ECO 6

QN=131 (17825) If a production function has constant returns to scale, output can be doubled if

• a. (i) labor alone doubles

• b. (ii) all inputs but labor double.

• c. (iii) all of the inputs double.

• d. None of (i), (ii), and (iii) is correct.

QN=132 (17861) World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs. We would expect that this would

• a. raise the demand for existing shares of the stock, causing the price to rise.

• b. decrease the demand for existing shares of the stock, causing the price to fall

• c. raise the supply of the existing shares of stock, causing the price to rise.

• d. raise the supply of the existing shares of stock, causing the price to fall.

QN=133 (17866) What would happen in the market for loanable funds if the government were to increase the tax on interest income?

• a. Interest rates would rise.

• b. Interest rates would be unaffected.

• c. Interest rates would fall.

• d. The effect on the interest rate is uncertain.

QN=134 (17859) People who buy newly issued stock in a corporation such as Crate and Barrel provide

• a. debt finance and so become part owners of Crate and Barrel.

• b. debt finance and so become creditors of Crate and Barrel

• c. equity finance and so become part owners of Crate and Barrel

• d. equity finance and so become creditors of Crate and Barrel.

QN=135 (17863) Which of the following is correct?

• a. In the national income accounts, investment and private saving refer to the same thing.

• b. In a closed economy if national saving is greater than zero, then everyone must be saving

• c. The financial system channels funds from savers to borrowers

• d. People whose consumption exceeds their income are savers.

QN=136 (17864) Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national saving amounts to 1,000, then what is GDP?

• a. (i) 9,500

• b. (ii) 10,000

• c. (iii) 10,500

• d. None of (i), (ii), and (iii) is correct.

QN=137 (17854) Two of the economy's most important financial intermediaries are

• a. suppliers of funds and demanders of funds.

• b. banks and the bond market

• c. the stock market and the bond market.

• d. banks and mutual funds.

QN=138 (17856) In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion, government transfers of $40 billion, and government purchases of goods and services of $80 billion. You also notice that last year it had private saving of $50 billion and investment of $70 billion. In which year did Nepotocracy have a budget deficit of $20 billion?

• a. this year and last year

• b. this year but not last year

• c. last year but not this year

• d. neither this year nor last year

QN=139 (17853) The source of the supply of loanable funds is

• a. saving, and the source of the demand for loanable funds is investment

• b. consumption, and the source of the demand for loanable funds is investment.

• c. investment, and the source of the demand for loanable funds is saving.

• d. the interest rate, and the source of the demand for loanable funds is saving.

QN=140 (17871) Which of the following lists correctly identifies the four expenditure categories of GDP?

• a. consumption, government purchases, investment, net-exports

• b. consumption, investment, depreciation, net-exports

• c. consumption, saving, investment, depreciation,

• d. consumption, government purchases, investment, savings