Question 1

The amount of output produced by an average worker in one hour is

Accepted Answer

A)  a production quota. 
B)  the marginal revenue product of labor. 
C)  the marginal product of labor. 
D)  labor productivity. 
A)  a production quota. 
B)  the marginal revenue product of labor. 
C)  the marginal product of labor. 
D)  labor productivity.

Question 2

The wage rate that is adjusted for changes in the price level over time is the

Accepted Answer

A)  expected future wage rate. 
B)  nominal wage rate. 
C)  real wage rate. 
D)  money wage rate. 
A)  expected future wage rate. 
B)  nominal wage rate. 
C)  real wage rate. 
D)  money wage rate.

Question 3

Consumption will generally decrease when the income tax rate ________ or transfer payments ________.

Accepted Answer

A)  increases; increase 
B)  increases; decrease 
C)  decreases; increase 
D)  decreases; decrease 
A)  increases; increase 
B)  increases; decrease 
C)  decreases; increase 
D)  decreases; decrease

Question 4

The theory that the unemployment rate decreases about 1% for every 3% increase in real GDP is

Accepted Answer

A)  Ockham's razor. 
B)  Say's law. 
C)  Okun's law. 
D)  the Laffer postulate. 
A)  Ockham's razor. 
B)  Say's law. 
C)  Okun's law. 
D)  the Laffer postulate.

Question 5

Refer to the information provided in Figure 30.2 below to answer the question(s) that follow.   Figure 30.2
-Refer to Figure 30.2. Labor productivity at time t2 is

Accepted Answer

A)  larger than labor productivity at time t3. 
B)  less than labor productivity at time t3. 
C)  less than labor productivity at time t1. 
D)  less than labor productivity at time t4, but larger than labor productivity at time t3. 
A)  larger than labor productivity at time t3. 
B)  less than labor productivity at time t3. 
C)  less than labor productivity at time t1. 
D)  less than labor productivity at time t4, but larger than labor productivity at time t3.

Question 6

There is an increase in aggregate demand, and firms do not have sufficient capital and labor to support an output increase. In this case, inventory stocks will

Accepted Answer

A)  continue to fall, and there will be a large increase in the price level. 
B)  continue to increase, and there will be a large increase in the price level. 
C)  continue to fall, and the price level will fall. 
D)  remain unchanged, and the price level will remain unchanged. 
A)  continue to fall, and there will be a large increase in the price level. 
B)  continue to increase, and there will be a large increase in the price level. 
C)  continue to fall, and the price level will fall. 
D)  remain unchanged, and the price level will remain unchanged.

Question 7

The unemployment rate is the ratio of the number of people

Accepted Answer

A)  unemployed to the number of people employed. 
B)  unemployed to the number of people in the labor force. 
C)  in the labor force to the number of people employed. 
D)  employed to the number of people in the labor force. 
A)  unemployed to the number of people employed. 
B)  unemployed to the number of people in the labor force. 
C)  in the labor force to the number of people employed. 
D)  employed to the number of people in the labor force.

Question 8

The smaller the percentage of people who work, the

Accepted Answer

A)  higher the potential output per capita. 
B)  lower the potential output per capita. 
C)  higher the actual output per capita. 
D)  lower the actual output per capita. 
A)  higher the potential output per capita. 
B)  lower the potential output per capita. 
C)  higher the actual output per capita. 
D)  lower the actual output per capita.

Question 9

Refer to the information provided in Table 30.2 below to answer the question(s) that follow.
Table 30.2  
-Refer to Table 30.2. What is the real wage rate in 2017 using 2015 as the base year?

Accepted Answer

A)  $4.21 
B)  $6.65 
C)  $7.37 
D)  $15.20 
A)  $4.21 
B)  $6.65 
C)  $7.37 
D)  $15.20

Question 10

The unconstrained supply of labor refers to the amount a household ________ within a given period at the current wage rate if it could find the work.

Accepted Answer

A)  would like to work 
B)  chooses not to work 
C)  is forced to work 
D)  actually works 
A)  would like to work 
B)  chooses not to work 
C)  is forced to work 
D)  actually works

Question 11

Refer to the information provided in Table 30.2 below to answer the question(s) that follow.
Table 30.2  
-Refer to Table 30.2. From 2016 to 2017 nominal wages

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay the same. 
D)  rise then fall. 
A)  rise. 
B)  fall. 
C)  stay the same. 
D)  rise then fall.

Question 12

A decrease in transfer payments will result in

Accepted Answer

A)  a decrease in both consumption and labor supply. 
B)  a decrease in consumption and an increase in labor supply. 
C)  an increase in consumption and a decrease in labor supply. 
D)  an increase in both consumption and labor supply. 
A)  a decrease in both consumption and labor supply. 
B)  a decrease in consumption and an increase in labor supply. 
C)  an increase in consumption and a decrease in labor supply. 
D)  an increase in both consumption and labor supply.

Question 13

The two channels through which monetary policy can influence behavior in the goods market are

Accepted Answer

A)  investment and government spending. 
B)  investment and consumption. 
C)  government spending and consumption. 
D)  taxation and investment. 
A)  investment and government spending. 
B)  investment and consumption. 
C)  government spending and consumption. 
D)  taxation and investment.

Question 14

Assume that Brenda has positive wealth. As the interest rate decreased, Brenda reduced her current consumption. For Brenda

Accepted Answer

A)  the substitution effect of an interest rate decrease outweighs the income effect. 
B)  the income effect of an interest rate decrease outweighs the substitution effect. 
C)  the substitution effect of an interest rate increase must be zero. 
D)  the income effect of an interest rate decrease must equal the substitution effect. 
A)  the substitution effect of an interest rate decrease outweighs the income effect. 
B)  the income effect of an interest rate decrease outweighs the substitution effect. 
C)  the substitution effect of an interest rate increase must be zero. 
D)  the income effect of an interest rate decrease must equal the substitution effect.

Question 15

Refer to the information provided in Figure 30.2 below to answer the question(s) that follow.   Figure 30.2
-Refer to Figure 30.2. Between times ________, labor is more productive because growth in employment is less than growth in output.

Accepted Answer

A)  t1 and t3 
B)  t2 and t3 
C)  t3 and t4 
D)  none of the above 
A)  t1 and t3 
B)  t2 and t3 
C)  t3 and t4 
D)  none of the above

Question 16

Suppose that the value of the multiplier has increased in recent years. Which of the following could have caused this?

Accepted Answer

A)  Consumption has become more sensitive to changes in the interest rate. 
B)  The costs of inventory storage have fallen. 
C)  Changes in the way the unemployment compensation fund is financed have made it more expensive for firms to lay off workers. 
D)  "Buy America" campaigns launched by many unions have succeeded in reducing the demand for imported goods. 
A)  Consumption has become more sensitive to changes in the interest rate. 
B)  The costs of inventory storage have fallen. 
C)  Changes in the way the unemployment compensation fund is financed have made it more expensive for firms to lay off workers. 
D)  "Buy America" campaigns launched by many unions have succeeded in reducing the demand for imported goods.

Question 17

Due to an increase in the birthrate, the Solid Wood Furniture Company expects an increase in the sale of its cribs over the next few years. The Solid Wood Furniture Company will most likely

Accepted Answer

A)  keep current production constant, but plan to increase production in the future. 
B)  increase current production. 
C)  decrease current production so that it can increase production in the future. 
D)  not change its current investment plans, but plan to increase investment in the future. 
A)  keep current production constant, but plan to increase production in the future. 
B)  increase current production. 
C)  decrease current production so that it can increase production in the future. 
D)  not change its current investment plans, but plan to increase investment in the future.

Question 18

The smaller the percentage of people who work, the higher the potential output per capita.

Accepted Answer

A) True 
 B)False

Question 19

The opportunity cost of leisure will fall if

Accepted Answer

A)  the wage rate increases. 
B)  the wage rate decreases. 
C)  nonlabor income decreases. 
D)  nonlabor income increases. 
A)  the wage rate increases. 
B)  the wage rate decreases. 
C)  nonlabor income decreases. 
D)  nonlabor income increases.

Question 20

Permanent income refers to the average level of a person's expected future income stream.

Accepted Answer

A) True 
 B)False

Exam 30: Household and Firm Behavior in the Macroeconomy: a Further Look

The amount of output produced by an average worker in one hour is

The wage rate that is adjusted for changes in the price level over time is the

Consumption will generally decrease when the income tax rate ________ or transfer payments ________.

The theory that the unemployment rate decreases about 1% for every 3% increase in real GDP is

Refer to the information provided in Figure 30.2 below to answer the question(s) that follow. Figure 30.2 -Refer to Figure 30.2. Labor productivity at time t2 is

There is an increase in aggregate demand, and firms do not have sufficient capital and labor to support an output increase. In this case, inventory stocks will

The unemployment rate is the ratio of the number of people

The smaller the percentage of people who work, the

Refer to the information provided in Table 30.2 below to answer the question(s) that follow. Table 30.2 -Refer to Table 30.2. What is the real wage rate in 2017 using 2015 as the base year?

The unconstrained supply of labor refers to the amount a household ________ within a given period at the current wage rate if it could find the work.

Refer to the information provided in Table 30.2 below to answer the question(s) that follow. Table 30.2 -Refer to Table 30.2. From 2016 to 2017 nominal wages

A decrease in transfer payments will result in

The two channels through which monetary policy can influence behavior in the goods market are

Assume that Brenda has positive wealth. As the interest rate decreased, Brenda reduced her current consumption. For Brenda

Refer to the information provided in Figure 30.2 below to answer the question(s) that follow. Figure 30.2 -Refer to Figure 30.2. Between times ________, labor is more productive because growth in employment is less than growth in output.

Suppose that the value of the multiplier has increased in recent years. Which of the following could have caused this?

Due to an increase in the birthrate, the Solid Wood Furniture Company expects an increase in the sale of its cribs over the next few years. The Solid Wood Furniture Company will most likely

The smaller the percentage of people who work, the higher the potential output per capita.

The opportunity cost of leisure will fall if

Permanent income refers to the average level of a person's expected future income stream.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: The Labor and Land Markets

Input Demand: The Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Consumption will generally decrease when the income tax rate or transfer payments .

Refer to the information provided in Figure 30.2 below to answer the question(s) that follow. Figure 30.2 -Refer to Figure 30.2. Labor productivity at time t₂ is