Question 1

The demand for current consumption, as plotted against current income, shifts to the right due to

Accepted Answer

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

Question 2

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

Accepted Answer

A)  current capital stock decreases. 
B)  current capital stock increases. 
C)  real wage rate decreases. 
D)  real wage rate increases. 
E)  current capital stock and real wage rate increases. 
A)  current capital stock decreases. 
B)  current capital stock increases. 
C)  real wage rate decreases. 
D)  real wage rate increases. 
E)  current capital stock and real wage rate increases. A

Question 3

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. B

Question 4

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

Accepted Answer

A)  an increase in current government spending and an increase in future government spending 
B)  an increase in current government spending and a decrease in future government spending 
C)  a decrease in current government spending and an increase in future government spending 
D)  a decrease in current government spending and a decrease in future government spending 
E)  a decrease in current government spending and an increase in the real interest rate 
A)  an increase in current government spending and an increase in future government spending 
B)  an increase in current government spending and a decrease in future government spending 
C)  a decrease in current government spending and an increase in future government spending 
D)  a decrease in current government spending and a decrease in future government spending 
E)  a decrease in current government spending and an increase in the real interest rate

Question 5

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.

Question 6

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 7

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 8

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 9

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 10

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 11

When drawn against current income, the slope of the Cd (r) + Id (r) + G  curve is equal to the marginal

Accepted Answer

A)  product of capital. 
B)  product of labour. 
C)  propensity to consume. 
D)  propensity to save. 
E)  benefit from investment. 
A)  product of capital. 
B)  product of labour. 
C)  propensity to consume. 
D)  propensity to save. 
E)  benefit from investment.

Question 12

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 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

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 15

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 16

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)  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)  constant with total factor productivity.

Question 17

Which one of the following is a key determinant of aggregate economic activity in the present?

Accepted Answer

A)  news about future incomes 
B)  social security developments 
C)  expectations about future monetary policy 
D)  future taxes 
E)  future government spending 
A)  news about future incomes 
B)  social security developments 
C)  expectations about future monetary policy 
D)  future taxes 
E)  future government spending

Question 18

Investment will be more variable if

Accepted Answer

A)  there is variability in z'' that shifts the investment schedule over time. 
B)  there is variability in z'' that causes movements along the investment schedule over time. 
C)  there is variability 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 volatile. 
A)  there is variability in z'' that shifts the investment schedule over time. 
B)  there is variability in z'' that causes movements along the investment schedule over time. 
C)  there is variability 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 volatile.

Question 19

An increase in total factor productivity causes

Accepted Answer

A)  real wages to rise. 
B)  labour supply to fall. 
C)  the output supply curve to shift left. 
D)  real interest rates to rise. 
E)  the production function to shift up. 
A)  real wages to rise. 
B)  labour supply to fall. 
C)  the output supply curve to shift left. 
D)  real interest rates to rise. 
E)  the production function to shift up.

Question 20

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.

The demand for current consumption, as plotted against current income, shifts to the right due to

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

An increase in the real interest rate

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

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

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

A firm that is a lender finances its lending

The solution to the recent financial crisis is

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

An increase in lifetime wealth

When drawn against current income, the slope of the Cd (r) + Id (r) + G curve is equal to the marginal

Investment tends to be more variable over the business cycle than

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

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

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

Investment will be more variable if the real interest rate is

Which one of the following is a key determinant of aggregate economic activity in the present?

Investment will be more variable if

An increase in total factor productivity causes

An increase in lifetime wealth is likely to

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: 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

A Monetary Intertemporal Model: 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 demand for current consumption, as plotted against current income, shifts to the right due to

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

An increase in the real interest rate

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

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

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

A firm that is a lender finances its lending

The solution to the recent financial crisis is

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

An increase in lifetime wealth

When drawn against current income, the slope of the Cd (r) + Id (r) + G curve is equal to the marginal

Investment tends to be more variable over the business cycle than

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

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

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

Investment will be more variable if the real interest rate is

Which one of the following is a key determinant of aggregate economic activity in the present?

Investment will be more variable if

An increase in total factor productivity causes

An increase in lifetime wealth is likely to

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: 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

A Monetary Intertemporal Model: 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