Question 1

A variable that moves in the same direction as real GDP is known as:

Accepted Answer

A) acyclical. 
B) procyclical. 
C) countercyclical. 
D) exogenous. 
A) acyclical. 
B) procyclical. 
C) countercyclical. 
D) exogenous. B

Question 2

In the Eurozone since 1999 total hours worked and employment have been:

Accepted Answer

A) acyclical. 
B) countercyclical. 
C) procyclical. 
D) exogenous. 
A) acyclical. 
B) countercyclical. 
C) procyclical. 
D) exogenous. C

Question 3

If technology, A, increases permanently then we would expect:

Accepted Answer

A) consumption to decrease as the substitution effect would be greater than the income effect of the change. 
B) consumption to increase as the income effect would be greater than the substitution effect of the change. 
C) consumption to increase as the substitution effect would be greater than the income effect of the change. 
D) consumption to decrease as the income effect would be greater than the substitution effect of the change. 
A) consumption to decrease as the substitution effect would be greater than the income effect of the change. 
B) consumption to increase as the income effect would be greater than the substitution effect of the change. 
C) consumption to increase as the substitution effect would be greater than the income effect of the change. 
D) consumption to decrease as the income effect would be greater than the substitution effect of the change. B

Question 4

With a temporary change in technology, A, we expect little change in consumption because:

Accepted Answer

A) the income effect on consumption is larger. 
B) the income effect on consumption is smaller. 
C) the intertemporal-substitution effect is larger. 
D) the intertemporal-substitution effect is smaller. 
A) the income effect on consumption is larger. 
B) the income effect on consumption is smaller. 
C) the intertemporal-substitution effect is larger. 
D) the intertemporal-substitution effect is smaller.

Question 5

An acyclical variable is one that:

Accepted Answer

A) moves the same direction as real GDP. 
B) has little tendency to move during a business cycle. 
C) moves the opposite direction as real GDP. 
D) determined outside the model. 
A) moves the same direction as real GDP. 
B) has little tendency to move during a business cycle. 
C) moves the opposite direction as real GDP. 
D) determined outside the model.

Question 6

When the labour supply of households is allowed to slope upward:

Accepted Answer

A) the model predictions match the observed data that employment and real wages are countercyclical. 
B) the model predictions do not match the observed data that employment and real wages are countercyclical. 
C) the model predictions do not match the observed data that employment and real wages are procyclical. 
D) the model predictions match the observed data that employment and real wages are procyclical. 
A) the model predictions match the observed data that employment and real wages are countercyclical. 
B) the model predictions do not match the observed data that employment and real wages are countercyclical. 
C) the model predictions do not match the observed data that employment and real wages are procyclical. 
D) the model predictions match the observed data that employment and real wages are procyclical.

Question 7

If technology, A, increases, then:

Accepted Answer

A) the MPK and the demand for capital services increase. 
B) the MPK and the demand for capital services decrease. 
C) the MPK increases and the demand for capital services decreases. 
D) the MPK decreases and the demand for capital services increases. 
A) the MPK and the demand for capital services increase. 
B) the MPK and the demand for capital services decrease. 
C) the MPK increases and the demand for capital services decreases. 
D) the MPK decreases and the demand for capital services increases.

Question 8

A higher interest rate makes:

Accepted Answer

A) future consumption cheaper. 
B) future leisure cheaper. 
C) current consumption more expensive. 
D) all of the above. 
A) future consumption cheaper. 
B) future leisure cheaper. 
C) current consumption more expensive. 
D) all of the above.

Question 9

When the marginal product of labour increases due to a positive technology change, the real wage falls.

Accepted Answer

A) True 
 B)False

Question 10

The overall effect of a higher real wage is:

Accepted Answer

A) to increase labour as the income and substitution effect reinforce each other. 
B) ambiguous on labour as the income and substitution effect work against each other. 
C) to decrease labour as the income and substitution effect reinforce each other. 
D) ambiguous because the income and substitution effect reinforce each other. 
A) to increase labour as the income and substitution effect reinforce each other. 
B) ambiguous on labour as the income and substitution effect work against each other. 
C) to decrease labour as the income and substitution effect reinforce each other. 
D) ambiguous because the income and substitution effect reinforce each other.

Question 11

The model predicts that in response to a permanent positive change in technology real consumption will be procyclical.

Accepted Answer

A) True 
 B)False

Question 12

An increase in the level of technology, A, causes:

Accepted Answer

A) an increase in the MPL 
B) a decrease in the MPL 
C) a movement along the MPL hiring more labour. 
D) a movement along the MPL hiring less labour. 
A) an increase in the MPL 
B) a decrease in the MPL 
C) a movement along the MPL hiring more labour. 
D) a movement along the MPL hiring less labour.

Question 13

An equilibrium business-cycle model:

Accepted Answer

A) uses shocks to GDP to find equilibrium conditions. 
B) uses GDP to find equilibrium shocks to the economy. 
C) uses equilibrium conditions to determine how shocks affect real GDP and other macroeconomic variables. 
D) uses GDP to find equilibrium conditions. 
A) uses shocks to GDP to find equilibrium conditions. 
B) uses GDP to find equilibrium shocks to the economy. 
C) uses equilibrium conditions to determine how shocks affect real GDP and other macroeconomic variables. 
D) uses GDP to find equilibrium conditions.

Question 14

With a temporary change in technology the model predicts:

Accepted Answer

A) the interest rate will be procyclical. 
B) a lower interest rate will motivate households to decrease current real consumption. 
C) a higher interest rate will motivate households to decrease current real saving. 
D) all of the above. 
A) the interest rate will be procyclical. 
B) a lower interest rate will motivate households to decrease current real consumption. 
C) a higher interest rate will motivate households to decrease current real saving. 
D) all of the above.

Question 15

The model predicts that if there is a technology, A, shock, the real rental price of capital will:

Accepted Answer

A) be relatively high during an economic expansion or a recession. 
B) be relatively low during an economic expansion or a recession. 
C) be relatively high during an economic expansion and relatively low during a recession. 
D) be relatively low during an economic expansion and relatively high during a recession. 
A) be relatively high during an economic expansion or a recession. 
B) be relatively low during an economic expansion or a recession. 
C) be relatively high during an economic expansion and relatively low during a recession. 
D) be relatively low during an economic expansion and relatively high during a recession.

Question 16

The cyclical part of real GDP is

Accepted Answer

A) trend real GDP less real GDP. 
B) real GDP less trend real GDP. 
C) real GDP/trend real GDP. 
D) trend real GDP/real GDP. 
A) trend real GDP less real GDP. 
B) real GDP less trend real GDP. 
C) real GDP/trend real GDP. 
D) trend real GDP/real GDP.

Question 17

What happens to consumption when there is a permanent and temporary increase in technology, A, and why?

Accepted Answer

An increase in technology drives up inte

Question 18

During an economic expansion due to an increase in technology, A, consumption will:

Accepted Answer

A) tend to rise due to the income effect. 
B) be unchanged. 
C) tend to rise due to the intertemporal substitution effect of the interest rate rising. 
D) tend to fluctuate. 
A) tend to rise due to the income effect. 
B) be unchanged. 
C) tend to rise due to the intertemporal substitution effect of the interest rate rising. 
D) tend to fluctuate.

Question 19

Eurozone real consumer expenditure since 1999 has been:

Accepted Answer

A) procyclical. 
B) countercyclical. 
C) a cyclical. 
D) exogenous. 
A) procyclical. 
B) countercyclical. 
C) a cyclical. 
D) exogenous.

Question 20

US real rental price of capital since 2000 has been:

Accepted Answer

A) procyclical as the model predicts. 
B) countercyclical as the model predicts. 
C) procyclical rather countercyclical as the model predicts. 
D) countercyclical rather procyclical as the model predicts. 
A) procyclical as the model predicts. 
B) countercyclical as the model predicts. 
C) procyclical rather countercyclical as the model predicts. 
D) countercyclical rather procyclical as the model predicts.

A variable that moves in the same direction as real GDP is known as:

In the Eurozone since 1999 total hours worked and employment have been:

If technology, A, increases permanently then we would expect:

With a temporary change in technology, A, we expect little change in consumption because:

An acyclical variable is one that:

When the labour supply of households is allowed to slope upward:

If technology, A, increases, then:

A higher interest rate makes:

When the marginal product of labour increases due to a positive technology change, the real wage falls.

The overall effect of a higher real wage is:

The model predicts that in response to a permanent positive change in technology real consumption will be procyclical.

An increase in the level of technology, A, causes:

An equilibrium business-cycle model:

With a temporary change in technology the model predicts:

The model predicts that if there is a technology, A, shock, the real rental price of capital will:

The cyclical part of real GDP is

What happens to consumption when there is a permanent and temporary increase in technology, A, and why?

During an economic expansion due to an increase in technology, A, consumption will:

Eurozone real consumer expenditure since 1999 has been:

US real rental price of capital since 2000 has been:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 9: An Equilibrium Business-Cycle Model

A variable that moves in the same direction as real GDP is known as:

In the Eurozone since 1999 total hours worked and employment have been:

If technology, A, increases permanently then we would expect:

With a temporary change in technology, A, we expect little change in consumption because:

An acyclical variable is one that:

When the labour supply of households is allowed to slope upward:

If technology, A, increases, then:

A higher interest rate makes:

When the marginal product of labour increases due to a positive technology change, the real wage falls.

The overall effect of a higher real wage is:

The model predicts that in response to a permanent positive change in technology real consumption will be procyclical.

An increase in the level of technology, A, causes:

An equilibrium business-cycle model:

With a temporary change in technology the model predicts:

The model predicts that if there is a technology, A, shock, the real rental price of capital will:

The cyclical part of real GDP is

What happens to consumption when there is a permanent and temporary increase in technology, A, and why?

During an economic expansion due to an increase in technology, A, consumption will:

Eurozone real consumer expenditure since 1999 has been:

US real rental price of capital since 2000 has been:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters