Question 1

If the household budget constraint is aggregated over all household, it shows that:

Accepted Answer

A) consumption plus net investment equal net national product. 
B) consumption plus net investment equals real GDP less depreciation. 
C) C +   K = Y -   K 
D) all of the above. 
A) consumption plus net investment equal net national product. 
B) consumption plus net investment equals real GDP less depreciation. 
C) C +   K = Y -   K 
D) all of the above. D

Question 2

Figure 7.1  
-In Figure 7.1 if the household moves from point H to point G on its budget, it would be:

Accepted Answer

A) saving and consuming more. 
B) saving less and consuming more. 
C) saving more and consuming less. 
D) saving and consuming less. 
A) saving and consuming more. 
B) saving less and consuming more. 
C) saving more and consuming less. 
D) saving and consuming less. B

Question 3

The measure used to reduce future consumption to today's values is called:

Accepted Answer

A) an implicit deflator. 
B) a discount factor. 
C) an escalator. 
D) a future value. 
A) an implicit deflator. 
B) a discount factor. 
C) an escalator. 
D) a future value. B

Question 4

An income effect is the response of households to changes in the present value of:

Accepted Answer

A) relative prices. 
B) sources of funds. 
C) uses of funds. 
D) assets at the end of year two. 
A) relative prices. 
B) sources of funds. 
C) uses of funds. 
D) assets at the end of year two.

Question 5

If wages rise by €10 per worker just this period, we would expect to see consumption rise by much less than €10 this period.

Accepted Answer

A) True 
 B)False

Question 6

In the one period budget constraint sources of funds include:

Accepted Answer

A) capital gains. 
B) inflation. 
C) income from bonds. 
D) all of the above. 
A) capital gains. 
B) inflation. 
C) income from bonds. 
D) all of the above.

Question 7

The household's year one budget constraint is:

Accepted Answer

A) real assets at the end of year zero plus real income in year one less consumption in year one equals real assets at the end of year one. 
B) real income in year one less real assets at the end of year zero less consumption in year one equals real assets at the end of year one. 
C) real assets at the end of year zero plus real income in year one plus consumption in year one equals real assets at the end of year one. 
D) real income in year one plus consumption in year one less real assets at the end of year zero equals real assets at the end of year one. 
A) real assets at the end of year zero plus real income in year one less consumption in year one equals real assets at the end of year one. 
B) real income in year one less real assets at the end of year zero less consumption in year one equals real assets at the end of year one. 
C) real assets at the end of year zero plus real income in year one plus consumption in year one equals real assets at the end of year one. 
D) real income in year one plus consumption in year one less real assets at the end of year zero equals real assets at the end of year one.

Question 8

If the value of initial assets increases, then a household will change consumption or present value of asset at the end of period 2 due to an income effect.

Accepted Answer

A) True 
 B)False

Question 9

When a discount factor is multiplied times a future period variable it creates a:

Accepted Answer

A) future value. 
B) a present value. 
C) a real variable. 
D) a nominal variable. 
A) future value. 
B) a present value. 
C) a real variable. 
D) a nominal variable.

Question 10

A discount factor is used to deflate nominal consumption to real consumption.

Accepted Answer

A) True 
 B)False

Question 11

If a person wins €500 in a scratch-off lottery game, we would expect them to:

Accepted Answer

A) save most of it. 
B) refuse it. 
C) consume most of it. 
D) consume half and save half of it. 
A) save most of it. 
B) refuse it. 
C) consume most of it. 
D) consume half and save half of it.

Question 12

An intertemporal substitution effect is caused by a change in:

Accepted Answer

A) a price from one period to another. 
B) wealth. 
C) income. 
D) all of the above. 
A) a price from one period to another. 
B) wealth. 
C) income. 
D) all of the above.

Question 13

Show the relationship between the household budget constraint and net national product.

Accepted Answer

The household budget constraint is:
C +

Question 14

The aggregate household budget constraint is consumption plus net investment is real GDP less depreciation.

Accepted Answer

A) True 
 B)False

Question 15

An increase in the interest rate:

Accepted Answer

A) makes future consumption more expensive. 
B) increases future income. 
C) makes present consumption cheaper. 
D) all of the above. 
A) makes future consumption more expensive. 
B) increases future income. 
C) makes present consumption cheaper. 
D) all of the above.

Question 16

When the labour and capital markets clear:

Accepted Answer

A) depreciation is zero. 
B) real profit is zero. 
C) a dollar today is worth more than a dollar in the future. 
D) all of the above. 
A) depreciation is zero. 
B) real profit is zero. 
C) a dollar today is worth more than a dollar in the future. 
D) all of the above.

Question 17

If the household budget constraint is aggregated over all household, it shows that:

Accepted Answer

A) profit is zero. 
B) PC+   B+P•   K =   + wL + i(B + PK), 
C) C +   K = Y -   K 
D) all of the above. 
A) profit is zero. 
B) PC+   B+P•   K =   + wL + i(B + PK), 
C) C +   K = Y -   K 
D) all of the above.

Question 18

In the one period budget constraint the uses of funds include:

Accepted Answer

A) purchases of consumption goods. 
B) purchases of capital goods. 
C) purchases of bonds. 
D) all of the above. 
A) purchases of consumption goods. 
B) purchases of capital goods. 
C) purchases of bonds. 
D) all of the above.

Question 19

An increase in the interest rate:

Accepted Answer

A) makes future consumption more expensive. 
B) decreases future income. 
C) makes present consumption more expensive. 
D) all of the above. 
A) makes future consumption more expensive. 
B) decreases future income. 
C) makes present consumption more expensive. 
D) all of the above.

Question 20

Real saving in year one is:

Accepted Answer

A) real bonds plus capital in year 1 minus real bonds and capital in year 0. 
B) bonds plus capital plus money period 1. 
C) bonds plus capital in period 1. 
D) interest times the sum of bonds plus capital in period 1. 
A) real bonds plus capital in year 1 minus real bonds and capital in year 0. 
B) bonds plus capital plus money period 1. 
C) bonds plus capital in period 1. 
D) interest times the sum of bonds plus capital in period 1.

If the household budget constraint is aggregated over all household, it shows that:

Figure 7.1 -In Figure 7.1 if the household moves from point H to point G on its budget, it would be:

The measure used to reduce future consumption to today's values is called:

An income effect is the response of households to changes in the present value of:

If wages rise by €10 per worker just this period, we would expect to see consumption rise by much less than €10 this period.

In the one period budget constraint sources of funds include:

The household's year one budget constraint is:

If the value of initial assets increases, then a household will change consumption or present value of asset at the end of period 2 due to an income effect.

When a discount factor is multiplied times a future period variable it creates a:

A discount factor is used to deflate nominal consumption to real consumption.

If a person wins €500 in a scratch-off lottery game, we would expect them to:

An intertemporal substitution effect is caused by a change in:

Show the relationship between the household budget constraint and net national product.

The aggregate household budget constraint is consumption plus net investment is real GDP less depreciation.

An increase in the interest rate:

When the labour and capital markets clear:

If the household budget constraint is aggregated over all household, it shows that:

In the one period budget constraint the uses of funds include:

An increase in the interest rate:

Real saving in year one is:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 8: Consumption, Saving, and Investment

If the household budget constraint is aggregated over all household, it shows that:

Figure 7.1 -In Figure 7.1 if the household moves from point H to point G on its budget, it would be:

The measure used to reduce future consumption to today's values is called:

An income effect is the response of households to changes in the present value of:

If wages rise by €10 per worker just this period, we would expect to see consumption rise by much less than €10 this period.

In the one period budget constraint sources of funds include:

The household's year one budget constraint is:

If the value of initial assets increases, then a household will change consumption or present value of asset at the end of period 2 due to an income effect.

When a discount factor is multiplied times a future period variable it creates a:

A discount factor is used to deflate nominal consumption to real consumption.

If a person wins €500 in a scratch-off lottery game, we would expect them to:

An intertemporal substitution effect is caused by a change in:

Show the relationship between the household budget constraint and net national product.

The aggregate household budget constraint is consumption plus net investment is real GDP less depreciation.

An increase in the interest rate:

When the labour and capital markets clear:

If the household budget constraint is aggregated over all household, it shows that:

In the one period budget constraint the uses of funds include:

An increase in the interest rate:

Real saving in year one is:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters