Question 1

Leisure includes all of the following except

Accepted Answer

A)  sleep. 
B)  home yardwork. 
C)  market work. 
D)  recreational activities. 
A)  sleep. 
B)  home yardwork. 
C)  market work. 
D)  recreational activities.

Question 2

When the representative firm maximizes profits,

Accepted Answer

A)  it sells as much as possible. 
B)  the wage equals average labor productivity. 
C)  the wage equals marginal labor productivity. 
D)  business taxes must be zero. 
A)  it sells as much as possible. 
B)  the wage equals average labor productivity. 
C)  the wage equals marginal labor productivity. 
D)  business taxes must be zero.

Question 3

The production function is concave in labor because

Accepted Answer

A)  the contribution to production of each additional unit of labor decreases. 
B)  the marginal product of labor is increasing. 
C)  the marginal product of capital is decreasing. 
D)  the labor demand is downward sloping. 
A)  the contribution to production of each additional unit of labor decreases. 
B)  the marginal product of labor is increasing. 
C)  the marginal product of capital is decreasing. 
D)  the labor demand is downward sloping.

Question 4

The marginal product of a factor of production

Accepted Answer

A)  is equal to the ratio of the amount of that factor of production to the amount of output produced. 
B)  is equal to the amount of additional output that can be produced with one additional unit of each factor input. 
C)  is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs. 
D)  always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs. 
A)  is equal to the ratio of the amount of that factor of production to the amount of output produced. 
B)  is equal to the amount of additional output that can be produced with one additional unit of each factor input. 
C)  is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs. 
D)  always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs.

Question 5

Which is a good example of an increase in total factor productivity?

Accepted Answer

A)  a tax cut 
B)  good weather 
C)  a company reducing its workforce 
D)  better credit conditions 
A)  a tax cut 
B)  good weather 
C)  a company reducing its workforce 
D)  better credit conditions

Question 6

A consumption bundle

Accepted Answer

A)  is a particular combination of consumption and leisure. 
B)  only measures a quantity of goods and services, but not the amount of leisure. 
C)  is a method of bringing home consumption goods. 
D)  measures the quality of a particular good. 
A)  is a particular combination of consumption and leisure. 
B)  only measures a quantity of goods and services, but not the amount of leisure. 
C)  is a method of bringing home consumption goods. 
D)  measures the quality of a particular good.

Question 7

An increase in total factor productivity could be the result of

Accepted Answer

A)  adverse weather. 
B)  the addition of new machinery. 
C)  new hires. 
D)  the introduction of new manufacturing methods. 
A)  adverse weather. 
B)  the addition of new machinery. 
C)  new hires. 
D)  the introduction of new manufacturing methods.

Question 8

When the representative firm maximizes profits

Accepted Answer

A)  production is at its maximum. 
B)  the slope of the production function is at its flattest. 
C)  labor costs are minimized. 
D)  the marginal product of labor equals the wage. 
A)  production is at its maximum. 
B)  the slope of the production function is at its flattest. 
C)  labor costs are minimized. 
D)  the marginal product of labor equals the wage.

Question 9

The representative consumer acts competitively

Accepted Answer

A)  when he or she can haggle for a lower price. 
B)  when he or she is a price-taker. 
C)  when he or she is a price-maker. 
D)  if the consumer is large relative to the size of the market. 
A)  when he or she can haggle for a lower price. 
B)  when he or she is a price-taker. 
C)  when he or she is a price-maker. 
D)  if the consumer is large relative to the size of the market.

Question 10

A dynamic decision is one that

Accepted Answer

A)  is made very quickly. 
B)  involves only the present. 
C)  involves only the future. 
D)  involves planning over more than one time period. 
A)  is made very quickly. 
B)  involves only the present. 
C)  involves only the future. 
D)  involves planning over more than one time period.

Question 11

In the (consumption,leisure)space,indifference curves as we have assumed them are

Accepted Answer

A)  downward sloping and bowed out of the origin. 
B)  downward sloping and bowed towards the origin. 
C)  upward sloping and bowed out of the origin. 
D)  upward sloping and bowed towards the origin. 
A)  downward sloping and bowed out of the origin. 
B)  downward sloping and bowed towards the origin. 
C)  upward sloping and bowed out of the origin. 
D)  upward sloping and bowed towards the origin.

Question 12

The marginal rate of substitution measures

Accepted Answer

A)  the willingness of a consumer to exchange a good with another consumer. 
B)  the willingness of a consumer to pay the form for a good. 
C)  the value in dollars of the last unit of good obtained by the consumer. 
D)  the rate at which a consumer is willing to exchange one good for another. 
A)  the willingness of a consumer to exchange a good with another consumer. 
B)  the willingness of a consumer to pay the form for a good. 
C)  the value in dollars of the last unit of good obtained by the consumer. 
D)  the rate at which a consumer is willing to exchange one good for another.

Question 13

A consumer is said to be indifferent between two consumption bundles

Accepted Answer

A)  when the consumer doesn't care about his or her consumption bundle. 
B)  when the two bundles provide equal amounts of utility. 
C)  when the consumer chooses the bundles equally often. 
D)  when the consumer is indecisive. 
A)  when the consumer doesn't care about his or her consumption bundle. 
B)  when the two bundles provide equal amounts of utility. 
C)  when the consumer chooses the bundles equally often. 
D)  when the consumer is indecisive.

Question 14

When the wage increases,the income effect on the household's choices leads to

Accepted Answer

A)  a decrease in consumption and leisure. 
B)  a decrease in consumption and an increase in leisure. 
C)  an increase in consumption and a decrease in leisure. 
D)  an increase in consumption and leisure. 
A)  a decrease in consumption and leisure. 
B)  a decrease in consumption and an increase in leisure. 
C)  an increase in consumption and a decrease in leisure. 
D)  an increase in consumption and leisure.

Question 15

In the one-period model,what do we assume about household preferences?

Accepted Answer

A)  Households prefer more to less. 
B)  Households like money. 
C)  Households dislike taxes. 
D)  Households care about others. 
A)  Households prefer more to less. 
B)  Households like money. 
C)  Households dislike taxes. 
D)  Households care about others.

Question 16

With consumption on the vertical axis and leisure on the horizontal axis,the slope of the budget line is equal to

Accepted Answer

A)  w. 
B)  -w. 
C)    
D)  -  
A)  w. 
B)  -w. 
C)    
D)  -

Question 17

An increase in total factor productivity

Accepted Answer

A)  changes neither the slope nor the position of the production function. 
B)  changes the slope but not the position of the production function. 
C)  changes the position but not the slope of the production function. 
D)  changes both the slope and the position of the production function. 
A)  changes neither the slope nor the position of the production function. 
B)  changes the slope but not the position of the production function. 
C)  changes the position but not the slope of the production function. 
D)  changes both the slope and the position of the production function.

Question 18

The production function is concave in capital because

Accepted Answer

A)  the contribution to production of each additional unit of capital decreases. 
B)  the marginal product of capital is increasing. 
C)  the marginal product of labor is decreasing. 
D)  the cost of loans increases with their quantity. 
A)  the contribution to production of each additional unit of capital decreases. 
B)  the marginal product of capital is increasing. 
C)  the marginal product of labor is decreasing. 
D)  the cost of loans increases with their quantity.

Question 19

A numeraire is

Accepted Answer

A)  an average good. 
B)  a tax levied on each consumer. 
C)  a good used as a unit of account. 
D)  an optimal bundle of goods. 
A)  an average good. 
B)  a tax levied on each consumer. 
C)  a good used as a unit of account. 
D)  an optimal bundle of goods.

Question 20

The fact that indifference curves are downward sloping

Accepted Answer

A)  is not true. 
B)  follows from the fact that more is preferred to less. 
C)  follows from the property that the consumer likes diversity in his or her consumption bundle. 
D)  follows from the property that consumption and leisure are normal goods. 
A)  is not true. 
B)  follows from the fact that more is preferred to less. 
C)  follows from the property that the consumer likes diversity in his or her consumption bundle. 
D)  follows from the property that consumption and leisure are normal goods.

Leisure includes all of the following except

When the representative firm maximizes profits,

The production function is concave in labor because

The marginal product of a factor of production

Which is a good example of an increase in total factor productivity?

A consumption bundle

An increase in total factor productivity could be the result of

When the representative firm maximizes profits

The representative consumer acts competitively

A dynamic decision is one that

In the (consumption,leisure)space,indifference curves as we have assumed them are

The marginal rate of substitution measures

A consumer is said to be indifferent between two consumption bundles

When the wage increases,the income effect on the household's choices leads to

In the one-period model,what do we assume about household preferences?

With consumption on the vertical axis and leisure on the horizontal axis,the slope of the budget line is equal to

An increase in total factor productivity

The production function is concave in capital because

A numeraire is

The fact that indifference curves are downward sloping

Introduction

Measurement

Business Cycle Measurement

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

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

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters

Exam 4: Consumer and Firm Behavior: The Work-Leisure Decision and Profit Maximization

Leisure includes all of the following except

When the representative firm maximizes profits,

The production function is concave in labor because

The marginal product of a factor of production

Which is a good example of an increase in total factor productivity?

A consumption bundle

An increase in total factor productivity could be the result of

When the representative firm maximizes profits

The representative consumer acts competitively

A dynamic decision is one that

In the (consumption,leisure)space,indifference curves as we have assumed them are

The marginal rate of substitution measures

A consumer is said to be indifferent between two consumption bundles

When the wage increases,the income effect on the household's choices leads to

In the one-period model,what do we assume about household preferences?

With consumption on the vertical axis and leisure on the horizontal axis,the slope of the budget line is equal to

An increase in total factor productivity

The production function is concave in capital because

A numeraire is

The fact that indifference curves are downward sloping

Introduction

Measurement

Business Cycle Measurement

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

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

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters