Question 1

A rational bubble is

Accepted Answer

A) when everyone behaves optimally and an asset price departs from its fundamental value. 
B) when asset prices are entirely explained by fundamental factors. 
C) never observed. 
D) always temporary. 
E) how Robert Shiller explains asset market behaviour. 
A) when everyone behaves optimally and an asset price departs from its fundamental value. 
B) when asset prices are entirely explained by fundamental factors. 
C) never observed. 
D) always temporary. 
E) how Robert Shiller explains asset market behaviour.

Question 2

When there is a temporary increase in total factor productivity

Accepted Answer

A) labour demand decreases and output demand increases. 
B) labour demand increases and output supply increases. 
C) labour demand decreases and output supply decreases. 
D) labour demand increases and output supply decreases. 
E) labour demand increases and output demand increases. 
A) labour demand decreases and output demand increases. 
B) labour demand increases and output supply increases. 
C) labour demand decreases and output supply decreases. 
D) labour demand increases and output supply decreases. 
E) labour demand increases and output demand increases.

Question 3

When drawn against the real interest rate, the output supply curve unambiguously shifts to the right if either or both of the following occur.

Accepted Answer

A) an increase in current government spending and a decrease in future government spending 
B) a decrease in current government spending and an increase in the real interest rate 
C) a decrease in current government spending and a decrease in future government spending 
D) an increase in current government spending and an increase in future government spending 
E) a decrease in current government spending and an increase in future government spending 
A) an increase in current government spending and a decrease in future government spending 
B) a decrease in current government spending and an increase in the real interest rate 
C) a decrease in current government spending and a decrease in future government spending 
D) an increase in current government spending and an increase in future government spending 
E) a decrease in current government spending and an increase in future government spending

Question 4

For the economy as a whole, investment represents a tradeoff between

Accepted Answer

A) government spending and issuing debt. 
B) interest rates and taxes. 
C) present and future consumption. 
D) savings and investment. 
E) real interest rates and GDP. 
A) government spending and issuing debt. 
B) interest rates and taxes. 
C) present and future consumption. 
D) savings and investment. 
E) real interest rates and GDP.

Question 5

The slope of the demand for consumption goods is

Accepted Answer

A) equal to 1. 
B) greater than 1. 
C) equal to the wage rate. 
D) the MPC. 
E) the MRS. 
A) equal to 1. 
B) greater than 1. 
C) equal to the wage rate. 
D) the MPC. 
E) the MRS.

Question 6

The intertemporal substitution of leisure effect is used to justify the assumption that current labour supply increases when the

Accepted Answer

A) real interest rate decreases. 
B) current real wage increases. 
C) current real wage decreases. 
D) real interest rate increases. 
E) current real wage and real investment rate decreases. 
A) real interest rate decreases. 
B) current real wage increases. 
C) current real wage decreases. 
D) real interest rate increases. 
E) current real wage and real investment rate decreases.

Question 7

The total government expenditure multiplier

Accepted Answer

A)  is the ratio of total increase in demand for goods to the increase in government spending. 
B)  equals the MPC. 
C)  equals $\frac { 1 } { 1 - \mathrm { MPC } }$. 
D)  is the total increase in the demand for goods. 
E)  is the ratio of total increase in real output to the increase in government spending. 
A)  is the ratio of total increase in demand for goods to the increase in government spending. 
B)  equals the MPC. 
C)  equals $\frac { 1 } { 1 - \mathrm { MPC } }$. 
D)  is the total increase in the demand for goods. 
E)  is the ratio of total increase in real output to the increase in government spending.

Question 8

What are three factors that determine current labour supply?

Accepted Answer

Labour supply is the amount of labour th

Question 9

Investment will be more variable if

Accepted Answer

A) there is variability in z'' that causes movements along the investment schedule over time. 
B) there is variability in r that shifts the investment schedule over time. 
C) stock prices remain sufficiently volatile. 
D) there is variability in z'' that shifts the investment schedule over time. 
E) the real interest rate remains below the return on stocks. 
A) there is variability in z'' that causes movements along the investment schedule over time. 
B) there is variability in r that shifts the investment schedule over time. 
C) stock prices remain sufficiently volatile. 
D) there is variability in z'' that shifts the investment schedule over time. 
E) the real interest rate remains below the return on stocks.

Question 10

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

Accepted Answer

A) right by less than the rightward shift in output supply. 
B) left by less than the leftward shift in output supply. 
C) right by more than the rightward shift in output supply. 
D) right by the same amount as the rightward shift in output supply. 
E) left by more than the leftward shift in output supply. 
A) right by less than the rightward shift in output supply. 
B) left by less than the leftward shift in output supply. 
C) right by more than the rightward shift in output supply. 
D) right by the same amount as the rightward shift in output supply. 
E) left by more than the leftward shift in output supply.

Question 11

When drawn against the real interest rate, the optimal investment schedule shifts to the right if

Accepted Answer

A) future total factor productivity z' decreases. 
B) future total factor productivity z' remains constant. 
C) current total factor productivity z decreases. 
D) future total factor productivity z' increases. 
E) current total factor productivity z increases. 
A) future total factor productivity z' decreases. 
B) future total factor productivity z' remains constant. 
C) current total factor productivity z decreases. 
D) future total factor productivity z' increases. 
E) current total factor productivity z increases.

Question 12

The partial expenditure multiplier

Accepted Answer

A) equals the MPC. 
B) is the ratio of total increase in demand for goods to the increase in government spending. 
C) equals (1 - MP
C) . 
D) is the total increase in government spending. 
E) is the total increase in the demand for goods. 
A) equals the MPC. 
B) is the ratio of total increase in demand for goods to the increase in government spending. 
C) equals (1 - MP
C) . 
D) is the total increase in government spending. 
E) is the total increase in the demand for goods.

Question 13

A firm that is a lender finances its lending

Accepted Answer

A) through credit market imperfections. 
B) with a default premium. 
C) with the spread between borrowing and lending rates. 
D) in the bond market. 
E) with retained earnings. 
A) through credit market imperfections. 
B) with a default premium. 
C) with the spread between borrowing and lending rates. 
D) in the bond market. 
E) with retained earnings.

Question 14

When drawn against current income, the slope of the $$C d ( r ) + I d ( r ) + G \text { curve is equal to the }$$ marginal

Accepted Answer

A) product of labour. 
B) propensity to save. 
C) benefit from investment. 
D) product of capital. 
E) propensity to consume. 
A) product of labour. 
B) propensity to save. 
C) benefit from investment. 
D) product of capital. 
E) propensity to consume.

Question 15

An increase in total factor productivity causes

Accepted Answer

A) real interest rates to rise. 
B) the production function to shift up. 
C) the output supply curve to shift left. 
D) real wages to rise. 
E) labour supply to fall. 
A) real interest rates to rise. 
B) the production function to shift up. 
C) the output supply curve to shift left. 
D) real wages to rise. 
E) labour supply to fall.

Question 16

Investment will be more variable if the real interest rate is

Accepted Answer

A) more variable and future total factor productivity is more variable. 
B) less variable and future total factor productivity is less variable. 
C) more variable and future total factor productivity is less variable. 
D) less variable and future total factor productivity is more variable. 
E) constant with total factor productivity. 
A) more variable and future total factor productivity is more variable. 
B) less variable and future total factor productivity is less variable. 
C) more variable and future total factor productivity is less variable. 
D) less variable and future total factor productivity is more variable. 
E) constant with total factor productivity.

Question 17

An increase in G or G' shifts the output supply curve to the right because

Accepted Answer

A) lifetime wealth decreases, a negative income effect that shifts labour supply to the right. 
B) the decrease in the real interest rate shifts output supply. 
C) lifetime wealth decreases, a negative income effect that shifts labour supply to the left. 
D) lifetime wealth increases, a positive income effect that shifts labour supply to the right. 
E) the increase in the real interest rate shifts output supply. 
A) lifetime wealth decreases, a negative income effect that shifts labour supply to the right. 
B) the decrease in the real interest rate shifts output supply. 
C) lifetime wealth decreases, a negative income effect that shifts labour supply to the left. 
D) lifetime wealth increases, a positive income effect that shifts labour supply to the right. 
E) the increase in the real interest rate shifts output supply.

Question 18

In response to a temporary increase in government spending, the representative consumer consumes

Accepted Answer

A) more and takes less leisure. 
B) more and takes more leisure. 
C) the same amount as leisure. 
D) less and takes more leisure. 
E) less and takes less leisure. 
A) more and takes less leisure. 
B) more and takes more leisure. 
C) the same amount as leisure. 
D) less and takes more leisure. 
E) less and takes less leisure.

Question 19

An increase in the real interest rate

Accepted Answer

A) shifts the current labour supply curve to the left. 
B) reduces savings. 
C) reduces the real wage. 
D) reduces the labour supply. 
E) shifts the current labour supply curve to the right. 
A) shifts the current labour supply curve to the left. 
B) reduces savings. 
C) reduces the real wage. 
D) reduces the labour supply. 
E) shifts the current labour supply curve to the right.

Question 20

When drawn against the current real wage, the labour demand curve is

Accepted Answer

A) upward sloping because the marginal product of labour rises with the quantity of labour employed. 
B) downward sloping because the marginal product of labour declines with the quantity of labour employed. 
C) upward sloping because the marginal product of labour declines with the quantity of labour employed. 
D) downward sloping because the marginal product of labour is constant. 
E) downward sloping because the marginal product of labour rises with the quantity of labour employed. 
A) upward sloping because the marginal product of labour rises with the quantity of labour employed. 
B) downward sloping because the marginal product of labour declines with the quantity of labour employed. 
C) upward sloping because the marginal product of labour declines with the quantity of labour employed. 
D) downward sloping because the marginal product of labour is constant. 
E) downward sloping because the marginal product of labour rises with the quantity of labour employed.

A rational bubble is

When there is a temporary increase in total factor productivity

When drawn against the real interest rate, the output supply curve unambiguously shifts to the right if either or both of the following occur.

For the economy as a whole, investment represents a tradeoff between

The slope of the demand for consumption goods is

The intertemporal substitution of leisure effect is used to justify the assumption that current labour supply increases when the

The total government expenditure multiplier

What are three factors that determine current labour supply?

Investment will be more variable if

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

When drawn against the real interest rate, the optimal investment schedule shifts to the right if

The partial expenditure multiplier

A firm that is a lender finances its lending

When drawn against current income, the slope of the $C d ( r ) + I d ( r ) + G \text { curve is equal to the }$ marginal

An increase in total factor productivity causes

Investment will be more variable if the real interest rate is

An increase in G or G' shifts the output supply curve to the right because

In response to a temporary increase in government spending, the representative consumer consumes

An increase in the real interest rate

When drawn against the current real wage, the labour demand curve is

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

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

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 11: A Real Intertemporal Model With Investment

A rational bubble is

When there is a temporary increase in total factor productivity

When drawn against the real interest rate, the output supply curve unambiguously shifts to the right if either or both of the following occur.

For the economy as a whole, investment represents a tradeoff between

The slope of the demand for consumption goods is

The intertemporal substitution of leisure effect is used to justify the assumption that current labour supply increases when the

The total government expenditure multiplier

What are three factors that determine current labour supply?

Investment will be more variable if

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

When drawn against the real interest rate, the optimal investment schedule shifts to the right if

The partial expenditure multiplier

A firm that is a lender finances its lending

When drawn against current income, the slope of the Cd(r)+Id(r)+G curve is equal to the C d ( r ) + I d ( r ) + G \text { curve is equal to the }Cd(r)+Id(r)+G curve is equal to the marginal

An increase in total factor productivity causes

Investment will be more variable if the real interest rate is

An increase in G or G' shifts the output supply curve to the right because

In response to a temporary increase in government spending, the representative consumer consumes

An increase in the real interest rate

When drawn against the current real wage, the labour demand curve is

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

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

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

When drawn against current income, the slope of the $C d ( r ) + I d ( r ) + G \text { curve is equal to the }$ marginal