Question 1

The assumption that current-period consumption demand is negatively related to the real interest rate is justified as long as the

Accepted Answer

A)  income effect dominates the substitution effect. 
B)  substitution effect dominates the income effect. 
C)  representative consumer is a borrower. 
D)  representative consumer is a lender. 
E)  income effect and substitution effects are equal. 
A)  income effect dominates the substitution effect. 
B)  substitution effect dominates the income effect. 
C)  representative consumer is a borrower. 
D)  representative consumer is a lender. 
E)  income effect and substitution effects are equal.

Question 2

A consumer may increase his or her saving by

Accepted Answer

A)  working more hours and consuming more goods in the present period. 
B)  working more hours and consuming fewer goods in the present period. 
C)  working fewer hours and consuming more goods in the present period. 
D)  working fewer hours and consuming fewer goods in the present period. 
E)  working more hours and paying less taxes in the present period. 
A)  working more hours and consuming more goods in the present period. 
B)  working more hours and consuming fewer goods in the present period. 
C)  working fewer hours and consuming more goods in the present period. 
D)  working fewer hours and consuming fewer goods in the present period. 
E)  working more hours and paying less taxes in the present period.

Question 3

The condition   = 1 + r describes the representative consumer's

Accepted Answer

A)  investment decision. 
B)  current consumption-savings decision. 
C)  current period work-leisure decision. 
D)  future period work-leisure decision. 
E)  future consumption-savings decision. 
A)  investment decision. 
B)  current consumption-savings decision. 
C)  current period work-leisure decision. 
D)  future period work-leisure decision. 
E)  future consumption-savings decision.

Question 4

When the real interest rate increases,the demand for current consumption

Accepted Answer

A)  shifts up. 
B)  remains constant. 
C)  moves along the demand curve. 
D)  shifts down. 
E)  increases for each level of current income. 
A)  shifts up. 
B)  remains constant. 
C)  moves along the demand curve. 
D)  shifts down. 
E)  increases for each level of current income.

Question 5

When drawn against the real interest rate,the optimal investment schedule shifts to the right if

Accepted Answer

A)  current total factor productivity z increases. 
B)  current total factor productivity z decreases. 
C)  future total factor productivity z' increases. 
D)  future total factor productivity z' decreases. 
E)  future total factor productivity z' remains constant. 
A)  current total factor productivity z increases. 
B)  current total factor productivity z decreases. 
C)  future total factor productivity z' increases. 
D)  future total factor productivity z' decreases. 
E)  future total factor productivity z' remains constant.

Question 6

An increase in the real interest rate

Accepted Answer

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

Question 7

What are three factors that determine current labour supply?

Accepted Answer

Labour supply is the amount of labour th

Question 8

When drawn against the real interest rate,the output demand curve shifts to the right when

Accepted Answer

A)  current total factor productivity z increases. 
B)  current total factor productivity z decreases. 
C)  future total factor productivity z' increases. 
D)  future total factor productivity z' decreases. 
E)  current and future total factor productivity z' decreases. 
A)  current total factor productivity z increases. 
B)  current total factor productivity z decreases. 
C)  future total factor productivity z' increases. 
D)  future total factor productivity z' decreases. 
E)  current and future total factor productivity z' decreases.

Question 9

The assumption that current-period labour supply is positively related to the current-period real wage is justified as long as the

Accepted Answer

A)  income effect dominates the substitution effect in the short run. 
B)  income effect dominates the substitution effect in the long run. 
C)  substitution effect dominates the income effect in the short run. 
D)  substitution effect dominates the income effect in the long run. 
E)  substitution effect equals the income effect in the long run. 
A)  income effect dominates the substitution effect in the short run. 
B)  income effect dominates the substitution effect in the long run. 
C)  substitution effect dominates the income effect in the short run. 
D)  substitution effect dominates the income effect in the long run. 
E)  substitution effect equals the income effect in the long run.

Question 10

An increase in total factor productivity causes the

Accepted Answer

A)  production fucntion to shift up, labour demand to shift right, and output supply to shift right. 
B)  production function to shift up, labour demand to shift left, and output supply to shift right. 
C)  production function to shift up, labour demand to shift right, and output supply to shift left. 
D)  production function to shift down, labour demand to shift left, and output supply to shift left. 
E)  production function to shift down, labour demand to shift right, and output supply to shift right. 
A)  production fucntion to shift up, labour demand to shift right, and output supply to shift right. 
B)  production function to shift up, labour demand to shift left, and output supply to shift right. 
C)  production function to shift up, labour demand to shift right, and output supply to shift left. 
D)  production function to shift down, labour demand to shift left, and output supply to shift left. 
E)  production function to shift down, labour demand to shift right, and output supply to shift right.

Question 11

For the economy as a whole,investment represents a tradeoff between

Accepted Answer

A)  real interest rates and GDP. 
B)  government spending and issuing debt. 
C)  present and future consumption. 
D)  savings and investment. 
E)  interest rates and taxes. 
A)  real interest rates and GDP. 
B)  government spending and issuing debt. 
C)  present and future consumption. 
D)  savings and investment. 
E)  interest rates and taxes.

Question 12

The total government expenditure multiplier is less than one because

Accepted Answer

A)  labour supply reacts to interest rate changes and consumption demand is affected by taxes. 
B)  investment demand falls dramatically when the government goes into debt. 
C)  government expenditures affect labour demand. 
D)  the marginal propensity to consume is greater than one. 
E)  the marginal propensity to consume is less than one. 
A)  labour supply reacts to interest rate changes and consumption demand is affected by taxes. 
B)  investment demand falls dramatically when the government goes into debt. 
C)  government expenditures affect labour demand. 
D)  the marginal propensity to consume is greater than one. 
E)  the marginal propensity to consume is less than one.

Question 13

A firm that is a lender finances its lending

Accepted Answer

A)  with a default premium. 
B)  with the spread between borrowing and lending rates. 
C)  with retained earnings. 
D)  through credit market imperfections. 
E)  in the bond market. 
A)  with a default premium. 
B)  with the spread between borrowing and lending rates. 
C)  with retained earnings. 
D)  through credit market imperfections. 
E)  in the bond market.

Question 14

The solution to the recent financial crisis is

Accepted Answer

A)  better financial disclosure and adequate regulatory supervision of credit markets. 
B)  higher borrowing costs for riskier firms. 
C)  higher interest rates to discourage risky borrowing. 
D)  expansionary fiscal policy. 
E)  government extending credit to consumers and firms. 
A)  better financial disclosure and adequate regulatory supervision of credit markets. 
B)  higher borrowing costs for riskier firms. 
C)  higher interest rates to discourage risky borrowing. 
D)  expansionary fiscal policy. 
E)  government extending credit to consumers and firms.

Question 15

A key determinant of investment is

Accepted Answer

A)  the expected rate of future total factor productivity. 
B)  the level of economic activity. 
C)  the level of government spending. 
D)  the potential for exports. 
E)  the real interest rate. 
A)  the expected rate of future total factor productivity. 
B)  the level of economic activity. 
C)  the level of government spending. 
D)  the potential for exports. 
E)  the real interest rate.

Question 16

The slope of the demand for consumption goods is

Accepted Answer

A)  greater than 1. 
B)  equal to 1. 
C)  the MPC. 
D)  the MRS. 
E)  equal to the wage rate. 
A)  greater than 1. 
B)  equal to 1. 
C)  the MPC. 
D)  the MRS. 
E)  equal to the wage rate.

Question 17

The representative consumer's current labour supply curve slopes upward under the assumption that

Accepted Answer

A)  there is an indirect relationship between the current real wage and current labour supply. 
B)  the substitution effect of an increase in the real wage outweighs the income effect. 
C)  the substitution effect of an increase in the real wage is less than the income effect. 
D)  the substitution effect of an increase in the current labour supply outweighs the income effect. 
E)  the substitution effect of an increase in the current labour supply is less than the income effect. 
A)  there is an indirect relationship between the current real wage and current labour supply. 
B)  the substitution effect of an increase in the real wage outweighs the income effect. 
C)  the substitution effect of an increase in the real wage is less than the income effect. 
D)  the substitution effect of an increase in the current labour supply outweighs the income effect. 
E)  the substitution effect of an increase in the current labour supply is less than the income effect.

Question 18

When drawn against the real interest rate,the optimal investment schedule shifts to the right if the

Accepted Answer

A)  current capital stock K increases. 
B)  current capital stock K decreases. 
C)  future capital stock K' increases. 
D)  future total factor productivity increases. 
A)  current capital stock K increases. 
B)  current capital stock K decreases. 
C)  future capital stock K' increases. 
D)  future total factor productivity increases.

Question 19

When future total factor productivity is expected to increase,

Accepted Answer

A)  investment demand decreases and output demand decreases. 
B)  investment demand increases and output demand increases. 
C)  current labour demand increases and output supply increases. 
D)  investment demand increases and output supply increases. 
E)  investment demand increases and output supply decreases. 
A)  investment demand decreases and output demand decreases. 
B)  investment demand increases and output demand increases. 
C)  current labour demand increases and output supply increases. 
D)  investment demand increases and output supply increases. 
E)  investment demand increases and output supply decreases.

Question 20

When drawn against the current real wage,the labour demand curve is

Accepted Answer

A)  upward sloping because the marginal product of labour rises with the quantity of labour employed. 
B)  upward sloping because the marginal product of labour declines with the quantity of labour employed. 
C)  downward sloping because the marginal product of labour rises with the quantity of labour employed. 
D)  downward sloping because the marginal product of labour declines with the quantity of labour employed. 
E)  downward sloping because the marginal product of labour is constant. 
A)  upward sloping because the marginal product of labour rises with the quantity of labour employed. 
B)  upward sloping because the marginal product of labour declines with the quantity of labour employed. 
C)  downward sloping because the marginal product of labour rises with the quantity of labour employed. 
D)  downward sloping because the marginal product of labour declines with the quantity of labour employed. 
E)  downward sloping because the marginal product of labour is constant.

The assumption that current-period consumption demand is negatively related to the real interest rate is justified as long as the

A consumer may increase his or her saving by

The condition = 1 + r describes the representative consumer's

When the real interest rate increases,the demand for current consumption

When drawn against the real interest rate,the optimal investment schedule shifts to the right if

An increase in the real interest rate

What are three factors that determine current labour supply?

When drawn against the real interest rate,the output demand curve shifts to the right when

The assumption that current-period labour supply is positively related to the current-period real wage is justified as long as the

An increase in total factor productivity causes the

For the economy as a whole,investment represents a tradeoff between

The total government expenditure multiplier is less than one because

A firm that is a lender finances its lending

The solution to the recent financial crisis is

A key determinant of investment is

The slope of the demand for consumption goods is

The representative consumer's current labour supply curve slopes upward under the assumption that

When drawn against the real interest rate,the optimal investment schedule shifts to the right if the

When future total factor productivity is expected to increase,

When drawn against the current real wage,the labour demand curve is

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 assumption that current-period consumption demand is negatively related to the real interest rate is justified as long as the

A consumer may increase his or her saving by

The condition = 1 + r describes the representative consumer's

When the real interest rate increases,the demand for current consumption

When drawn against the real interest rate,the optimal investment schedule shifts to the right if

An increase in the real interest rate

What are three factors that determine current labour supply?

When drawn against the real interest rate,the output demand curve shifts to the right when

The assumption that current-period labour supply is positively related to the current-period real wage is justified as long as the

An increase in total factor productivity causes the

For the economy as a whole,investment represents a tradeoff between

The total government expenditure multiplier is less than one because

A firm that is a lender finances its lending

The solution to the recent financial crisis is

A key determinant of investment is

The slope of the demand for consumption goods is

The representative consumer's current labour supply curve slopes upward under the assumption that

When drawn against the real interest rate,the optimal investment schedule shifts to the right if the

When future total factor productivity is expected to increase,

When drawn against the current real wage,the labour demand curve is

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