Question 1

In a one-period economy,the expression for the budget constraint is

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 2

The representative consumer acts competitively

Accepted Answer

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

Question 3

A defense for the assumption that consumers maximize is that

Accepted Answer

A)  consumers never make mistakes. 
B)  mistakes by the consumer are not likely to last for a long time. 
C)  it allows for many possible outcomes. 
D)  mistaken consumers may receive counseling from the government. 
E)  mistakes by consumers only last for two periods. 
A)  consumers never make mistakes. 
B)  mistakes by the consumer are not likely to last for a long time. 
C)  it allows for many possible outcomes. 
D)  mistaken consumers may receive counseling from the government. 
E)  mistakes by consumers only last for two periods.

Question 4

A good is inferior for a consumer if

Accepted Answer

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

Question 5

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

Accepted Answer

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

Question 6

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

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

The Solow residual is a measure of

Accepted Answer

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

Question 8

We typically assume that

Accepted Answer

A)  both consumption and leisure are normal goods. 
B)  consumption is a normal good and leisure is an inferior good. 
C)  consumption is an inferior good and leisure is a normal good. 
D)  both consumption and leisure are inferior goods. 
E)  both consumption and leisure and complimentary goods. 
A)  both consumption and leisure are normal goods. 
B)  consumption is a normal good and leisure is an inferior good. 
C)  consumption is an inferior good and leisure is a normal good. 
D)  both consumption and leisure are inferior goods. 
E)  both consumption and leisure and complimentary goods.

Question 9

A consumption bundle

Accepted Answer

A)  is a particular combination of consumption and leisure. 
B)  only measures a quantity of goods and services, but not the amount of leisure. 
C)  is a method of bringing home consumption goods. 
D)  measures the quality of a particular good. 
E)  is a particular combination of work and leisure. 
A)  is a particular combination of consumption and leisure. 
B)  only measures a quantity of goods and services, but not the amount of leisure. 
C)  is a method of bringing home consumption goods. 
D)  measures the quality of a particular good. 
E)  is a particular combination of work and leisure.

Question 10

A lump-sum tax is a tax that

Accepted Answer

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

Question 11

Convexity of the indifference curve follows from

Accepted Answer

A)  the fact that more is preferred to less. 
B)  the fact that consumption and leisure are normal goods. 
C)  the fact that consumers are indifferent to consumption and leisure goods. 
D)  the fact that consumers prefer diversity. 
E)  the fact that income plays a significant role in consumption and leisure decisions. 
A)  the fact that more is preferred to less. 
B)  the fact that consumption and leisure are normal goods. 
C)  the fact that consumers are indifferent to consumption and leisure goods. 
D)  the fact that consumers prefer diversity. 
E)  the fact that income plays a significant role in consumption and leisure decisions.

Question 12

A production function describes the

Accepted Answer

A)  technological possibilities for converting factor inputs into outputs. 
B)  intellectual possibilities for converting factor inputs into outputs. 
C)  amount of resources available to the representative firm. 
D)  actual process of converting factor inputs into outputs. 
E)  the amount of labour available to produce outputs. 
A)  technological possibilities for converting factor inputs into outputs. 
B)  intellectual possibilities for converting factor inputs into outputs. 
C)  amount of resources available to the representative firm. 
D)  actual process of converting factor inputs into outputs. 
E)  the amount of labour available to produce outputs.

Question 13

The real wage denotes

Accepted Answer

A)  the number of units of consumption goods that can be exchanged for one unit of labour time. 
B)  the number of units of labour time that can be exchanged for one unit of consumption goods. 
C)  the number of units of labour time that can be exchanged for one unit of leisure time. 
D)  the number of units of leisure time that can be exchanged for one unit of labour time. 
E)  the purchasing power of income earned after taxes are paid. 
A)  the number of units of consumption goods that can be exchanged for one unit of labour time. 
B)  the number of units of labour time that can be exchanged for one unit of consumption goods. 
C)  the number of units of labour time that can be exchanged for one unit of leisure time. 
D)  the number of units of leisure time that can be exchanged for one unit of labour time. 
E)  the purchasing power of income earned after taxes are paid.

Question 14

The shape of the indifference curve depends on

Accepted Answer

A)  the price of goods. 
B)  the family income. 
C)  the substitutability between goods for the household. 
D)  the level of happiness for the household. 
E)  the relative price of good Y. 
A)  the price of goods. 
B)  the family income. 
C)  the substitutability between goods for the household. 
D)  the level of happiness for the household. 
E)  the relative price of good Y.

In a one-period economy,the expression for the budget constraint is

The representative consumer acts competitively

A defense for the assumption that consumers maximize is that

A good is inferior for a consumer if

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

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

The Solow residual is a measure of

We typically assume that

A consumption bundle

A lump-sum tax is a tax that

Convexity of the indifference curve follows from

A production function describes the

The real wage denotes

The shape of the indifference curve depends on

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 Consumption–Savings 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 Work–Leisure Decision and Profit Maximization

In a one-period economy,the expression for the budget constraint is

The representative consumer acts competitively

A defense for the assumption that consumers maximize is that

A good is inferior for a consumer if

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

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

The Solow residual is a measure of

We typically assume that

A consumption bundle

A lump-sum tax is a tax that

Convexity of the indifference curve follows from

A production function describes the

The real wage denotes

The shape of the indifference curve depends on

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 Consumption–Savings 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