Question 1

An increase in government spending

Accepted Answer

A)  increases taxes and reduces the marginal propensity to consume. 
B)  increases taxes and reduces lifetime wealth of consumers. 
C)  reduces taxes and reduces lifetime wealth of consumers.. 
D)  increases taxes and increases the marginal propensity to consume. 
E)  does not affect the present value of taxes, thus does not affect the lifetime wealth of consumers. 
A)  increases taxes and reduces the marginal propensity to consume. 
B)  increases taxes and reduces lifetime wealth of consumers. 
C)  reduces taxes and reduces lifetime wealth of consumers.. 
D)  increases taxes and increases the marginal propensity to consume. 
E)  does not affect the present value of taxes, thus does not affect the lifetime wealth of consumers.

Question 2

The equilibrium effects of a temporary increase in total factor productivity include

Accepted Answer

A)  an increase in the real wage and an increase in the real interest rate. 
B)  an increase in the real wage and a decrease in the real interest rate. 
C)  a decrease in the real wage and an increase in the real interest rate. 
D)  a decrease in the real wage and a decrease in the real interest rate. 
E)  only a decrease in the real interest rate. 
A)  an increase in the real wage and an increase in the real interest rate. 
B)  an increase in the real wage and a decrease in the real interest rate. 
C)  a decrease in the real wage and an increase in the real interest rate. 
D)  a decrease in the real wage and a decrease in the real interest rate. 
E)  only a decrease in the real interest rate.

Question 3

Any increase in the present value of taxes for the consumer implies

Accepted Answer

A)  an increase in lifetime wealth and an increase in current labour supply. 
B)  an increase in lifetime wealth and a decrease in current labour supply. 
C)  a decrease in lifetime wealth and an increase in current labour supply. 
D)  a decrease in lifetime wealth and a decrease in current labour supply. 
E)  a decrease in lifetime wealth and a decrease in current consumption demand. 
A)  an increase in lifetime wealth and an increase in current labour supply. 
B)  an increase in lifetime wealth and a decrease in current labour supply. 
C)  a decrease in lifetime wealth and an increase in current labour supply. 
D)  a decrease in lifetime wealth and a decrease in current labour supply. 
E)  a decrease in lifetime wealth and a decrease in current consumption demand.

Question 4

Investment will be more variable if

Accepted Answer

A)  there is variablility in z'' that shifts the investment schedule over time. 
B)  there is variablility in z'' that causes movements along the investment schedule over time. 
C)  there is variablility in r that shifts the investment schedule over time. 
D)  the real interest rate remains below the return on stocks. 
E)  stock prices remain sufficiently volitile. 
A)  there is variablility in z'' that shifts the investment schedule over time. 
B)  there is variablility in z'' that causes movements along the investment schedule over time. 
C)  there is variablility in r that shifts the investment schedule over time. 
D)  the real interest rate remains below the return on stocks. 
E)  stock prices remain sufficiently volitile.

Question 5

An increase in lifetime wealth

Accepted Answer

A)  shifts the current labour supply curve to the left. 
B)  shifts the current labour supply curve to the right. 
C)  reduces the real wage. 
D)  increases labour supply. 
E)  reduces savings. 
A)  shifts the current labour supply curve to the left. 
B)  shifts the current labour supply curve to the right. 
C)  reduces the real wage. 
D)  increases labour supply. 
E)  reduces savings.

Question 6

An individual stock price

Accepted Answer

A)  determines investment spending. 
B)  mimics the information contained in the stock market index. 
C)  determines the future performance of the firm. 
D)  incorporates all news about the firm's future prospects. 
E)  is inversely related to the interest rate. 
A)  determines investment spending. 
B)  mimics the information contained in the stock market index. 
C)  determines the future performance of the firm. 
D)  incorporates all news about the firm's future prospects. 
E)  is inversely related to the interest rate.

Question 7

Investment tends to be more variable over the business cycle than

Accepted Answer

A)  savings. 
B)  government spending. 
C)  real interest rates. 
D)  aggregate output. 
E)  consumer income. 
A)  savings. 
B)  government spending. 
C)  real interest rates. 
D)  aggregate output. 
E)  consumer income.

Question 8

Investment will be more variable if the real interest rate is

Accepted Answer

A)  more variable and future total factor productivity is more variable. 
B)  more variable and future total factor productivity is less variable. 
C)  less variable and future total factor productivity is more variable. 
D)  less variable and future total factor productivity is less variable. 
E)  is constant with total factor productivity. 
A)  more variable and future total factor productivity is more variable. 
B)  more variable and future total factor productivity is less variable. 
C)  less variable and future total factor productivity is more variable. 
D)  less variable and future total factor productivity is less variable. 
E)  is constant with total factor productivity.

Question 9

An increase in G or G' shifts the output supply curve to the right because

Accepted Answer

A)  lifetime wealth increases, a positive income effect that shifts labour supply to the right. 
B)  lifetime wealth decreases, a negative income effect that shifts labour supply to the left. 
C)  lifetime wealth decreases, a negative income effect that shifts labour supply to the right. 
D)  the increase in the real interest rate shifts output supply. 
E)  the decrease in the real interest rate shifts output supply. 
A)  lifetime wealth increases, a positive income effect that shifts labour supply to the right. 
B)  lifetime wealth decreases, a negative income effect that shifts labour supply to the left. 
C)  lifetime wealth decreases, a negative income effect that shifts labour supply to the right. 
D)  the increase in the real interest rate shifts output supply. 
E)  the decrease in the real interest rate shifts output supply.

Question 10

In the real intertemporal model,an increase in credit market risk implies

Accepted Answer

A)  output demand shifts left and output supply shifts right, increasing the real interest rate. 
B)  output demand shifts right and output supply shifts left, the real interest rate is constant. 
C)  output demand shifts left and output supply shifts left, decreasing the real interest rate. 
D)  output demand shifts left and output supply is constant, increasing the real interest rate. 
E)  output demand shifts left and output supply shifts right, decreasing the real interest rate. 
A)  output demand shifts left and output supply shifts right, increasing the real interest rate. 
B)  output demand shifts right and output supply shifts left, the real interest rate is constant. 
C)  output demand shifts left and output supply shifts left, decreasing the real interest rate. 
D)  output demand shifts left and output supply is constant, increasing the real interest rate. 
E)  output demand shifts left and output supply shifts right, decreasing the real interest rate.

Question 11

When drawn against the real interest rate,the output demand curve unambiguously shifts to the right if either or both of the following occur.

Accepted Answer

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

Question 12

According to research by Robert Barro,the total governement expenditure multiplier is

Accepted Answer

A)  1.6 
B)  4 
C)  0 
D)  1 
E)  0.8 
A)  1.6 
B)  4 
C)  0 
D)  1 
E)  0.8

Question 13

Next period's capital is equal to current-period investment

Accepted Answer

A)  plus the amount of current capital left over after depreciation. 
B)  minus the amount of current capital left over after depreciation. 
C)  plus the amount of current period depreciation. 
D)  minus the amount of current period depreciation. 
E)  plus the amount of current capital left over. 
A)  plus the amount of current capital left over after depreciation. 
B)  minus the amount of current capital left over after depreciation. 
C)  plus the amount of current period depreciation. 
D)  minus the amount of current period depreciation. 
E)  plus the amount of current capital left over.

Question 14

An increase in lifetime wealth is likely to

Accepted Answer

A)  increase current labour supply and increase current consumption demand. 
B)  increase current labour supply and decrease current consumption demand. 
C)  decrease current labour supply and increase current leisure. 
D)  decrease current labour supply and decrease current consumption demand. 
E)  decrease current labour supply and decrease current leisure. 
A)  increase current labour supply and increase current consumption demand. 
B)  increase current labour supply and decrease current consumption demand. 
C)  decrease current labour supply and increase current leisure. 
D)  decrease current labour supply and decrease current consumption demand. 
E)  decrease current labour supply and decrease current leisure.

Question 15

In response to a temporary increase in government spending,the representative consumer consumes

Accepted Answer

A)  more and takes more leisure. 
B)  more and takes less leisure. 
C)  less and takes more leisure. 
D)  less and takes less leisure. 
E)  the same amount as leisure. 
A)  more and takes more leisure. 
B)  more and takes less leisure. 
C)  less and takes more leisure. 
D)  less and takes less leisure. 
E)  the same amount as leisure.

Question 16

When drawn against the real interest rate,the output supply curve is upward sloping because labour supply is

Accepted Answer

A)  increasing the real interest rate and labour demand is independent of the real interest rate. 
B)  decreasing the real interest rate and labour demand is independent of the real interest rate. 
C)  independent of the real interest rate and labour demand is increasing the real interest rate. 
D)  independent of the real interest rate and labour demand is decreasing the real interest rate. 
E)  increasing as the wage rate rises. 
A)  increasing the real interest rate and labour demand is independent of the real interest rate. 
B)  decreasing the real interest rate and labour demand is independent of the real interest rate. 
C)  independent of the real interest rate and labour demand is increasing the real interest rate. 
D)  independent of the real interest rate and labour demand is decreasing the real interest rate. 
E)  increasing as the wage rate rises.

Question 17

The intertemporal substitution of leisure effect is used to justify the assumption that current labour supply increases when the

Accepted Answer

A)  current real wage increases. 
B)  current real wage decreases. 
C)  real interest rate increases. 
D)  real interest rate decreases. 
E)  current real wage and real investment rate decreases. 
A)  current real wage increases. 
B)  current real wage decreases. 
C)  real interest rate increases. 
D)  real interest rate decreases. 
E)  current real wage and real investment rate decreases.

Question 18

The equilibrium effects of a prospective future increase in total factor productivity include

Accepted Answer

A)  an increase in the real wage and an increase in the real interest rate. 
B)  an increase in the real wage and a decrease in the real interest rate. 
C)  a decrease in the real wage and an increase in the real interest rate. 
D)  a decrease in the real wage and a decrease in the real interest rate. 
E)  a decrease in the real wage only. 
A)  an increase in the real wage and an increase in the real interest rate. 
B)  an increase in the real wage and a decrease in the real interest rate. 
C)  a decrease in the real wage and an increase in the real interest rate. 
D)  a decrease in the real wage and a decrease in the real interest rate. 
E)  a decrease in the real wage only.

Question 19

The 1990-1992 recession in Canada is an example of a recession where

Accepted Answer

A)  a large spike in interest rate spreads indicates no role of shocks to credit market risk. 
B)  a large spike in interest rate spreads indicates an important role for shocks to credit market risk. 
C)  there is no spike in interest rate spreads indicating no role of shocks to credit market risk. 
D)  a decrease in interest rate spreads indicates an important role for shocks to credit market risk. 
E)  there is no spike in interest rate spreads indicating an important role for shocks to credit market risk. 
A)  a large spike in interest rate spreads indicates no role of shocks to credit market risk. 
B)  a large spike in interest rate spreads indicates an important role for shocks to credit market risk. 
C)  there is no spike in interest rate spreads indicating no role of shocks to credit market risk. 
D)  a decrease in interest rate spreads indicates an important role for shocks to credit market risk. 
E)  there is no spike in interest rate spreads indicating an important role for shocks to credit market risk.

Question 20

The total government expenditure multiplier

Accepted Answer

A)  is the ratio of total increase in real output to the increase in government spending. 
B)  is the total increase in the demand for goods. 
C)  equals   
D)  is the ratio of total increase in demand for goods to the increase in government spending. 
E)  equals the MPC. 
A)  is the ratio of total increase in real output to the increase in government spending. 
B)  is the total increase in the demand for goods. 
C)  equals   
D)  is the ratio of total increase in demand for goods to the increase in government spending. 
E)  equals the MPC.

An increase in government spending

The equilibrium effects of a temporary increase in total factor productivity include

Any increase in the present value of taxes for the consumer implies

Investment will be more variable if

An increase in lifetime wealth

An individual stock price

Investment tends to be more variable over the business cycle than

Investment will be more variable if the real interest rate is

An increase in G or G' shifts the output supply curve to the right because

In the real intertemporal model,an increase in credit market risk implies

When drawn against the real interest rate,the output demand curve unambiguously shifts to the right if either or both of the following occur.

According to research by Robert Barro,the total governement expenditure multiplier is

Next period's capital is equal to current-period investment

An increase in lifetime wealth is likely to

In response to a temporary increase in government spending,the representative consumer consumes

When drawn against the real interest rate,the output supply curve is upward sloping because labour supply is

The intertemporal substitution of leisure effect is used to justify the assumption that current labour supply increases when the

The equilibrium effects of a prospective future increase in total factor productivity include

The 1990-1992 recession in Canada is an example of a recession where

The total government expenditure multiplier

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

An increase in government spending

The equilibrium effects of a temporary increase in total factor productivity include

Any increase in the present value of taxes for the consumer implies

Investment will be more variable if

An increase in lifetime wealth

An individual stock price

Investment tends to be more variable over the business cycle than

Investment will be more variable if the real interest rate is

An increase in G or G' shifts the output supply curve to the right because

In the real intertemporal model,an increase in credit market risk implies

When drawn against the real interest rate,the output demand curve unambiguously shifts to the right if either or both of the following occur.

According to research by Robert Barro,the total governement expenditure multiplier is

Next period's capital is equal to current-period investment

An increase in lifetime wealth is likely to

In response to a temporary increase in government spending,the representative consumer consumes

When drawn against the real interest rate,the output supply curve is upward sloping because labour supply is

The intertemporal substitution of leisure effect is used to justify the assumption that current labour supply increases when the

The equilibrium effects of a prospective future increase in total factor productivity include

The 1990-1992 recession in Canada is an example of a recession where

The total government expenditure multiplier

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