Question 1

The amount of output produced by an average worker in ________ is labor productivity.

Accepted Answer

A)  one day 
B)  one week 
C)  one year 
D)  one hour 
A)  one day 
B)  one week 
C)  one year 
D)  one hour

Question 2

Which of the following factors is not one of the determinants of a household's budget constraint?

Accepted Answer

A)  consumer's preferences 
B)  income 
C)  wealth 
D)  prices 
A)  consumer's preferences 
B)  income 
C)  wealth 
D)  prices

Question 3

Change in inventories equals the difference between

Accepted Answer

A)  production and investment. 
B)  sales and investment. 
C)  production and sales. 
D)  investment and depreciation. 
A)  production and investment. 
B)  sales and investment. 
C)  production and sales. 
D)  investment and depreciation.

Question 4

In general, the relationship between output and unemployment

Accepted Answer

A)  has been quite stable over the long run. 
B)  depends on the state of the economy at the time of the output change. 
C)  has been completely unpredictable over time. 
D)  is a simple one, as represented by Okun's Law. 
A)  has been quite stable over the long run. 
B)  depends on the state of the economy at the time of the output change. 
C)  has been completely unpredictable over time. 
D)  is a simple one, as represented by Okun's Law.

Question 5

The wage rate that is adjusted for changes in ________ over time is the real wage rate.

Accepted Answer

A)  tax rates 
B)  worker productivity 
C)  the price level 
D)  the average number of hours worked per week 
A)  tax rates 
B)  worker productivity 
C)  the price level 
D)  the average number of hours worked per week

Question 6

Households are said to have positive wealth when

Accepted Answer

A)  the market value of their assets is zero. 
B)  the value of their assets is greater than the debts they owe. 
C)  the value of their assets is equal to the debts they owe. 
D)  the value of their assets is less than the debts they owe. 
A)  the market value of their assets is zero. 
B)  the value of their assets is greater than the debts they owe. 
C)  the value of their assets is equal to the debts they owe. 
D)  the value of their assets is less than the debts they owe.

Question 7

The measured unemployment rate does not fall as much as one might expect when output increases because, as the economy expands,

Accepted Answer

A)  more people enter the labor force. 
B)  firms want to hire additional workers. 
C)  more people find jobs. 
D)  more people leave the labor force. 
A)  more people enter the labor force. 
B)  firms want to hire additional workers. 
C)  more people find jobs. 
D)  more people leave the labor force.

Question 8

If a firm is able to produce the same amount of output even after reducing its labor workforce, this implies that the firm has

Accepted Answer

A)  unplanned inventories. 
B)  excess capital. 
C)  excess labor. 
D)  planned inventories. 
A)  unplanned inventories. 
B)  excess capital. 
C)  excess labor. 
D)  planned inventories.

Question 9

When firms hold excess capital, the value of the multiplier decreases.

Accepted Answer

A) True 
 B)False

Question 10

As the economy ________, the labor force increases, and as the economy ________, the labor force decreases.

Accepted Answer

A)  expands; contracts 
B)  contracts; expands 
C)  matures; develops 
D)  develops; matures 
A)  expands; contracts 
B)  contracts; expands 
C)  matures; develops 
D)  develops; matures

Question 11

The measured unemployment rate does not rise as much as one might expect when output decreases because, as the economy contracts

Accepted Answer

A)  more people enter the labor force. 
B)  firms want to hire additional workers. 
C)  more people find jobs. 
D)  more people leave the labor force. 
A)  more people enter the labor force. 
B)  firms want to hire additional workers. 
C)  more people find jobs. 
D)  more people leave the labor force.

Question 12

Monetary policy is ________ it was in the past ________ the income effect of an interest rate change on consumption has increased.

Accepted Answer

A)  equally effective as; even though 
B)  less effective than; because 
C)  more effective than, because 
D)  more effective than; even though 
A)  equally effective as; even though 
B)  less effective than; because 
C)  more effective than, because 
D)  more effective than; even though

Question 13

The tendency for ________ to decrease when ________ decreases is the result of the accelerator effect.

Accepted Answer

A)  investment; aggregate output 
B)  consumption; investment 
C)  saving; consumption 
D)  aggregate output; saving 
A)  investment; aggregate output 
B)  consumption; investment 
C)  saving; consumption 
D)  aggregate output; saving

Question 14

As the economy approaches full employment, the size of the multiplier will

Accepted Answer

A)  remain unchanged. 
B)  become negative. 
C)  become larger. 
D)  become smaller. 
A)  remain unchanged. 
B)  become negative. 
C)  become larger. 
D)  become smaller.

Question 15

As the economy starts to expand, labor productivity rises as firms start using any excess labor they kept during the recession.

Accepted Answer

A) True 
 B)False

Question 16

Soozie's Smoothies employs ten workers. Each worker works eight hours per day. The ten workers are able to make 240 smoothies per day. The labor productivity is therefore ________ smoothies per person/hour.

Accepted Answer

A)  0.33 
B)  1.5 
C)  3 
D)  5 
A)  0.33 
B)  1.5 
C)  3 
D)  5

Question 17

When forming their expectations, firms gather information about all the following factors except

Accepted Answer

A)  the projected demand for their specific line of products. 
B)  the overall health of the macroeconomy. 
C)  the future plans of their competitors. 
D)  the historical supply of their competitors' line of products. 
A)  the projected demand for their specific line of products. 
B)  the overall health of the macroeconomy. 
C)  the future plans of their competitors. 
D)  the historical supply of their competitors' line of products.

Question 18

When input prices adjust slowly, the multiplier is smaller.

Accepted Answer

A) True 
 B)False

Question 19

The unemployment rate does not tend to fall as soon as the economy pulls out of a recession. Which of the following best explains this?

Accepted Answer

A)  Firms are holding excess labor, so as the economy pulls out of the recession, firms do not need to hire new workers immediately. 
B)  Firms' optimism about the state of the economy increased prior to the economy pulling out of the recession, so firms increased their employment earlier. 
C)  Firms are not able to find qualified workers to fill the job vacancies. 
D)  During recessionary periods, firms switch to more capital-intensive production techniques, so they do not need to increase employment as the economy pulls out of the recession. 
A)  Firms are holding excess labor, so as the economy pulls out of the recession, firms do not need to hire new workers immediately. 
B)  Firms' optimism about the state of the economy increased prior to the economy pulling out of the recession, so firms increased their employment earlier. 
C)  Firms are not able to find qualified workers to fill the job vacancies. 
D)  During recessionary periods, firms switch to more capital-intensive production techniques, so they do not need to increase employment as the economy pulls out of the recession.

Question 20

If the employment rate is 93%, then the unemployment rate is

Accepted Answer

A)  7%. 
B)  13%. 
C)  97%. 
D)  unknown based on the information given. 
A)  7%. 
B)  13%. 
C)  97%. 
D)  unknown based on the information given.

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

The amount of output produced by an average worker in ________ is labor productivity.

Which of the following factors is not one of the determinants of a household's budget constraint?

Change in inventories equals the difference between

In general, the relationship between output and unemployment

The wage rate that is adjusted for changes in ________ over time is the real wage rate.

Households are said to have positive wealth when

The measured unemployment rate does not fall as much as one might expect when output increases because, as the economy expands,

If a firm is able to produce the same amount of output even after reducing its labor workforce, this implies that the firm has

When firms hold excess capital, the value of the multiplier decreases.

As the economy ________, the labor force increases, and as the economy ________, the labor force decreases.

The measured unemployment rate does not rise as much as one might expect when output decreases because, as the economy contracts

Monetary policy is ________ it was in the past ________ the income effect of an interest rate change on consumption has increased.

The tendency for ________ to decrease when ________ decreases is the result of the accelerator effect.

As the economy approaches full employment, the size of the multiplier will

As the economy starts to expand, labor productivity rises as firms start using any excess labor they kept during the recession.

Soozie's Smoothies employs ten workers. Each worker works eight hours per day. The ten workers are able to make 240 smoothies per day. The labor productivity is therefore ________ smoothies per person/hour.

When forming their expectations, firms gather information about all the following factors except

When input prices adjust slowly, the multiplier is smaller.

The unemployment rate does not tend to fall as soon as the economy pulls out of a recession. Which of the following best explains this?

If the employment rate is 93%, then the unemployment rate is

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

As the economy , the labor force increases, and as the economy , the labor force decreases.

Monetary policy is it was in the past the income effect of an interest rate change on consumption has increased.

The tendency for to decrease when decreases is the result of the accelerator effect.