Question 1

An important feature of the financial market crisis was

Accepted Answer

A)  decreased interest rate spread on risky assets versus safe assets. 
B)  increased investment by firms. 
C)  an increase in the safe credit market interest rate, r. 
D)  increased financial market uncertainty. 
E)  a lower opportunity cost of investment. 
A)  decreased interest rate spread on risky assets versus safe assets. 
B)  increased investment by firms. 
C)  an increase in the safe credit market interest rate, r. 
D)  increased financial market uncertainty. 
E)  a lower opportunity cost of investment.

Question 2

The output demand curve shows the

Accepted Answer

A)  positive relationship between the wage rate and current aggregate output. 
B)  negative relationship between the wage rate and current aggregate output. 
C)  positive relationship between total factor productivity and current aggregate output. 
D)  positive relationship between the real interest rate and current aggregate output. 
E)  negative relationship between the real interest rate and current aggregate output. 
A)  positive relationship between the wage rate and current aggregate output. 
B)  negative relationship between the wage rate and current aggregate output. 
C)  positive relationship between total factor productivity and current aggregate output. 
D)  positive relationship between the real interest rate and current aggregate output. 
E)  negative relationship between the real interest rate and current aggregate output.

Question 3

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical real wages?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  four 
E)  none 
A)  one 
B)  two 
C)  three 
D)  four 
E)  none

Question 4

An individual stock price

Accepted Answer

A)  determines investment spending. 
B)  mimics the information contained in the stock market index. 
C)  determines the future performance of the firm. 
D)  incorporates all news about the firm's future prospects. 
E)  is inversely related to the interest rate. 
A)  determines investment spending. 
B)  mimics the information contained in the stock market index. 
C)  determines the future performance of the firm. 
D)  incorporates all news about the firm's future prospects. 
E)  is inversely related to the interest rate.

Question 5

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 6

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

Accepted Answer

A)  future income increases. 
B)  future taxes increase. 
C)  the real interest rate decreases. 
D)  both future and current taxes increase. 
E)  the real interest rate increases. 
A)  future income increases. 
B)  future taxes increase. 
C)  the real interest rate decreases. 
D)  both future and current taxes increase. 
E)  the real interest rate increases.

Question 7

The condition MRSC,C' = 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 8

An increase in G or G' shifts the output supply curve to the right because

Accepted Answer

A)  lifetime wealth increases, a positive income effect that shifts labour supply to the right. 
B)  lifetime wealth decreases, a negative income effect that shifts labour supply to the left. 
C)  lifetime wealth decreases, a negative income effect that shifts labour supply to the right. 
D)  the increase in the real interest rate shifts output supply. 
E)  the decrease in the real interest rate shifts output supply. 
A)  lifetime wealth increases, a positive income effect that shifts labour supply to the right. 
B)  lifetime wealth decreases, a negative income effect that shifts labour supply to the left. 
C)  lifetime wealth decreases, a negative income effect that shifts labour supply to the right. 
D)  the increase in the real interest rate shifts output supply. 
E)  the decrease in the real interest rate shifts output supply.

Question 9

The partial expenditure multiplier

Accepted Answer

A)  is the total increase in the demand for goods. 
B)  is the total increase in government spending. 
C)  equals (1 - MP
C) . 
D)  is the ratio of total increase in demand for goods to the increase in government spending. 
E)  equals the MPC. 
A)  is the total increase in the demand for goods. 
B)  is the total increase in government spending. 
C)  equals (1 - MP
C) . 
D)  is the ratio of total increase in demand for goods to the increase in government spending. 
E)  equals the MPC.

Question 10

An increase in total factor productivity causes the

Accepted Answer

A)  production function 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 function 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

An increase in the default premium

Accepted Answer

A)  raises the safe credit market interest rate. 
B)  lowers the real interest rate and firms invest more. 
C)  shifts the optimal investment schedule to the left. 
D)  shifts the optimal investment schedule to the right. 
E)  will prevent firms from defaulting on their loans. 
A)  raises the safe credit market interest rate. 
B)  lowers the real interest rate and firms invest more. 
C)  shifts the optimal investment schedule to the left. 
D)  shifts the optimal investment schedule to the right. 
E)  will prevent firms from defaulting on their loans.

An important feature of the financial market crisis was

The output demand curve shows the

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical real wages?

An individual stock price

The total government expenditure multiplier is less than one because

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

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

An increase in G or G' shifts the output supply curve to the right because

The partial expenditure multiplier

An increase in total factor productivity causes the

An increase in the default premium

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

An important feature of the financial market crisis was

The output demand curve shows the

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical real wages?

An individual stock price

The total government expenditure multiplier is less than one because

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

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

An increase in G or G' shifts the output supply curve to the right because

The partial expenditure multiplier

An increase in total factor productivity causes the

An increase in the default premium

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