Question 1

The demand for output in a closed economy is the sum of:

Accepted Answer

A) public saving and private saving. 
B) the quantity of capital and labor and production technology. 
C) consumption, investment, and government spending. 
D) government purchases and transfer payments minus tax receipts. 
A) public saving and private saving. 
B) the quantity of capital and labor and production technology. 
C) consumption, investment, and government spending. 
D) government purchases and transfer payments minus tax receipts.

Question 2

If government purchases exceed taxes minus transfer payments, then the government budget is:

Accepted Answer

A) balancd 
B) in deficit. 
C) in surplus. 
D) endogenous. 
A) balancd 
B) in deficit. 
C) in surplus. 
D) endogenous.

Question 3

If Y = AK0.5L0.5 and A, K, and L are all 100, the marginal product of capital is:

Accepted Answer

A) 50. 
B) 100. 
C) 200. 
D) 1000. 
A) 50. 
B) 100. 
C) 200. 
D) 1000.

Question 4

Disposable personal income is defined as income after the payment of all:

Accepted Answer

A) taxes. 
B) interest. 
C) loans. 
D) social insurance contributions. 
A) taxes. 
B) interest. 
C) loans. 
D) social insurance contributions.

Question 5

Accounting profit is:

Accepted Answer

A) Aeconomic profit minus the return to capital. 
B) equal to economic profit. 
C) economic profit plus the return to capital. 
D) equal to the economic return to capital. 
A) Aeconomic profit minus the return to capital. 
B) equal to economic profit. 
C) economic profit plus the return to capital. 
D) equal to the economic return to capital.

Question 6

National saving refers to:

Accepted Answer

A) disposable income minus consumption. 
B) taxes minus government spending. 
C) income minus consumption minus government 
D) spending. income minus investment. 
A) disposable income minus consumption. 
B) taxes minus government spending. 
C) income minus consumption minus government 
D) spending. income minus investment.

Question 7

According to the neoclassical theory of distribution, if firms are competitive and subject to constant total income in the economy is distributed:

Accepted Answer

A) only to the labor used in production. 
B) partly between labor and capital used in production, with the surplus going to the owners of the firm as profits. 
C) equally between the labor and capital used in production. 
D) between the labor and capital used in production, according to their marginal productivities. 
A) only to the labor used in production. 
B) partly between labor and capital used in production, with the surplus going to the owners of the firm as profits. 
C) equally between the labor and capital used in production. 
D) between the labor and capital used in production, according to their marginal productivities.

Question 8

In the classical model with fixed income, if the interest rate is too high, then investment is too for output the supply.

Accepted Answer

A) high; exceeds 
B) high; falls short 
C) of low; exceeds 
D) low; falls short of 
A) high; exceeds 
B) high; falls short 
C) of low; exceeds 
D) low; falls short of

Question 9

When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor:

Accepted Answer

A) supply curve is horizontal. 
B) supply curve is vertical. 
C) supply curve slopes up to the right. 
D) demand curve slopes up to the right. 
A) supply curve is horizontal. 
B) supply curve is vertical. 
C) supply curve slopes up to the right. 
D) demand curve slopes up to the right.

Question 10

Assume that the investment function is given by I = 1,000 - 30r, where r is the real rate of interest (in percent). Assume further that the nominal rate of interest is 10 percent and the inflation rate is 2 percent. According to the investment function, investment will be:

Accepted Answer

A) 240. 
B) 700. 
C) 760. 
D) 970. 
A) 240. 
B) 700. 
C) 760. 
D) 970.

Question 11

Other things equal, an increase in the interest rate leads to:

Accepted Answer

A) a decrease in the quantity of investment goods demanded. 
B) no change in the quantity of investment goods demanded. 
C) an increase in the quantity of investment goods demanded. 
D) sometimes an increase and sometimes a decrease in the quantity of investment goods demanded. 
A) a decrease in the quantity of investment goods demanded. 
B) no change in the quantity of investment goods demanded. 
C) an increase in the quantity of investment goods demanded. 
D) sometimes an increase and sometimes a decrease in the quantity of investment goods demanded.

Question 12

The real rental price of capital is the price per unit of capital measured in:

Accepted Answer

A) dollars. 
B) units of output. 
C) units of labor. 
D) units of capital. 
A) dollars. 
B) units of output. 
C) units of labor. 
D) units of capital.

Question 13

The neoclassical theory of distribution:

Accepted Answer

A) was developed by Karl Marx. 
B) is rejected by most economists today. 
C) shows that the national income of an economy is not equal to total output. 
D) is a theory of how national income is divided among the factors of production. 
A) was developed by Karl Marx. 
B) is rejected by most economists today. 
C) shows that the national income of an economy is not equal to total output. 
D) is a theory of how national income is divided among the factors of production.

Question 14

Unlike the real world, the classical model with fixed output assumes that:

Accepted Answer

A) all factors of production are fully utilized. 
B) all capital is fully utilized but some labor is unemployed. 
C) all labor is fully employed but some capital lies idle. 
D) some capital lies idle and some labor is unemployed. 
A) all factors of production are fully utilized. 
B) all capital is fully utilized but some labor is unemployed. 
C) all labor is fully employed but some capital lies idle. 
D) some capital lies idle and some labor is unemployed.

Question 15

Assume that a firm wants to build a factory that will cost $5 million. It believes that it can get a return of $600,000 in one year and then can sell the used factory for its original cost. The rate of return on this investment would be:

Accepted Answer

A) 6 percent. 
B) 12 percent. 
C) 18 percent. 
D) 30 percent. 
A) 6 percent. 
B) 12 percent. 
C) 18 percent. 
D) 30 percent.

Question 16

If output is described by the production function Y = AK 0.2L0.8, then the production function has:

Accepted Answer

A) constant returns to scale. 
B) diminishing returns to scale. 
C) increasing returns to scale. 
D) a degree of returns to scale that cannot be determined from the information given. 
A) constant returns to scale. 
B) diminishing returns to scale. 
C) increasing returns to scale. 
D) a degree of returns to scale that cannot be determined from the information given.

Question 17

The demand for the economy's output:

Accepted Answer

A) is always equal to the supply, regardless of the interest rate. 
B) may be computed provided that we know disposable income. 
C) is equal to consumption, investment, and government purchases. 
D) is determined by government purchases and taxes. 
A) is always equal to the supply, regardless of the interest rate. 
B) may be computed provided that we know disposable income. 
C) is equal to consumption, investment, and government purchases. 
D) is determined by government purchases and taxes.

The demand for output in a closed economy is the sum of:

If government purchases exceed taxes minus transfer payments, then the government budget is:

If Y = AK^0.5L^0.5 and A, K, and L are all 100, the marginal product of capital is:

Disposable personal income is defined as income after the payment of all:

Accounting profit is:

National saving refers to:

According to the neoclassical theory of distribution, if firms are competitive and subject to constant total income in the economy is distributed:

In the classical model with fixed income, if the interest rate is too high, then investment is too for output the supply.

When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor:

Assume that the investment function is given by I = 1,000 - 30r, where r is the real rate of interest (in percent). Assume further that the nominal rate of interest is 10 percent and the inflation rate is 2 percent. According to the investment function, investment will be:

Other things equal, an increase in the interest rate leads to:

The real rental price of capital is the price per unit of capital measured in:

The neoclassical theory of distribution:

Unlike the real world, the classical model with fixed output assumes that:

Assume that a firm wants to build a factory that will cost $5 million. It believes that it can get a return of $600,000 in one year and then can sell the used factory for its original cost. The rate of return on this investment would be:

If output is described by the production function Y = AK ^0.2L^0.8, then the production function has:

The demand for the economy's output:

The Science of Macroeconomics

The Data of Macroeconomics

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

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Exam 3: National Income Where It Comes From and Where It Goes

The demand for output in a closed economy is the sum of:

If government purchases exceed taxes minus transfer payments, then the government budget is:

If Y = AK0.5L0.5 and A, K, and L are all 100, the marginal product of capital is:

Disposable personal income is defined as income after the payment of all:

Accounting profit is:

National saving refers to:

According to the neoclassical theory of distribution, if firms are competitive and subject to constant total income in the economy is distributed:

In the classical model with fixed income, if the interest rate is too high, then investment is too for output the supply.

When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor:

Assume that the investment function is given by I = 1,000 - 30r, where r is the real rate of interest (in percent). Assume further that the nominal rate of interest is 10 percent and the inflation rate is 2 percent. According to the investment function, investment will be:

Other things equal, an increase in the interest rate leads to:

The real rental price of capital is the price per unit of capital measured in:

The neoclassical theory of distribution:

Unlike the real world, the classical model with fixed output assumes that:

Assume that a firm wants to build a factory that will cost $5 million. It believes that it can get a return of $600,000 in one year and then can sell the used factory for its original cost. The rate of return on this investment would be:

If output is described by the production function Y = AK 0.2L0.8, then the production function has:

The demand for the economy's output:

The Science of Macroeconomics

The Data of Macroeconomics

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Filters

If Y = AK^0.5L^0.5 and A, K, and L are all 100, the marginal product of capital is:

If output is described by the production function Y = AK ^0.2L^0.8, then the production function has: