Question 1

A relationship that shows the technological possibilities for an economy as a whole is called a

Accepted Answer

A) production function. 
B) utility possibilities frontier. 
C) competitive equilibrium. 
D) budget constraint. 
E) production possibilities frontier. 
A) production function. 
B) utility possibilities frontier. 
C) competitive equilibrium. 
D) budget constraint. 
E) production possibilities frontier.

Question 2

Real business cycle theory argues that the primary cause of business cycles is fluctuations in

Accepted Answer

A) government spending. 
B) the importance of externalities. 
C) total factor productivity. 
D) preferences. 
E) monetary shocks. 
A) government spending. 
B) the importance of externalities. 
C) total factor productivity. 
D) preferences. 
E) monetary shocks.

Question 3

A decrease in total factor productivity could be caused by

Accepted Answer

A) better organization of production. 
B) higher taxes. 
C) technological innovation. 
D) consumer supplying less hours of work. 
E) an increase in regulation. 
A) better organization of production. 
B) higher taxes. 
C) technological innovation. 
D) consumer supplying less hours of work. 
E) an increase in regulation.

Question 4

An example of a public good is

Accepted Answer

A) transfer payments. 
B) national defence. 
C) government pension payments. 
D) both A and C. 
E) lump sum taxes. 
A) transfer payments. 
B) national defence. 
C) government pension payments. 
D) both A and C. 
E) lump sum taxes.

Question 5

The real wage is determined by

Accepted Answer

A) -(slope of PPF). 
B) the marginal rate of transformation. 
C) +(slope of indifference curve). 
D) the marginal product of capital. 
E) the competitive equilibrium. 
A) -(slope of PPF). 
B) the marginal rate of transformation. 
C) +(slope of indifference curve). 
D) the marginal product of capital. 
E) the competitive equilibrium.

Question 6

In the production function, output is given by

Accepted Answer

A) consumption and taxes. 
B) capital stock and leisure. 
C) capital stock and employment. 
D) consumption and government spending. 
E) production technology and the capital stock. 
A) consumption and taxes. 
B) capital stock and leisure. 
C) capital stock and employment. 
D) consumption and government spending. 
E) production technology and the capital stock.

Question 7

A Pareto optimum is a point that

Accepted Answer

A) a social planner would choose. 
B) a malevolent dictator would choose. 
C) is experienced at competitive equilibrium. 
D) a cooperative coalition of some altruistic consumers would choose. 
E) a cooperative coalition of some socially responsible firms would choose. 
A) a social planner would choose. 
B) a malevolent dictator would choose. 
C) is experienced at competitive equilibrium. 
D) a cooperative coalition of some altruistic consumers would choose. 
E) a cooperative coalition of some socially responsible firms would choose.

Question 8

Changes in total factor productivity are plausible causes of business cycles because productivity-induced business cycles correctly predict

Accepted Answer

A) real wages and consumption must be procyclical. 
B) consumption and total factor productivity must be procyclical. 
C) total hours worked and consumption must be procyclical. 
D) real wages and total hours must be procyclical. 
E) consumption and government spending must be procyclical. 
A) real wages and consumption must be procyclical. 
B) consumption and total factor productivity must be procyclical. 
C) total hours worked and consumption must be procyclical. 
D) real wages and total hours must be procyclical. 
E) consumption and government spending must be procyclical.

Question 9

In the one-period competitive model we have been studying

Accepted Answer

A) both consumption and total factor productivity are endogenous. 
B) consumption and taxes are exogenous. 
C) consumption is exogenous and total factor productivity is endogenous. 
D) both consumption and total factor productivity are exogenous. 
E) consumption is endogenous and total factor productivity is exogenous. 
A) both consumption and total factor productivity are endogenous. 
B) consumption and taxes are exogenous. 
C) consumption is exogenous and total factor productivity is endogenous. 
D) both consumption and total factor productivity are exogenous. 
E) consumption is endogenous and total factor productivity is exogenous.

Question 10

In a one-period model, government is likely to run

Accepted Answer

A) a surplus but not a deficit. 
B) on a fiscal year basis. 
C) either a surplus or a deficit. 
D) neither a surplus nor a deficit. 
E) a deficit but not a surplus. 
A) a surplus but not a deficit. 
B) on a fiscal year basis. 
C) either a surplus or a deficit. 
D) neither a surplus nor a deficit. 
E) a deficit but not a surplus.

Question 11

Goods and services provided by the government are called

Accepted Answer

A) national goods. 
B) social goods. 
C) public goods. 
D) free goods. 
E) government goods. 
A) national goods. 
B) social goods. 
C) public goods. 
D) free goods. 
E) government goods.

Question 12

An example of a negative externality is

Accepted Answer

A) a chemical factory producing fertilizers that kills plants, rather than help them as advertised. 
B) a chemical factory that conducts research into the safe disposal if chemicals. 
C) a chemical factory dumping waste in a river upstream from a popular fishing spot. 
D) a chemical factory producing fertilizers that do not, in fact, help plants grow. 
E) a chemical factory that enters a town and bids up wages, and, therefore, increases the cost of other firms. 
A) a chemical factory producing fertilizers that kills plants, rather than help them as advertised. 
B) a chemical factory that conducts research into the safe disposal if chemicals. 
C) a chemical factory dumping waste in a river upstream from a popular fishing spot. 
D) a chemical factory producing fertilizers that do not, in fact, help plants grow. 
E) a chemical factory that enters a town and bids up wages, and, therefore, increases the cost of other firms.

Question 13

The second fundamental theorem of welfare economics states that

Accepted Answer

A) a Pareto optimum is always a competitive equilibrium. 
B) under certain conditions, a competitive equilibrium is Pareto-optimal. 
C) under certain conditions, a Pareto optimum is a competitive equilibrium. 
D) a competitive equilibrium is always Pareto-optimal. 
E) a Pareto optimum does not have to be a competitive equilibrium. 
A) a Pareto optimum is always a competitive equilibrium. 
B) under certain conditions, a competitive equilibrium is Pareto-optimal. 
C) under certain conditions, a Pareto optimum is a competitive equilibrium. 
D) a competitive equilibrium is always Pareto-optimal. 
E) a Pareto optimum does not have to be a competitive equilibrium.

Question 14

Changes in government spending are NOT likely causes of business cycles because government spending induced business cycles would, counterfactually predict

Accepted Answer

A) countercyclical employment. 
B) countercyclical consumption. 
C) procyclical consumption. 
D) countercyclical real wages. 
E) procyclical employment. 
A) countercyclical employment. 
B) countercyclical consumption. 
C) procyclical consumption. 
D) countercyclical real wages. 
E) procyclical employment.

Question 15

The marginal rate of transformation is equal to

Accepted Answer

A) marginal rate of substitution of leisure. 
B) the real wage rate divided by total factor productivity. 
C) marginal product of labour. 
D) marginal rate of substitution for capital. 
E) marginal product of capital. 
A) marginal rate of substitution of leisure. 
B) the real wage rate divided by total factor productivity. 
C) marginal product of labour. 
D) marginal rate of substitution for capital. 
E) marginal product of capital.

Question 16

A Pareto optimum

Accepted Answer

A) is the slope of the PPF. 
B) is where the consumption line is tangent to the PPF. 
C) can be found in a closed and open economy. 
D) is found where the budget line is tangent to the indifference curve. 
E) is the same as a competitive equilibrium. 
A) is the slope of the PPF. 
B) is where the consumption line is tangent to the PPF. 
C) can be found in a closed and open economy. 
D) is found where the budget line is tangent to the indifference curve. 
E) is the same as a competitive equilibrium.

Question 17

The presence of a distorting tax on wage income can result in

Accepted Answer

A) MPN < MRTL,C. 
B) MRTL,C < MRSL,C. 
C) MRSL,C < MPN. 
D) MPn < w. 
E) MRSL,C = MPN. 
A) MPN < MRTL,C. 
B) MRTL,C < MRSL,C. 
C) MRSL,C < MPN. 
D) MPn < w. 
E) MRSL,C = MPN.

Question 18

In an economic model, an endogenous variable is

Accepted Answer

A) a stand-in for more complicated variables. 
B) closely linked to a closed economy. 
C) determined outside the model. 
D) determined by the model itself. 
E) a variable that has no effect on the workings of the model. 
A) a stand-in for more complicated variables. 
B) closely linked to a closed economy. 
C) determined outside the model. 
D) determined by the model itself. 
E) a variable that has no effect on the workings of the model.

Question 19

Fiscal policy refers to a government's choices over its

Accepted Answer

A) expenditures, taxes, issuance of money, and borrowing. 
B) expenditures, foreign affairs, issuance of money, and borrowing. 
C) expenditures, taxes, transfers, and borrowing. 
D) changing the money supply, defense, and borrowing. 
E) issuance of money, taxes, environmental regulations, and foreign affairs. 
A) expenditures, taxes, issuance of money, and borrowing. 
B) expenditures, foreign affairs, issuance of money, and borrowing. 
C) expenditures, taxes, transfers, and borrowing. 
D) changing the money supply, defense, and borrowing. 
E) issuance of money, taxes, environmental regulations, and foreign affairs.

Question 20

Much of the writings of Adam Smith are in close agreement with

Accepted Answer

A) the first fundamental theorem of welfare economics. 
B) where competitive equilibrium is. 
C) the necessity of trade restrictions. 
D) the relationship between the production function and the PPF. 
E) the second theorem of welfare economics. 
A) the first fundamental theorem of welfare economics. 
B) where competitive equilibrium is. 
C) the necessity of trade restrictions. 
D) the relationship between the production function and the PPF. 
E) the second theorem of welfare economics.

A relationship that shows the technological possibilities for an economy as a whole is called a

Real business cycle theory argues that the primary cause of business cycles is fluctuations in

A decrease in total factor productivity could be caused by

An example of a public good is

The real wage is determined by

In the production function, output is given by

A Pareto optimum is a point that

Changes in total factor productivity are plausible causes of business cycles because productivity-induced business cycles correctly predict

In the one-period competitive model we have been studying

In a one-period model, government is likely to run

Goods and services provided by the government are called

An example of a negative externality is

The second fundamental theorem of welfare economics states that

Changes in government spending are NOT likely causes of business cycles because government spending induced business cycles would, counterfactually predict

The marginal rate of transformation is equal to

A Pareto optimum

The presence of a distorting tax on wage income can result in

In an economic model, an endogenous variable is

Fiscal policy refers to a government's choices over its

Much of the writings of Adam Smith are in close agreement with

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 5: A Closed-Economy One-Period Macroeconomic Model

A relationship that shows the technological possibilities for an economy as a whole is called a

Real business cycle theory argues that the primary cause of business cycles is fluctuations in

A decrease in total factor productivity could be caused by

An example of a public good is

The real wage is determined by

In the production function, output is given by

A Pareto optimum is a point that

Changes in total factor productivity are plausible causes of business cycles because productivity-induced business cycles correctly predict

In the one-period competitive model we have been studying

In a one-period model, government is likely to run

Goods and services provided by the government are called

An example of a negative externality is

The second fundamental theorem of welfare economics states that

Changes in government spending are NOT likely causes of business cycles because government spending induced business cycles would, counterfactually predict

The marginal rate of transformation is equal to

A Pareto optimum

The presence of a distorting tax on wage income can result in

In an economic model, an endogenous variable is

Fiscal policy refers to a government's choices over its

Much of the writings of Adam Smith are in close agreement with

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters