Question 1

An indifference curve

Accepted Answer

A) connects a set of consumption and income bundles among which the consumer is indifferent. 
B) connects a set of consumption bundles among which the consumer is indifferent. 
C) connects a set of consumers who each have the same preferences. 
D) is only useful in analyzing apathetic consumers. 
E) is only useful in microeconomics. 
A) connects a set of consumption and income bundles among which the consumer is indifferent. 
B) connects a set of consumption bundles among which the consumer is indifferent. 
C) connects a set of consumers who each have the same preferences. 
D) is only useful in analyzing apathetic consumers. 
E) is only useful in microeconomics.

Question 2

An increase in total factor productivity shifts the production function

Accepted Answer

A) upward and increases the marginal product of labour. 
B) downward and decreases the marginal product of labour. 
C) upward and decreases the marginal product of labour. 
D) upward and increases the marginal product of capital. 
E) downward and increases the marginal product of labour. 
A) upward and increases the marginal product of labour. 
B) downward and decreases the marginal product of labour. 
C) upward and decreases the marginal product of labour. 
D) upward and increases the marginal product of capital. 
E) downward and increases the marginal product of labour.

Question 3

A barter economy

Accepted Answer

A) is an economy without monetary exchange. 
B) cannot be a market economy. 
C) is a competitive economy. 
D) is not a competitive economy. 
E) is an economy with no business firms. 
A) is an economy without monetary exchange. 
B) cannot be a market economy. 
C) is a competitive economy. 
D) is not a competitive economy. 
E) is an economy with no business firms.

Question 4

The Solow residual is a measure of

Accepted Answer

A) average capital productivity. 
B) the rate of growth of real GDP. 
C) total factor productivity. 
D) the marginal product of labour. 
E) average labour productivity. 
A) average capital productivity. 
B) the rate of growth of real GDP. 
C) total factor productivity. 
D) the marginal product of labour. 
E) average labour productivity.

Question 5

A good is inferior for a consumer if

Accepted Answer

A) its consumption rises when income rises. 
B) its consumption falls when income rises. 
C) the assumption of "more is always preferred to less" holds. 
D) some minimal level of the good must be consumed to assure the consumer's survival. 
E) it is never included in his or her consumption bundle. 
A) its consumption rises when income rises. 
B) its consumption falls when income rises. 
C) the assumption of "more is always preferred to less" holds. 
D) some minimal level of the good must be consumed to assure the consumer's survival. 
E) it is never included in his or her consumption bundle.

Question 6

As the quantity of labour increases, the marginal product of labour

Accepted Answer

A) is constant. 
B) increases. 
C) decreases. 
D) may either increase or decrease. 
E) gets more expensive. 
A) is constant. 
B) increases. 
C) decreases. 
D) may either increase or decrease. 
E) gets more expensive.

Question 7

An increase in total factor productivity

Accepted Answer

A) changes neither the slope nor the position of the production function. 
B) changes both the slope and the position of the production function. 
C) changes the position but not the slope of the production function. 
D) keeps the marginal product of labour constant. 
E) changes the slope but not the position of the production function. 
A) changes neither the slope nor the position of the production function. 
B) changes both the slope and the position of the production function. 
C) changes the position but not the slope of the production function. 
D) keeps the marginal product of labour constant. 
E) changes the slope but not the position of the production function.

Question 8

Two key properties of indifference curves are that an indifference curve slopes

Accepted Answer

A) downward and is bowed out from the origin. 
B) upward and is bowed out from the origin. 
C) downward and is bowed in toward the origin. 
D) upward and is bowed in toward the origin. 
E) downward and is concave from the origin. 
A) downward and is bowed out from the origin. 
B) upward and is bowed out from the origin. 
C) downward and is bowed in toward the origin. 
D) upward and is bowed in toward the origin. 
E) downward and is concave from the origin.

Question 9

A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X
Equals

Accepted Answer

A) one over the slope of the indifference curve through that point. 
B)  Py / Px. 
C)  Px/Py. 
D)  Y/Px. 
E) the slope of the indifference curve through that point. 
A) one over the slope of the indifference curve through that point. 
B)  Py / Px. 
C)  Px/Py. 
D)  Y/Px. 
E) the slope of the indifference curve through that point.

Question 10

An increase in the real wage

Accepted Answer

A) represents a pure income effect. 
B) represents a combination of income and substitution effects. 
C) leads to no change in labour supply. 
D) causes a parallel shift in the consumer's budget line. 
E) represents a pure substitution effect. 
A) represents a pure income effect. 
B) represents a combination of income and substitution effects. 
C) leads to no change in labour supply. 
D) causes a parallel shift in the consumer's budget line. 
E) represents a pure substitution effect.

Question 11

A good is normal for a consumer if

Accepted Answer

A) some minimal level of the good must be consumed to assure the consumer's survival. 
B) the assumption of "more is always preferred to less" holds. 
C) its consumption falls when income rises. 
D) its consumption rises when income rises. 
E) it is always consumed in a consistent quantity. 
A) some minimal level of the good must be consumed to assure the consumer's survival. 
B) the assumption of "more is always preferred to less" holds. 
C) its consumption falls when income rises. 
D) its consumption rises when income rises. 
E) it is always consumed in a consistent quantity.

Question 12

The representative consumer acts competitively

Accepted Answer

A) when he or she is a price-maker. 
B) if the consumer is large relative to the size of the market. 
C) when he or she has to make decisions regarding work and leisure. 
D) when he or she is a price-taker. 
E) when he or she can haggle for a lower price. 
A) when he or she is a price-maker. 
B) if the consumer is large relative to the size of the market. 
C) when he or she has to make decisions regarding work and leisure. 
D) when he or she is a price-taker. 
E) when he or she can haggle for a lower price.

Question 13

In a one-period economy

Accepted Answer

A) consumption equals disposable income plus the value of non-market work. 
B) consumption equals disposable income. 
C) consumers may increase their consumption by borrowing. 
D) consumers save more than they consume. 
E) savings is always positive. 
A) consumption equals disposable income plus the value of non-market work. 
B) consumption equals disposable income. 
C) consumers may increase their consumption by borrowing. 
D) consumers save more than they consume. 
E) savings is always positive.

Question 14

Constant returns to scale means that, given any constant x > 0

Accepted Answer

A)  $x Y = z F ( x K , x N d )$. 
B)  $x Y = x z F ( x F , x N d )$. 
C)  $x Y  z F ( x K , x N d )$. 
E)  $x Y = Z ^ { x F ( K , N d ) }$. 
A)  $x Y = z F ( x K , x N d )$. 
B)  $x Y = x z F ( x F , x N d )$. 
C)  $x Y  z F ( x K , x N d )$. 
E)  $x Y = Z ^ { x F ( K , N d ) }$.

Question 15

With consumption on the vertical axis and leisure on the horizontal axis, the slope of the budget line is equal to

Accepted Answer

A)  $\pi$. 
B)  $w h + \pi . - T$. 
C)  $- w$. 
D)  $w$. 
E)  $- \pi$. 
A)  $\pi$. 
B)  $w h + \pi . - T$. 
C)  $- w$. 
D)  $w$. 
E)  $- \pi$.

Question 16

A dynamic decision is one that

Accepted Answer

A) involved planning over exactly two time periods. 
B) involves only the future. 
C) is made very quickly. 
D) involves only the present. 
E) involves planning over more than one time period. 
A) involved planning over exactly two time periods. 
B) involves only the future. 
C) is made very quickly. 
D) involves only the present. 
E) involves planning over more than one time period.

Question 17

In macroeconomic analysis, the representative consumer

Accepted Answer

A) is always a misleading fiction. 
B) denotes the consumer with the average amount of income. 
C) plays the role of a stand-in for all consumers in the economy. 
D) is the consumer with an average standard of living. 
E) is the consumer who bargains with firms for all workers in the economy. 
A) is always a misleading fiction. 
B) denotes the consumer with the average amount of income. 
C) plays the role of a stand-in for all consumers in the economy. 
D) is the consumer with an average standard of living. 
E) is the consumer who bargains with firms for all workers in the economy.

Question 18

The profit-maximizing quantity of labour equates the marginal product of labour with

Accepted Answer

A) the average product of labour. 
B) total factor productivity. 
C) the slope of the production function. 
D) the marginal product of capital. 
E) the real wage. 
A) the average product of labour. 
B) total factor productivity. 
C) the slope of the production function. 
D) the marginal product of capital. 
E) the real wage.

Question 19

Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) diminishing marginal rate of substitution. 
D) the law of diminishing returns. 
E) constant returns to scale. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) diminishing marginal rate of substitution. 
D) the law of diminishing returns. 
E) constant returns to scale.

Question 20

A lump-sum tax is a tax that

Accepted Answer

A) distorts economic decisions. 
B) depends on the quantity of taxable goods consumers purchase. 
C) does not depend on the actions of the economic agent being taxed. 
D) does not depend on the actions of the government. 
E) can be avoided by strategic behaviour. 
A) distorts economic decisions. 
B) depends on the quantity of taxable goods consumers purchase. 
C) does not depend on the actions of the economic agent being taxed. 
D) does not depend on the actions of the government. 
E) can be avoided by strategic behaviour.

An indifference curve

An increase in total factor productivity shifts the production function

A barter economy

The Solow residual is a measure of

A good is inferior for a consumer if

As the quantity of labour increases, the marginal product of labour

An increase in total factor productivity

Two key properties of indifference curves are that an indifference curve slopes

A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X Equals

An increase in the real wage

A good is normal for a consumer if

The representative consumer acts competitively

In a one-period economy

Constant returns to scale means that, given any constant x > 0

With consumption on the vertical axis and leisure on the horizontal axis, the slope of the budget line is equal to

A dynamic decision is one that

In macroeconomic analysis, the representative consumer

The profit-maximizing quantity of labour equates the marginal product of labour with

Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of

A lump-sum tax is a tax that

Introduction

Measurement

Business Cycle Measurement

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 Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

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 4: Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

An indifference curve

An increase in total factor productivity shifts the production function

A barter economy

The Solow residual is a measure of

A good is inferior for a consumer if

As the quantity of labour increases, the marginal product of labour

An increase in total factor productivity

Two key properties of indifference curves are that an indifference curve slopes

A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X Equals

An increase in the real wage

A good is normal for a consumer if

The representative consumer acts competitively

In a one-period economy

Constant returns to scale means that, given any constant x > 0

With consumption on the vertical axis and leisure on the horizontal axis, the slope of the budget line is equal to

A dynamic decision is one that

In macroeconomic analysis, the representative consumer

The profit-maximizing quantity of labour equates the marginal product of labour with

Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of

A lump-sum tax is a tax that

Introduction

Measurement

Business Cycle Measurement

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 Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

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