Question 1

The response of output following a natural disaster includes

Accepted Answer

A)  an increase in output demand and an increase in output supply. 
B)  an increase in output demand and a decrease in output supply. 
C)  a decrease in output demand and an increase in output supply. 
D)  a decrease in output demand and a decrease in output supply. 
E)  only a decrease in output demand. 
A)  an increase in output demand and an increase in output supply. 
B)  an increase in output demand and a decrease in output supply. 
C)  a decrease in output demand and an increase in output supply. 
D)  a decrease in output demand and a decrease in output supply. 
E)  only a decrease in output demand. B

Question 2

When drawn against current income,the slope of the Cd (r)+ Id (r)+ G curve is equal to the marginal

Accepted Answer

A)  product of capital. 
B)  product of labour. 
C)  propensity to consume. 
D)  propensity to save. 
E)  benefit from investment. 
A)  product of capital. 
B)  product of labour. 
C)  propensity to consume. 
D)  propensity to save. 
E)  benefit from investment. C

Question 3

An increase in total factor productivity causes

Accepted Answer

A)  real wages to rise. 
B)  labour supply to fall. 
C)  the output supply curve to shift left. 
D)  real interest rates to rise. 
E)  the production function to shift up. 
A)  real wages to rise. 
B)  labour supply to fall. 
C)  the output supply curve to shift left. 
D)  real interest rates to rise. 
E)  the production function to shift up. E

Question 4

The demand for current consumption,as plotted against current income,shifts to the right due to

Accepted Answer

A)  a increase in current taxes. 
B)  an increase in future taxes. 
C)  an increase in current income. 
D)  a decrease in future income. 
E)  a decrease in interest rates. 
A)  a increase in current taxes. 
B)  an increase in future taxes. 
C)  an increase in current income. 
D)  a decrease in future income. 
E)  a decrease in interest rates.

Question 5

The marginal cost of investment for the firm is equal to

Accepted Answer

A)  1. 
B)  -1. 
C)  MP'K. 
D)  - MP'K. 
E)  1/MP'K. 
A)  1. 
B)  -1. 
C)  MP'K. 
D)  - MP'K. 
E)  1/MP'K.

Question 6

The marginal benefit from investment comes from

Accepted Answer

A)  increased production and more undepreciated capital in the future period. 
B)  only increased production in the future period. 
C)  only increased undepreciated capital in the future period. 
D)  having more capital in the current period. 
E)  increases in the prices of stocks. 
A)  increased production and more undepreciated capital in the future period. 
B)  only increased production in the future period. 
C)  only increased undepreciated capital in the future period. 
D)  having more capital in the current period. 
E)  increases in the prices of stocks.

Question 7

The marginal benefit from investment for a firm is equal to

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 8

Optimal investment is

Accepted Answer

A)  negatively related with the real interest rate. 
B)  positively related with the real interest rate. 
C)  determined by current stock prices. 
D)  unrelated to the real interest rate. 
E)  positively related with the depreciation rate. 
A)  negatively related with the real interest rate. 
B)  positively related with the real interest rate. 
C)  determined by current stock prices. 
D)  unrelated to the real interest rate. 
E)  positively related with the depreciation rate.

Question 9

The partial expenditure multiplier

Accepted Answer

A)  is the total increase in the demand for goods. 
B)  is the total increase in government spending. 
C)  equals (1 - MP
C) . 
D)  is the ratio of total increase in demand for goods to the increase in government spending. 
E)  equals the MPC. 
A)  is the total increase in the demand for goods. 
B)  is the total increase in government spending. 
C)  equals (1 - MP
C) . 
D)  is the ratio of total increase in demand for goods to the increase in government spending. 
E)  equals the MPC.

Question 10

The marginal benefit from investment is

Accepted Answer

A)  the ratio of investment to expected future profits. 
B)  is related to economic activity and the real interest rate. 
C)  is what one unit of investment in the current period adds to the present value of profits. 
D)  is what one unit of investment adds to the current capital stock. 
E)  is what one unit of investment costs when funds are borrowed. 
A)  the ratio of investment to expected future profits. 
B)  is related to economic activity and the real interest rate. 
C)  is what one unit of investment in the current period adds to the present value of profits. 
D)  is what one unit of investment adds to the current capital stock. 
E)  is what one unit of investment costs when funds are borrowed.

Question 11

An asymmetric information problem arises when

Accepted Answer

A)  interest rates exceed r. 
B)  the representative firm is unable to borrow. 
C)  there are more bad firms than good firms that wish to borrow. 
D)  the lender is not able to distinguish between a good borrower and a bad borrower. 
E)  the managers of bad firms consumer the borrowed funds as executive compensation. 
A)  interest rates exceed r. 
B)  the representative firm is unable to borrow. 
C)  there are more bad firms than good firms that wish to borrow. 
D)  the lender is not able to distinguish between a good borrower and a bad borrower. 
E)  the managers of bad firms consumer the borrowed funds as executive compensation.

Question 12

The total government expenditure multiplier is

Accepted Answer

A)  larger than 1. 
B)  between 0 and 1. 
C)  equal to the MPC. 
D)  equal to   
E)  1. 
A)  larger than 1. 
B)  between 0 and 1. 
C)  equal to the MPC. 
D)  equal to   
E)  1.

Question 13

The firm will hire current labour until

Accepted Answer

A)  profits are maximized. 
B)  total factor productivity is maximized. 
C)  the marginal product of labour equals total employment. 
D)  the marginal product of labour equals the wage rate. 
E)  the marginal product of labour is less than the real interest rate. 
A)  profits are maximized. 
B)  total factor productivity is maximized. 
C)  the marginal product of labour equals total employment. 
D)  the marginal product of labour equals the wage rate. 
E)  the marginal product of labour is less than the real interest rate.

Question 14

If firm-level asymmetric information becomes more severe,then

Accepted Answer

A)  investment demand decreases. 
B)  investment demand does not change. 
C)  investment demand increases. 
D)  there is an unambiguous effect on investment demand. 
E)  investment demand decreases if the subsitution effect dominates, increases if the income effect dominates. 
A)  investment demand decreases. 
B)  investment demand does not change. 
C)  investment demand increases. 
D)  there is an unambiguous effect on investment demand. 
E)  investment demand decreases if the subsitution effect dominates, increases if the income effect dominates.

Question 15

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption,procyclical investment,procyclical employment,and procyclical real wages?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  four 
E)  none 
A)  one 
B)  two 
C)  three 
D)  four 
E)  none

Question 16

The output supply curve is the relationship between output and

Accepted Answer

A)  labour supply. 
B)  real interest rates. 
C)  total factor productivity. 
D)  investment. 
E)  capital stock. 
A)  labour supply. 
B)  real interest rates. 
C)  total factor productivity. 
D)  investment. 
E)  capital stock.

Question 17

An increase in the default premium

Accepted Answer

A)  raises the safe credit market interest rate. 
B)  lowers the real interest rate and firms invest more. 
C)  shifts the optimal investement schedule to the left. 
D)  shifts the optimal investement schedule to the right. 
E)  will prevent firms from defaulting on their loans. 
A)  raises the safe credit market interest rate. 
B)  lowers the real interest rate and firms invest more. 
C)  shifts the optimal investement schedule to the left. 
D)  shifts the optimal investement schedule to the right. 
E)  will prevent firms from defaulting on their loans.

Question 18

The decrease in lifetime wealth affects consumption demand by

Accepted Answer

A)  -MPC(G2 - G1). 
B)  MPC(G2 - G1). 
C)  r(G2 - G1). 
D)  (1 - MP
C) (G2 - G1). 
E)  does not affect it. 
A)  -MPC(G2 - G1). 
B)  MPC(G2 - G1). 
C)  r(G2 - G1). 
D)  (1 - MP
C) (G2 - G1). 
E)  does not affect it.

Question 19

The marginal rate of substitution of future leisure for future consumption must be equal to

Accepted Answer

A)  the real interest rate. 
B)  savings in the current period. 
C)  one. 
D)  the future real wage. 
E)  the relative price of current consumption in terms of future consumption. 
A)  the real interest rate. 
B)  savings in the current period. 
C)  one. 
D)  the future real wage. 
E)  the relative price of current consumption in terms of future consumption.

Question 20

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

Accepted Answer

A)  right by more than the rightward shift in output supply. 
B)  right by less than the rightward shift in output supply. 
C)  left by more than the leftward shift in output supply. 
D)  left by less than the leftward shift in output supply. 
E)  right by the same amount as the rightward shift in output supply. 
A)  right by more than the rightward shift in output supply. 
B)  right by less than the rightward shift in output supply. 
C)  left by more than the leftward shift in output supply. 
D)  left by less than the leftward shift in output supply. 
E)  right by the same amount as the rightward shift in output supply.

The response of output following a natural disaster includes

When drawn against current income,the slope of the Cd (r)+ Id (r)+ G curve is equal to the marginal

An increase in total factor productivity causes

The demand for current consumption,as plotted against current income,shifts to the right due to

The marginal cost of investment for the firm is equal to

The marginal benefit from investment comes from

The marginal benefit from investment for a firm is equal to

Optimal investment is

The partial expenditure multiplier

The marginal benefit from investment is

An asymmetric information problem arises when

The total government expenditure multiplier is

The firm will hire current labour until

If firm-level asymmetric information becomes more severe,then

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption,procyclical investment,procyclical employment,and procyclical real wages?

The output supply curve is the relationship between output and

An increase in the default premium

The decrease in lifetime wealth affects consumption demand by

The marginal rate of substitution of future leisure for future consumption must be equal to

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

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

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 11: A Real Intertemporal Model with Investment

The response of output following a natural disaster includes

When drawn against current income,the slope of the Cd (r)+ Id (r)+ G curve is equal to the marginal

An increase in total factor productivity causes

The demand for current consumption,as plotted against current income,shifts to the right due to

The marginal cost of investment for the firm is equal to

The marginal benefit from investment comes from

The marginal benefit from investment for a firm is equal to

Optimal investment is

The partial expenditure multiplier

The marginal benefit from investment is

An asymmetric information problem arises when

The total government expenditure multiplier is

The firm will hire current labour until

If firm-level asymmetric information becomes more severe,then

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption,procyclical investment,procyclical employment,and procyclical real wages?

The output supply curve is the relationship between output and

An increase in the default premium

The decrease in lifetime wealth affects consumption demand by

The marginal rate of substitution of future leisure for future consumption must be equal to

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

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

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