Essentials of Real Estate Economics 6th Edition
Final Exam
1. Economics is considered a:
(a) behavioral science
(b) physical science
(c) cultural science
(d) social science
2. The famous capitalist, Adam Smith, wrote the book:
(a) Das Kapital
(b) The Wealth of Nations
(c) General Theory of Employment, Interest, and Money
(d) Theory of Capitalism
3. When all major economic decisions are made by private individuals with no interference
by government, the economic system would be called:
(a) pure socialism
(b) mixed socialism
(c) mixed capitalism
(d) pure capitalism
4. All of the following are principles of pure socialism, EXCEPT:
(a) a central planning committee
(b) distribution is based on need
(c) public ownership of basic resources
(d) open and competitive markets for goods and services
5. The payment for the use of all of the factors of production is called:
(a) profit
(b) income
(c) interest
(d) return
6. Some economists use the term “demand” to mean just desire or need:
(a) true
(b) false
7. If demand by renters for apartments increases, while the number of apartment units
available for rent increases by a proportional amount, apartment rents should:
(a) increase
(b) decrease
(c) remain the same
(d) become dynamic
© Cengage Learning 1
,8. The phrase “No Free Lunch” is best explained by the concept of:
(a) diminishing returns
(b) opportunity costs
(c) highest and best use
(d) excess demand
9. A change or shift in demand could be caused by a change in:
(a) the cost of the factors of production
(b) business anticipation of future trends
(c) consumer tastes
(d) an increase in the cost of labor
10. A change in demand for one product can cause a change in the supply of another product:
(a) true
(b) false
11. That point where supply and demand are matched at a price that will clear the market is
called:
(a) open price
(b) equilibrium
(c) comparative advantage
(d) surplus
12. A summary of the net value of the goods exported and imported between one nation and
other nations is called:
(a) free trade
(b) rate of exchange
(c) balance of trade
(d) balance of payments
13. The total market value of all goods and services produced within the U.S. economy in a
given time period is called:
(a) gross domestic product
(b) personal consumption expenditures
(c) net export
(d) gross private domestic investment
14. The time period in a business cycle from the trough (bottom) to the peak is called:
(a) recession
(b) recovery
(c) prosperity
(d) expansion
© Cengage Learning 2
, 15. In the short run, real estate cycles tend to be most influenced by changes in:
(a) mortgage interest rates
(b) death rates
(c) age brackets
(d) cost of construction
16. The government’s use of the money supply and interest rates as a tool to control swings
in the business cycle is called:
(a) automatic stabilizers
(b) fiscal policy
(c) monetary policy
(d) foreign policy
17. During times of recession, the government can attempt to stimulate the economy by:
(a) increasing government spending
(b) increasing taxes
(c) increasing interest rates
(d) increasing budget cuts
18. During times of rapid inflation, the government can attempt to reduce inflation by:
(a) increasing government spending
(b) decreasing taxes
(c) decreasing interest rates
(d) decreasing the supply of money
19. When one views the economy as a circular flow, private individuals and households:
(a) provide land, labor, and capital
(b) pay wages, rents, and interest
(c) receive business revenue
(d) provide a vast array of consumer products
20. Real GDP is GDP that has been adjusted for:
(a) taxes
(b) government expenditures
(c) inflation
(d) unemployment
21. According to fiscal theory, a tax increase should:
(a) decrease private spending
(b) expand private savings
(c) fight unemployment
(d) create employment
© Cengage Learning 3
Final Exam
1. Economics is considered a:
(a) behavioral science
(b) physical science
(c) cultural science
(d) social science
2. The famous capitalist, Adam Smith, wrote the book:
(a) Das Kapital
(b) The Wealth of Nations
(c) General Theory of Employment, Interest, and Money
(d) Theory of Capitalism
3. When all major economic decisions are made by private individuals with no interference
by government, the economic system would be called:
(a) pure socialism
(b) mixed socialism
(c) mixed capitalism
(d) pure capitalism
4. All of the following are principles of pure socialism, EXCEPT:
(a) a central planning committee
(b) distribution is based on need
(c) public ownership of basic resources
(d) open and competitive markets for goods and services
5. The payment for the use of all of the factors of production is called:
(a) profit
(b) income
(c) interest
(d) return
6. Some economists use the term “demand” to mean just desire or need:
(a) true
(b) false
7. If demand by renters for apartments increases, while the number of apartment units
available for rent increases by a proportional amount, apartment rents should:
(a) increase
(b) decrease
(c) remain the same
(d) become dynamic
© Cengage Learning 1
,8. The phrase “No Free Lunch” is best explained by the concept of:
(a) diminishing returns
(b) opportunity costs
(c) highest and best use
(d) excess demand
9. A change or shift in demand could be caused by a change in:
(a) the cost of the factors of production
(b) business anticipation of future trends
(c) consumer tastes
(d) an increase in the cost of labor
10. A change in demand for one product can cause a change in the supply of another product:
(a) true
(b) false
11. That point where supply and demand are matched at a price that will clear the market is
called:
(a) open price
(b) equilibrium
(c) comparative advantage
(d) surplus
12. A summary of the net value of the goods exported and imported between one nation and
other nations is called:
(a) free trade
(b) rate of exchange
(c) balance of trade
(d) balance of payments
13. The total market value of all goods and services produced within the U.S. economy in a
given time period is called:
(a) gross domestic product
(b) personal consumption expenditures
(c) net export
(d) gross private domestic investment
14. The time period in a business cycle from the trough (bottom) to the peak is called:
(a) recession
(b) recovery
(c) prosperity
(d) expansion
© Cengage Learning 2
, 15. In the short run, real estate cycles tend to be most influenced by changes in:
(a) mortgage interest rates
(b) death rates
(c) age brackets
(d) cost of construction
16. The government’s use of the money supply and interest rates as a tool to control swings
in the business cycle is called:
(a) automatic stabilizers
(b) fiscal policy
(c) monetary policy
(d) foreign policy
17. During times of recession, the government can attempt to stimulate the economy by:
(a) increasing government spending
(b) increasing taxes
(c) increasing interest rates
(d) increasing budget cuts
18. During times of rapid inflation, the government can attempt to reduce inflation by:
(a) increasing government spending
(b) decreasing taxes
(c) decreasing interest rates
(d) decreasing the supply of money
19. When one views the economy as a circular flow, private individuals and households:
(a) provide land, labor, and capital
(b) pay wages, rents, and interest
(c) receive business revenue
(d) provide a vast array of consumer products
20. Real GDP is GDP that has been adjusted for:
(a) taxes
(b) government expenditures
(c) inflation
(d) unemployment
21. According to fiscal theory, a tax increase should:
(a) decrease private spending
(b) expand private savings
(c) fight unemployment
(d) create employment
© Cengage Learning 3
