underallocation of resources
to the health care industry.



c)
increase the quantity of health care demanded and cause an overallocation of resources to
the health care industry.



d)
decrease the quantity of health care demanded and cause an overallocation of resources to
the health care industry.

View Feedback
Question 18

2 / 2 points
To say that land rent performs no incentive function means that:


a) higher rental payments will not bring forth a larger quantity of land.



b)
rent is not a cost to specific firms but it is a cost from the standpoint of the economy as a
whole.



c) rent does not allocate land in terms of productive efficiency.



d) rent tends to allocate land into the most productive uses.

View Feedback
Question 19

2 / 2 points
Defined narrowly as wages and salaries, labor's share of the national income is about:


a) 70 percent.



b) 53 percent.



c) 42 percent.



d) 89 percent.

View Feedback
Question 20

2 / 2 points
If Kelly deposits $10,000 into an account that pays 8 percent interest, compounded annually, and she
makes no further deposits or withdrawals, how much will Kelly have in her account at the end of 5
years?


a) $14,000



b) $14,482



c) $14,693



d) $15,000

View Feedback
Question 21

2 / 2 points
The problem of asymmetric information is that:


a) neither health care buyers nor providers are well-informed.



b) health care providers are well-informed, but buyers are not.



c) the outcomes of many complex medical procedures cannot be predicted.



d) insurance companies are well-informed but policy purchasers are not.

View Feedback
Question 22

2 / 2 points
A normal profit is:


a) the average profitability of a firm over one complete business cycle.



b) calculated by subtracting explicit costs from total revenue.



c) the "price" required to retain entrepreneurial talent in some particular line of production.



d) the amount by which total revenue exceeds total costs.

View Feedback
Question 23

2 / 2 points
The real interest rate can be estimated by:


a) subtracting the pure interest rate from the nominal interest rate.



b) dividing the nominal interest rate by the consumer price index.



c) subtracting the nominal interest rate from the rate of inflation.



d) subtracting the rate of inflation from the nominal interest rate.

View Feedback
Question 24

2 / 2 points
One of the provisions of the PPACA is a personal mandate that all individuals:


a)
pay a $1,000 deductible and 20% co-pay on all medical care except annual check-ups or
preventative care.



b) contribute at least 30% of the total cost of employer-provided health insurance.



c)
purchase health insurance for themselves and their dependents unless they are already
covered by government or employer-provided insurance.



d)
with preexisting conditions must purchase a specially designated government insurance
plan.

View Feedback
Question 25

2 / 2 points
Employer-provided private health insurance began in the United States because:


a)
the rising threat of socialism prompted U.S. companies to provide insurance to dampen
enthusiasm for socialist reform.



b)
during World War II, wage and price controls forced employers to use nonwage forms of
compensation to attract workers.



c)
poor health conditions at the beginning of the 20
th
century prompted the U.S. government
to require new companies to offer health insurance to employees.



d)
the American Medical Association successfully lobbied the U.S. government to provide
subsidies to companies offering private health insurance to employees.

View Feedback