Question 1

A Pareto optimum requires all of the following except

Accepted Answer

A) MPN= -slope of PPF. 
B)  MRS?,C = MRT?,C. 
C)  MRS?,C ? MPN. 
D)  MPN = w. 
A) MPN= -slope of PPF. 
B)  MRS?,C = MRT?,C. 
C)  MRS?,C ? MPN. 
D)  MPN = w. D

Question 2

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

Accepted Answer

A)  the necessity of trade restrictions. 
B)  the first fundamental theorem of welfare economics. 
C)  the second theorem of welfare economics. 
D)  both B and C above. 
A)  the necessity of trade restrictions. 
B)  the first fundamental theorem of welfare economics. 
C)  the second theorem of welfare economics. 
D)  both B and C above. B

Question 3

In a competitive equilibrium all these relationships hold but one. Which one?

Accepted Answer

A)  Nd=Ns 
B)  Y=G+C 
C)  G=T 
D)  w=z 
A)  Nd=Ns 
B)  Y=G+C 
C)  G=T 
D)  w=z D

Question 4

An increase in government spending

Accepted Answer

A)  increases consumption and output. 
B)  increases consumption, decreases output. 
C)  decreases consumption, increases output. 
D)  decreases consumption and output. 
A)  increases consumption and output. 
B)  increases consumption, decreases output. 
C)  decreases consumption, increases output. 
D)  decreases consumption and output.

Question 5

In a general equilibrium model

Accepted Answer

A)  all markets but one clear. 
B)  there are no fluctuations. 
C)  all prices are exogenous. 
D)  all prices are endogenous. 
A)  all markets but one clear. 
B)  there are no fluctuations. 
C)  all prices are exogenous. 
D)  all prices are endogenous.

Question 6

An increase in total factor productivity

Accepted Answer

A)  increases consumption, increases output, and increases the real wage. 
B)  reduces consumption, increases output, and increases the real wage. 
C)  reduces consumption, increases output and reduces the real wage. 
D)  reduces consumption, reduces output, and reduces the real wage. 
A)  increases consumption, increases output, and increases the real wage. 
B)  reduces consumption, increases output, and increases the real wage. 
C)  reduces consumption, increases output and reduces the real wage. 
D)  reduces consumption, reduces output, and reduces the real wage.

Question 7

The Laffer curve is a curve showing

Accepted Answer

A)  output as a function of the tax rate. 
B)  tax revenue as a function of the tax rate. 
C)  government expenses as a function of how liberal the government is. 
D)  the tax rate as a function of government expenses. 
A)  output as a function of the tax rate. 
B)  tax revenue as a function of the tax rate. 
C)  government expenses as a function of how liberal the government is. 
D)  the tax rate as a function of government expenses.

Question 8

A one-unit increase in government expenditures should,according to the model,increase GDP by

Accepted Answer

A)  0. 
B)  between zero and one unit. 
C)  one unit. 
D)  more than one unit. 
A)  0. 
B)  between zero and one unit. 
C)  one unit. 
D)  more than one unit.

Question 9

A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods so that

Accepted Answer

A)  anyone can be made better off. 
B)  no one can be made worse off. 
C)  someone can be made better off without making someone else worse off. 
D)  someone can be made better off without making everyone else worse off. 
A)  anyone can be made better off. 
B)  no one can be made worse off. 
C)  someone can be made better off without making someone else worse off. 
D)  someone can be made better off without making everyone else worse off.

Question 10

A competitive equilibrium has all of the following properties except

Accepted Answer

A)  MPN = slope of PFF. 
B)  MRS?,C = MRT?,C. 
C)  MRT?,C = MPN. 
D)  MPN = w. 
A)  MPN = slope of PFF. 
B)  MRS?,C = MRT?,C. 
C)  MRT?,C = MPN. 
D)  MPN = w.

Question 11

Which feature of the business cycle does the one-period model replicate with shocks to government expenditures?

Accepted Answer

A)  procyclical employment 
B)  procyclical consumption 
C)  procyclical real wages 
D)  countercyclical prices 
A)  procyclical employment 
B)  procyclical consumption 
C)  procyclical real wages 
D)  countercyclical prices

Question 12

Fiscal policy refers to a government's choices over its

Accepted Answer

A)  expenditures, taxes, transfers, and borrowing. 
B)  expenditures, taxes, issuance of money, and borrowing. 
C)  expenditures, foreign affairs, issuance of money, and borrowing. 
D)  issuance of money, taxes, environmental regulations, and foreign affairs. 
A)  expenditures, taxes, transfers, and borrowing. 
B)  expenditures, taxes, issuance of money, and borrowing. 
C)  expenditures, foreign affairs, issuance of money, and borrowing. 
D)  issuance of money, taxes, environmental regulations, and foreign affairs.

Question 13

In the model of public goods

Accepted Answer

A)  government spending is pure waste 
B)  private consumption and government spending are equal. 
C)  consumers benefit from private goods and public goods. 
D)  the government provides goods at no cost to the public. 
A)  government spending is pure waste 
B)  private consumption and government spending are equal. 
C)  consumers benefit from private goods and public goods. 
D)  the government provides goods at no cost to the public.

Question 14

The production possibilities frontier represents

Accepted Answer

A)  all combinations of consumption and leisure for fixed output. 
B)  all equally affordable combinations of consumption and leisure for a given wage. 
C)  all technologically feasible combinations of consumption and leisure. 
D)  all equally liked combinations of consumption and leisure. 
A)  all combinations of consumption and leisure for fixed output. 
B)  all equally affordable combinations of consumption and leisure for a given wage. 
C)  all technologically feasible combinations of consumption and leisure. 
D)  all equally liked combinations of consumption and leisure.

Question 15

In response to an increase in total factor productivity

Accepted Answer

A)  both the substitution effect and the income effect suggest that hours worked should increase. 
B)  the substitution effect suggests that hours worked should increase, while the income effect suggests that hours worked should decrease. 
C)  the substitution effect suggests that hours worked should decrease, while the income effect suggests that hours worked should increase. 
D)  both the substitution effect and the income effect suggest that hours worked should decrease. 
A)  both the substitution effect and the income effect suggest that hours worked should increase. 
B)  the substitution effect suggests that hours worked should increase, while the income effect suggests that hours worked should decrease. 
C)  the substitution effect suggests that hours worked should decrease, while the income effect suggests that hours worked should increase. 
D)  both the substitution effect and the income effect suggest that hours worked should decrease.

Question 16

Suppose total factor productivity increases. Which of the following is incorrect?

Accepted Answer

A)  Households are better off. 
B)  Consumption goes up. 
C)  The real wage goes down. 
D)  Output goes up. 
A)  Households are better off. 
B)  Consumption goes up. 
C)  The real wage goes down. 
D)  Output goes up.

Question 17

How does an increase in the proportional labor income tax modify the consumer's budget constraint?

Accepted Answer

A)  a parallel move up 
B)  a parallel move down 
C)  the slope decreases (constraint gets steeper) 
D)  the slope increases (constraint gets flatter) 
A)  a parallel move up 
B)  a parallel move down 
C)  the slope decreases (constraint gets steeper) 
D)  the slope increases (constraint gets flatter)

Question 18

In the model of public goods

Accepted Answer

A)  GDP is fixed. 
B)  there is a production function. 
C)  labor supply matters. 
D)  public goods production is proportional to labor input. 
A)  GDP is fixed. 
B)  there is a production function. 
C)  labor supply matters. 
D)  public goods production is proportional to labor input.

Question 19

A Pareto optimum is a point that

Accepted Answer

A)  a malevolent dictator would choose. 
B)  a cooperative coalition of some altruistic consumers would choose. 
C)  a cooperative coalition of some socially responsible firms would choose. 
D)  a social planner would choose. 
A)  a malevolent dictator would choose. 
B)  a cooperative coalition of some altruistic consumers would choose. 
C)  a cooperative coalition of some socially responsible firms would choose. 
D)  a social planner would choose.

Question 20

Changes in government spending are not likely causes of business cycles because changes in government spending predict

Accepted Answer

A)  countercyclical consumption. 
B)  procyclical consumption. 
C)  countercyclical employment. 
D)  procyclical employment. 
A)  countercyclical consumption. 
B)  procyclical consumption. 
C)  countercyclical employment. 
D)  procyclical employment.

A Pareto optimum requires all of the following except

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

In a competitive equilibrium all these relationships hold but one. Which one?

An increase in government spending

In a general equilibrium model

An increase in total factor productivity

The Laffer curve is a curve showing

A one-unit increase in government expenditures should,according to the model,increase GDP by

A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods so that

A competitive equilibrium has all of the following properties except

Which feature of the business cycle does the one-period model replicate with shocks to government expenditures?

Fiscal policy refers to a government's choices over its

In the model of public goods

The production possibilities frontier represents

In response to an increase in total factor productivity

Suppose total factor productivity increases. Which of the following is incorrect?

How does an increase in the proportional labor income tax modify the consumer's budget constraint?

In the model of public goods

A Pareto optimum is a point that

Changes in government spending are not likely causes of business cycles because changes in government spending predict

Introduction

Measurement

Business Cycle Measurement

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

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 5: A Closed-Economy One-Period Macroeconomic Model

A Pareto optimum requires all of the following except

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

In a competitive equilibrium all these relationships hold but one. Which one?

An increase in government spending

In a general equilibrium model

An increase in total factor productivity

The Laffer curve is a curve showing

A one-unit increase in government expenditures should,according to the model,increase GDP by

A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods so that

A competitive equilibrium has all of the following properties except

Which feature of the business cycle does the one-period model replicate with shocks to government expenditures?

Fiscal policy refers to a government's choices over its

In the model of public goods

The production possibilities frontier represents

In response to an increase in total factor productivity

Suppose total factor productivity increases. Which of the following is incorrect?

How does an increase in the proportional labor income tax modify the consumer's budget constraint?

In the model of public goods

A Pareto optimum is a point that

Changes in government spending are not likely causes of business cycles because changes in government spending predict

Introduction

Measurement

Business Cycle Measurement

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

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