Question 1

In the market clearing model, nominal saving is:

Accepted Answer

A) the change in money + the change in bonds. 
B) nominal income plus nominal consumption. 
C)    + wL + i(B + PK) - PC. 
D) all of the above. 
A) the change in money + the change in bonds. 
B) nominal income plus nominal consumption. 
C)    + wL + i(B + PK) - PC. 
D) all of the above.

Question 2

The profit in the model is:

Accepted Answer

A) output - (wages times labour hired + the rental price times capital rented). 
B) (price times output) divided by (wages times labour hired + the rental price times capital rented). 
C) (price times output) - (wages times labour hired + the rental price times capital rented). 
D) (wages times labour hired + the rental price times capital rented) - (price times output). 
A) output - (wages times labour hired + the rental price times capital rented). 
B) (price times output) divided by (wages times labour hired + the rental price times capital rented). 
C) (price times output) - (wages times labour hired + the rental price times capital rented). 
D) (wages times labour hired + the rental price times capital rented) - (price times output).

Question 3

Money in the model of this chapter is:

Accepted Answer

A) gold. 
B) a medium of exchange. 
C) interest earning. 
D) all of the above. 
A) gold. 
B) a medium of exchange. 
C) interest earning. 
D) all of the above.

Question 4

To maximize profit a firm should hire labour:

Accepted Answer

A) until it can produce no more of its product. 
B) until the marginal product of labour begins to fall. 
C) until the marginal product of labour equal the real wage rate. 
D) until the marginal product of labour is zero. 
A) until it can produce no more of its product. 
B) until the marginal product of labour begins to fall. 
C) until the marginal product of labour equal the real wage rate. 
D) until the marginal product of labour is zero.

Question 5

According to the household nominal budget constraint, PC+   B+P•   K =   + wL + i(B + PK), households can use their income to:

Accepted Answer

A) purchase consumption goods. 
B) hire more workers. 
C) acquire more money. 
D) all of the above. 
A) purchase consumption goods. 
B) hire more workers. 
C) acquire more money. 
D) all of the above.

Question 6

The household's budget constraint shows that:

Accepted Answer

A) sources of fund = uses of funds. 
B) profits are the largest part of income 
C) labour income is the largest part of income. 
D) consumption is the largest part of spending. 
A) sources of fund = uses of funds. 
B) profits are the largest part of income 
C) labour income is the largest part of income. 
D) consumption is the largest part of spending.

Question 7

In the model why does the return on bonds, i, equal the return on capital, (R/P) -   ?

Accepted Answer

The return on capital equals the return

Question 8

Money in the model of this chapter is held because:

Accepted Answer

A) for its own sake. 
B) to trade fairly soon for something else. 
C) to earn interest. 
D) all of the above. 
A) for its own sake. 
B) to trade fairly soon for something else. 
C) to earn interest. 
D) all of the above.

Question 9

According to the household nominal budget constraint, PC+   B+P•   K =   + wL + i(B + PK), households can use their income to:

Accepted Answer

A) acquire more money. 
B) acquire more bonds. 
C) pay more wages. 
D) all of the above. 
A) acquire more money. 
B) acquire more bonds. 
C) pay more wages. 
D) all of the above.

Question 10

If a household has ¥2,000 in money and the price level is 10, then the real value of its money is:

Accepted Answer

A) ¥10. 
B) ¥20,000. 
C) 200 goods. 
D) 1,900 goods. 
A) ¥10. 
B) ¥20,000. 
C) 200 goods. 
D) 1,900 goods.

Question 11

The goods market the price, P, is:

Accepted Answer

A) the price level. 
B) the rental price of goods. 
C) the price of a particular good. 
D) the interest rate. 
A) the price level. 
B) the rental price of goods. 
C) the price of a particular good. 
D) the interest rate.

Question 12

If the principal of a bond is €1000, it matures in a year and the interest rate is 6%, then at the end of the year the lender will receive:

Accepted Answer

A) €1000. 
B) €1060. 
C) €60. 
D) €940. 
A) €1000. 
B) €1060. 
C) €60. 
D) €940.

Question 13

Real saving is:

Accepted Answer

A)    + wL + i(B + PK) - PC. 
B) output plus consumption. 
C) (   /P) + (w/P)L + i((B/P) + K) - C. 
D) all of the above. 
A)    + wL + i(B + PK) - PC. 
B) output plus consumption. 
C) (   /P) + (w/P)L + i((B/P) + K) - C. 
D) all of the above.

Question 14

If the principal of a bond is €100, it matures in a year and the interest rate is 4%, then at the interest payment on this bond will be:

Accepted Answer

A) €100. 
B) €96. 
C) €4. 
D) €400. 
A) €100. 
B) €96. 
C) €4. 
D) €400.

Question 15

According to the household nominal budget constraint, PC+   B+P•   K =   + wL + i(B + PK), households can use their income to:

Accepted Answer

A) purchase consumption goods. 
B) acquire more bonds. 
C) purchase capital goods. 
D) all of the above. 
A) purchase consumption goods. 
B) acquire more bonds. 
C) purchase capital goods. 
D) all of the above.

Question 16

In the model of this chapter prices like the real wage adjust to clear markets like the labour market.

Accepted Answer

A) True 
 B)False

Question 17

The principal of a bond is:

Accepted Answer

A) the amount of interest paid each period. 
B) the initial amount borrowed. 
C) the amount of interest paid over the term of the bond. 
D) the total amount to be paid back including the amount borrow and the amount of interest paid over the term of the bond. 
A) the amount of interest paid each period. 
B) the initial amount borrowed. 
C) the amount of interest paid over the term of the bond. 
D) the total amount to be paid back including the amount borrow and the amount of interest paid over the term of the bond.

Question 18

The labour market clears when:

Accepted Answer

A) the real wage causes LS = LD. 
B) the real wage causes LS to be minimized. 
C) the marginal product of labour is zero. 
D) the real wage causes LS to be as large as possible. 
A) the real wage causes LS = LD. 
B) the real wage causes LS to be minimized. 
C) the marginal product of labour is zero. 
D) the real wage causes LS to be as large as possible.

Question 19

Real profit equals real output plus spending on capital and labour inputs.

Accepted Answer

A) True 
 B)False

Question 20

In the model the nominal interest rate equals the nominal net return on capital, i = (R/P) -   , because:

Accepted Answer

A) bonds are zero in the aggregate. 
B) capital is riskier than bonds. 
C) bonds are riskier than capital. 
D) if bonds offered a higher return than capital households would hold no capital. 
A) bonds are zero in the aggregate. 
B) capital is riskier than bonds. 
C) bonds are riskier than capital. 
D) if bonds offered a higher return than capital households would hold no capital.

In the market clearing model, nominal saving is:

The profit in the model is:

Money in the model of this chapter is:

To maximize profit a firm should hire labour:

According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

The household's budget constraint shows that:

In the model why does the return on bonds, i, equal the return on capital, (R/P) - ?

Money in the model of this chapter is held because:

According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

If a household has ¥2,000 in money and the price level is 10, then the real value of its money is:

The goods market the price, P, is:

If the principal of a bond is €1000, it matures in a year and the interest rate is 6%, then at the end of the year the lender will receive:

Real saving is:

If the principal of a bond is €100, it matures in a year and the interest rate is 4%, then at the interest payment on this bond will be:

According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

In the model of this chapter prices like the real wage adjust to clear markets like the labour market.

The principal of a bond is:

The labour market clears when:

Real profit equals real output plus spending on capital and labour inputs.

In the model the nominal interest rate equals the nominal net return on capital, i = (R/P) - , because:

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

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

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 7: Markets, Prices, Supply, and Demand

In the market clearing model, nominal saving is:

The profit in the model is:

Money in the model of this chapter is:

To maximize profit a firm should hire labour:

According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

The household's budget constraint shows that:

In the model why does the return on bonds, i, equal the return on capital, (R/P) - ?

Money in the model of this chapter is held because:

According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

If a household has ¥2,000 in money and the price level is 10, then the real value of its money is:

The goods market the price, P, is:

If the principal of a bond is €1000, it matures in a year and the interest rate is 6%, then at the end of the year the lender will receive:

Real saving is:

If the principal of a bond is €100, it matures in a year and the interest rate is 4%, then at the interest payment on this bond will be:

According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

In the model of this chapter prices like the real wage adjust to clear markets like the labour market.

The principal of a bond is:

The labour market clears when:

Real profit equals real output plus spending on capital and labour inputs.

In the model the nominal interest rate equals the nominal net return on capital, i = (R/P) - , because:

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

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

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