Question 1

Which of the following would incur the highest labor adjustment costs for people just losing their jobs?

Accepted Answer

A)  waiting to be rehired by the same company 
B)  finding another job in the same location 
C)  moving to another more prosperous part of the country 
D)  collecting unemployment checks from the government 
A)  waiting to be rehired by the same company 
B)  finding another job in the same location 
C)  moving to another more prosperous part of the country 
D)  collecting unemployment checks from the government

Question 2

Most people prefer parties at which all of the guests arrive and leave without overlapping with the other guests.

Accepted Answer

A) True 
 B)False

Question 3

What is the seasonal business cycle,and which transmission mechanism(s)are responsible for it?

Accepted Answer

Seasonal fluctuations are similar to reg

Question 4

Explain the difference between intertemporal substitution and time bunching.Are there any similarities between the two?

Accepted Answer

Intertemporal substitution refers to peo

Question 5

Why does the irreversible nature of some investments cause them to be delayed or are not undertaken at all?

Accepted Answer

Investment is defined as business purcha

Question 6

An owner's equity is the:

Accepted Answer

A)  total value of the owner's assets. 
B)  value of the asset minus the debt. 
C)  value of a company's stock owned by its shareholders. 
D)  total value of the owner's assets and debt. 
A)  total value of the owner's assets. 
B)  value of the asset minus the debt. 
C)  value of a company's stock owned by its shareholders. 
D)  total value of the owner's assets and debt.

Question 7

Which of the following are people NOT more likely to do during a recession?

Accepted Answer

A)  retire 
B)  shrink business operations 
C)  focus on homemaking 
D)  drop out of school 
A)  retire 
B)  shrink business operations 
C)  focus on homemaking 
D)  drop out of school

Question 8

Irreversible investments:

Accepted Answer

A)  are the costs of shifting workers from declining sectors of the economy to the growing sectors. 
B)  are valuable assets that are pledged to a lender to secure a loan. 
C)  are the tendency for economic activities to be coordinated at common points in time. 
D)  have high value only under specific conditions-they cannot be easily moved,adjusted,or reversed if conditions change. 
A)  are the costs of shifting workers from declining sectors of the economy to the growing sectors. 
B)  are valuable assets that are pledged to a lender to secure a loan. 
C)  are the tendency for economic activities to be coordinated at common points in time. 
D)  have high value only under specific conditions-they cannot be easily moved,adjusted,or reversed if conditions change.

Question 9

In July of 2009-one month after the official end of the 2007-2009 recession-the unemployment rate in Detroit topped 17%.This was the highest rate of unemployment of all 49 urban areas with over 1 million residents and was also the largest 1-year increase in unemployment of any major urban center.Using the transmission mechanisms found in this chapter,explain why Detroit-also known as the Motor City and the center of the automobile industry-experienced such a severe and long-lasting decrease in employment during this time period.

Accepted Answer

During the 2007-2009 recession,the autom

Question 10

If a real shock causes a particular sector of the economy to decline,associated labor adjustment costs will _____ the effect of the initial shock.

Accepted Answer

A)  amplify 
B)  dampen 
C)  not influence 
D)  eliminate 
A)  amplify 
B)  dampen 
C)  not influence 
D)  eliminate

Question 11

Which of the following is NOT a factor that helps to amplify economic shocks?

Accepted Answer

A)  collateral shocks 
B)  labor adjustment costs 
C)  consumption smoothing 
D)  intertemporal substitution 
A)  collateral shocks 
B)  labor adjustment costs 
C)  consumption smoothing 
D)  intertemporal substitution

Question 12

Suppose that Kristi is unsure about what to do with her life.Should she go to graduate school now or wait until she decides what she wants to do?

Accepted Answer

A)  She should go now. 
B)  She should wait until she decides. 
C)  It doesn't matter. 
D)  Each choice is equally valid. 
A)  She should go now. 
B)  She should wait until she decides. 
C)  It doesn't matter. 
D)  Each choice is equally valid.

Question 13

Jamie has a fixed amount of savings and is planning to invest in one of two different projects with the same expected return on investment.Other things being equal,Jamie will most likely invest in:

Accepted Answer

A)  the project that is more easily reversed. 
B)  the project that is less easily reversed. 
C)  either of the two projects regardless of how reversible they are. 
D)  neither of the two projects because there is always uncertainty in their returns. 
A)  the project that is more easily reversed. 
B)  the project that is less easily reversed. 
C)  either of the two projects regardless of how reversible they are. 
D)  neither of the two projects because there is always uncertainty in their returns.

Question 14

Figure: AS/AD   Assume that an economy begins initially at Point 1 in the figure.An increase in government spending accompanied by intertemporal substitution would move the economy to Point _____.

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  6 
A)  2 
B)  3 
C)  4 
D)  6

Question 15

Collateral is:

Accepted Answer

A)  a valuable asset that is pledged to a lender to secure a loan. 
B)  the cost of shifting workers from declining sectors of the economy to the growing sectors. 
C)  the allocation of consumption,work,and leisure across time to maximize well-being. 
D)  the tendency for economic activities to be coordinated at common points in time. 
A)  a valuable asset that is pledged to a lender to secure a loan. 
B)  the cost of shifting workers from declining sectors of the economy to the growing sectors. 
C)  the allocation of consumption,work,and leisure across time to maximize well-being. 
D)  the tendency for economic activities to be coordinated at common points in time.

Question 16

If a house is worth $600,000 and its owner owes $400,000 on the mortgage,how much equity does the owner have?

Accepted Answer

A)  $0 
B)  $200,000 
C)  $400,000 
D)  $600,000 
A)  $0 
B)  $200,000 
C)  $400,000 
D)  $600,000

Question 17

A reduction in the value of collateral is called:

Accepted Answer

A)  intertemporal substitution. 
B)  collateral damage. 
C)  irreversible investment. 
D)  labor adjustment cost. 
A)  intertemporal substitution. 
B)  collateral damage. 
C)  irreversible investment. 
D)  labor adjustment cost.

Question 18

Explain why negative shocks reduce investment in physical capital.

Accepted Answer

Negative shocks themselves result in a r

Question 19

The text refers to "labor adjustment costs" as the costs of:

Accepted Answer

A)  making an educated workforce. 
B)  machines and equipment that replace the use of labor in production. 
C)  increasing a nation's workforce through bringing in migrant workers from overseas. 
D)  shifting workers from one sector of the economy to another sector. 
A)  making an educated workforce. 
B)  machines and equipment that replace the use of labor in production. 
C)  increasing a nation's workforce through bringing in migrant workers from overseas. 
D)  shifting workers from one sector of the economy to another sector.

Which of the following would incur the highest labor adjustment costs for people just losing their jobs?

Most people prefer parties at which all of the guests arrive and leave without overlapping with the other guests.

What is the seasonal business cycle,and which transmission mechanism(s)are responsible for it?

Explain the difference between intertemporal substitution and time bunching.Are there any similarities between the two?

Why does the irreversible nature of some investments cause them to be delayed or are not undertaken at all?

An owner's equity is the:

Which of the following are people NOT more likely to do during a recession?

Irreversible investments:

If a real shock causes a particular sector of the economy to decline,associated labor adjustment costs will _____ the effect of the initial shock.

Which of the following is NOT a factor that helps to amplify economic shocks?

Suppose that Kristi is unsure about what to do with her life.Should she go to graduate school now or wait until she decides what she wants to do?

Jamie has a fixed amount of savings and is planning to invest in one of two different projects with the same expected return on investment.Other things being equal,Jamie will most likely invest in:

Figure: AS/AD Assume that an economy begins initially at Point 1 in the figure.An increase in government spending accompanied by intertemporal substitution would move the economy to Point _____.

Collateral is:

If a house is worth $600,000 and its owner owes $400,000 on the mortgage,how much equity does the owner have?

A reduction in the value of collateral is called:

Explain why negative shocks reduce investment in physical capital.

The text refers to "labor adjustment costs" as the costs of:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 14: Transmission and Amplification Mechanisms

Which of the following would incur the highest labor adjustment costs for people just losing their jobs?

Most people prefer parties at which all of the guests arrive and leave without overlapping with the other guests.

What is the seasonal business cycle,and which transmission mechanism(s)are responsible for it?

Explain the difference between intertemporal substitution and time bunching.Are there any similarities between the two?

Why does the irreversible nature of some investments cause them to be delayed or are not undertaken at all?

An owner's equity is the:

Which of the following are people NOT more likely to do during a recession?

Irreversible investments:

If a real shock causes a particular sector of the economy to decline,associated labor adjustment costs will _____ the effect of the initial shock.

Which of the following is NOT a factor that helps to amplify economic shocks?

Suppose that Kristi is unsure about what to do with her life.Should she go to graduate school now or wait until she decides what she wants to do?

Jamie has a fixed amount of savings and is planning to invest in one of two different projects with the same expected return on investment.Other things being equal,Jamie will most likely invest in:

Figure: AS/AD Assume that an economy begins initially at Point 1 in the figure.An increase in government spending accompanied by intertemporal substitution would move the economy to Point _____.

Collateral is:

If a house is worth $600,000 and its owner owes $400,000 on the mortgage,how much equity does the owner have?

A reduction in the value of collateral is called:

Explain why negative shocks reduce investment in physical capital.

The text refers to "labor adjustment costs" as the costs of:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters