ECO 305 - Final

In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion increase in government spending increases planned expenditures by ______ and increases the equilibrium level of income by ______. A. $1 billion; more than $1 billion B. $0.75 billion; more than $0.75 billion C. $0.75 billion; $0.75 billion D. $1 billion; $1 billion

$1 billion; more than $1 billion

In a small open economy, if exports equal $20 billion, imports equal $30 billion, and domestic national saving equals $25 billion, then net capital outflow equals: A. -$25 billion. B. -$10 billion. C. $10 billion. D. $25 billion.

-$10 billion

In the Solow model with technological progress, the steady-state growth rate of capital per effective worker is: A. 0 B. g C. n D. n + g

0

In the Solow model with technological progress, the steady-state growth rate of output per effective worker is: A. 0 B. g C. n D. n + g

0

In the Solow model with technological progress, the steady-state growth rate of capital per effective worker is: A. 0 B. g C. n D. n + g

0

The steady-state level of capital occurs when the change in the capital stock ( k) equals: A. 0 B. the saving rate. C. the depreciation rate. D. the population growth rate.

0

Economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about: A. 10 to 30 percent. B. 5 percent. C. 1 to 3 percent. D. 0 percent.

1 to 3 percent

If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is: A. 1 percent. B. 9 percent. C. 10 percent. D. 11 percent.

10 percent

If the nominal exchange rate falls 10 percent, the domestic price level rises 4 percent, and the foreign price level rises 6 percent, the real exchange rate will fall: A. 0 percent. B. 8 percent. C. 10 percent. D. 12 percent

12 percent

If the quantity of real money balances is kY, where k is a constant, then velocity is: A. k. B. 1=k. C. kP. D. P=k.

1=k

If the per-worker production function is given by y = k 1/2, the saving ratio is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is: A. 1 B. 2 C. 3 D. 4

2

If MPC = 0.75 (and there are no income taxes) when G increases by 100, then the IS curve for any given interest rate shifts to the right by: A. 100 B. 200 C. 300 D. 400

400

. If the marginal product of capital net of depreciation equals 10 percent and the rate of population growth equals 2 percent, then this economy will be at the Golden Rule steady state if the rate of technological progress equals _____ percent. A. 0 B. 2 C. 8 D. 10

8

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent). A. 0 B. 9 C. 10 D. 20

9

The price level decreases and output increases in the transition from the short run to the long run when the short-run equilibrium is ______ the natural rate of output in the short run. A. Above B. Below C. Equal to D. either above or below

Below

In the Solow model, it is assumed that a(n) ______ fraction of capital wears out as the capital-labor ratio increases. A. Smaller B. Larger C. Constant D. Increasing

Constant

Which of the following is an example of frictional unemployment? A. Dave searches for a new job after voluntarily moving to San Diego. B. Elaine is willing to work for less than the minimum wage, but employers cannot hire her. C. Bill is qualified and would like to be an airline pilot, but airlines do not find it profitable to hire him at the wage established by the airline pilot's union. D. Joan is willing to work at the going wage, but there are no jobs available.

Dave searches for a new job after voluntarily moving to San Diego

According to the IS-LM model, if Congress raises taxes but the Fed wants to hold the interest rate constant, then the Fed must ______ the money supply. A. Increase B. Decrease C. first increase and then decrease D. first decrease and then increase

Decrease

In the Solow growth model, if investment is less than depreciation, the capital stock will ______ and output will ______ until the steady state is attained. A. Increase; increase B. Increase; decrease C. Decrease; decrease D. Decrease; increase

Decrease; decrease

According to the quantity equation, if the velocity of money and the supply of money are fixed, and the price level increases, then the quantity of goods and services purchased: A. Increases B. Decreases C. Does no change D. may either increase or decrease.

Decreases

The quantity of money in the United States is essentially controlled by the: A. president of the United States. B. Department of the Treasury. C. Federal Reserve. D. system of commercial banks.

Federal Reserve

Open-market operations are: A. Commerce Department efforts to open foreign markets to international trade. B. Federal Reserve purchases and sales of government bonds. C. Securities and Exchange Commission rules requiring open disclosure of market trades. D. Treasury Department purchases and sales of the U.S. gold stock.

Federal Reserve purchases and sales of government bonds

According to the Keynesian-cross analysis, when there is a shift upward in the government-purchases schedule by an amount G and the planned expenditure schedule by an equal amount, then equilibrium income rises by: A. one unit. B. G. C. G divided by the quantity one minus the marginal propensity to consume. D. G multiplied by the quantity one plus the marginal propensity to consume.

G divided by the quantity one minus the marginal propensity to consume

An increase in consumer saving for any given level of income will shift the: A. LM curve upward and to the left. B. LM curve downward and to the right. C. IS curve downward and to the left. D. IS curve upward and to the right.

IS curve downward and to the left

A tax cut shifts the ______ to the right, and the aggregate demand curve ______. A. IS; shifts to the right B. IS; does not shift C. LM: shifts to the right D. LM; does not shift

IS; shifts to the right

If domestic spending exceeds output, we ______ the difference—net exports are ______. A. Import; negative B. Export; positive C. Import; positive D. Export negative

Import; negative

According to the IS-LM model, if Congress raises taxes but the Fed wants to hold income constant, then the Fed must ______ the money supply. A. Increase B. Decrease C. first increase and then decrease D. first decrease and then increase

Increase

In the Solow growth model, if investment exceeds depreciation, the capital stock will ______ and output will ______ until the steady state is attained. A. Increase; increase B. Increase; decrease C. Decrease; decrease D. Decrease; increase

Increase; increase

______ cause(s) the capital stock to rise, while ______ cause(s) the capital stock to fall. A. Inflation; deflation B. Interest rates; the discount rate C. Investment; depreciation D. International trade; depressions

Investment; depreciation

Changes in monetary policy shift the: A. LM curve. B. planned spending curve. C. money demand curve. D. IS curve.

LM curve

An increase in the money supply shifts the ______ curve to the right, and the aggregate demand curve ______. A. IS; shifts to the right B. IS; does not shift C. LM: shifts to the right D. LM; does not shift

LM: shifts to the right

A decrease in the price level shifts the ______ curve to the right, and the aggregate demand curve ______. A. IS; shifts to the right B. IS; does not shift C. LM: shifts to the right D. LM; does not shift

LM; does not shift

If the money supply increases, then in the IS-LM analysis the ______ curve shifts to the ______. A. LM; left B. LM; right C. IS; left D. IS; right

LM; right

All of the following statements about minimum-wage workers in the United States are correct except: A. Minimum-wage workers are more likely to be male. B. Minimum-wage workers are more likely to work part time. C. Minimum-wage workers are more likely to be less educated. D. Minimum-wage workers are more likely to be young

Minimum-wage workers are more likely to be male

The Solow model shows that a key determinant of the steady-state ratio of capital to labor is the: A. Level of output B. Labor force C. Saving rate D. capital elasticity in the production function.

Saving rate

With the real money supply held constant, the theory of liquidity preference implies that a higher income level will be consistent with: A. no change in the interest rate. B. a lower interest rate. C. a higher interest rate. D. first a lower and then a higher interest rate.

a higher interest rate

The equilibrium condition in the Keynesian-cross analysis in a closed economy is: A. income equals consumption plus investment plus government spending. B. planned expenditure equals consumption plus planned investment plus government spending. C. actual expenditure equals planned expenditure. D. actual saving equals actual investment.

actual expenditure equals planned expenditure

The marginal product of capital is: A. output divided by capital input. B. additional output produced when one additional unit of capital is added. C. additional output produced when one additional unit of capital and one additional unit of labor are added. D. value of additional output when one dollar's worth of additional capital is added.

additional output produced when one additional unit of capital is added

In the aggregate demand/aggregate supply model, long-run equilibrium occurs at the combination of output and prices where: A. aggregate demand equals long-run aggregate supply. B. aggregate demand equals short-run aggregate supply. C. aggregate demand equals short-run and long-run aggregate supply. D. short-run aggregate supply equals long-run aggregate supply

aggregate demand equals long-run aggregate supply

Economic profit is zero if: A. all factors are paid their marginal products and the law of diminishing returns is valid. B. all factors are paid their marginal products and there are constant returns to scale. C. all firms maximize profits and none are competitive. D. all firms maximize profits and all factors are paid their marginal products.

all factors are paid their marginal products and there are constant returns to scale

Suppose an economy is initially in a steady state with capital per worker exceeding the Golden Rule level. If the saving rate falls to a rate consistent with the Golden Rule, then in the transition to the new steady state, consumption per worker will: A. always exceed the initial level. B. first fall below then rise above the initial level. C. first rise above then fall below the initial level. D. always be lower than the initial level.

always exceed the initial level

Real money balances equal the: A. sum of coin, currency, and balances in checking accounts. B. amount of money expressed in terms of the quantity of goods and services it can purchase. C. number of dollars used as a medium of exchange. D. quantity of money created by the Federal Reserve.

amount of money expressed in terms of the quantity of goods and services it can purchase

In the long run, the level of output is determined by the: A. interaction of supply and demand. B. money supply and the levels of government spending and taxation. C. amounts of capital and labor and the available technology. D. preferences of the public.

amounts of capital and labor and the available technology

An increase in the trade deficit of a small open economy could be the result of: A. an increase in taxes. B. an increase in government spending. C. a decrease in the world interest rate. D. the expiration of an investment tax-credit provision.

an increase in government spending

The theory of liquidity preference implies that: A. as the interest rate rises, the demand for real balances will fall. B. as the interest rate rises, the demand for real balances will rise. C. the interest rate will have no effect on the demand for real balances. D. as the interest rate rises, income will rise

as the interest rate rises, the demand for real balances will fall

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10, then the current unemployment rate is ______ the equilibrium rate, and in the next period it will move ______ the equilibrium rate. A. above; toward B. above; away from C. below; toward D. below; away from

below; toward

When planned expenditure is drawn on a graph as a function of income, the slope of the line is: A. zero. B. between zero and one. C. one. D. greater than one.

between zero and one

A trade deficit can be financed in all of the following ways except by: A. borrowing from foreigners. B. selling domestic assets to foreigners. C. selling foreign assets owned by domestic residents to foreigners. D. borrowing from domestic lenders.

borrowing from domestic lenders

The IS and LM curves together generally determine: A. income only. B. the interest rate only. C. both income and the interest rate. D. income, the interest rate, and the price level

both income and the interest rate

Short-run fluctuations in output and employment are called: A. sectoral shifts. B. the classical dichotomy. C. business cycles. D. productivity slowdowns.

business cycles

The formula for steady-state consumption per worker (c*) as a function of output per worker and investment per worker is: A. c* = f(k*) - δk*. B. c* = f(k*) + δk*. C. c* = f(k*) + dk*. D. c* = k* - f(k)*.

c* = f(k*) - δk*

Hypotheses to explain the positive correlation between factor accumulation and production efficiency include each of the following except: A. the quality of a nation's institutions influences both factor accumulation and production efficiency. B. capital accumulation causes greater production efficiency. C. efficient economies make capital accumulation unnecessary. D. an efficient economy encourages capital (including human capital) accumulation.

capital accumulation causes greater production efficiency

In an economy with no population growth and no technological change, steady-state consumption is at its greatest possible level when the marginal product of: A. labor equals the marginal product of capital. B. labor equals the depreciation rate. C. capital equals the depreciation rate. D. capital equals zero.

capital equals the depreciation rate

In the Solow growth model, the steady-state occurs when: A. capital per worker is constant. B. the saving rate equals the depreciation rate. C. output per worker equals consumption per worker. D. consumption per worker is maximized.

capital per worker is constant

In the Keynesian-cross model, fiscal policy has a multiplied effect on income because fiscal policy: A. increases the amount of money in the economy. B. changes income, which changes consumption, which further changes income. C. is government spending and, therefore, more powerful than private spending. D. changes the interest rate.

changes income, which changes consumption, which further changes income

The aggregate demand curve tells us possible: A. combinations of M and Y for a given value of P. B. combinations of M and P for a given value of Y. C. combinations of P and Y for a given value of M. D. results if the Federal Reserve reduces the money supply

combinations of P and Y for a given value of M

A country that is on a gold standard primarily uses: A. commodity money. B. fiat money. C. credit money. D. the barter system.

commodity money

In the IS-LM model, changes in taxes initially affect planned expenditures through: A. consumption. B. investment. C. government spending. D. the interest rate.

consumption

The Golden Rule level of capital accumulation is the steady state with the highest level of: A. output per worker. B. capital per worker. C. savings per worker. D. consumption per worker.

consumption per worker

The Golden Rule level of capital accumulation is the steady state with the highest level of: A. output per worker. B. capital per worker. C. savings per worker. D. consumption per worker.

consumption per worker

Net capital outflow in a large country: A. rises as the real domestic interest rate rises. B. declines as the domestic interest rate rises. C. depends on the foreign interest rate. D. depends only on domestic saving.

declines as the domestic interest rate rises

The version of Okun's law studied in Chapter 9 assumes that, with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate rose by 2 percentage points over a year, Okun's law predicts that real GDP would: A. decrease by 1 percent. B. decrease by 2 percent. C. decrease by 3 percent. D. increase by 1 percent.

decrease by 1 percent

A shift in the aggregate demand curve, starting from long-run equilibrium, which increases output in the short run, will ______ in the long run, as compared to a short-run equilibrium. A. increase both output and the price level B. decrease output but increase prices C. increase output but decrease the price level D. decrease both output and the price level

decrease output but increase prices

If the information technology boom increases investment demand in a small open economy, then net exports ______ and the real exchange rate ______. A. increase; appreciates B. increase; depreciates C. decrease; appreciates D. decrease; depreciates

decrease; appreciates

In the IS-LM model, a decrease in government purchases leads to a(n) ______ in planned expenditures, a(n) ______ in total income, a(n) ______ in money demand, and a(n) ______ in the equilibrium interest rate. A. decrease; decrease; decrease; decrease B. increases; increase; increases; increase C. decrease; decrease; increase; increase D. increase; increase; decrease; decrease

decrease; decrease; decrease; decrease

If a short-run equilibrium occurs at a level of output below the natural rate, then in the transition to the long run, prices will ______ and output will ______. A. increase; increase B. decrease; decrease C. increase; decrease D. decrease; increase

decrease; increase

An explanation for the slope of the IS curve is that as the interest rate increases, the quantity of investment ______, and this shifts the expenditure function ______, thereby decreasing income. A. increases; downward B. increases; upward C. decreases; upward D. decreases; downward

decreases; downward

The price received by each factor of production for its services is determined by: A. demand for output and supply of factors. B. demand for factors and supply of output. C. demand and supply of output. D. demand and supply of factors.

demand and supply of factors

The assumption of constant velocity in the quantity equation is the equivalent of the assumption of a constant: A. short-run aggregate supply curve. B. long-run aggregate supply curve. C. price level in the short run. D. demand for real balances per unit of output.

demand for real balances per unit of output

In the IS-LM model, which two variables are influenced by the interest rate? A. supply of nominal money balances and demand for real balances B. demand for real balances and government purchases C. supply of nominal money balances and investment spending D. demand for real money balances and investment spending

demand for real money balances and investment spending

In the Solow growth model with population growth and technological change, the break-even level of investment must cover: A. depreciating capital. B. depreciating capital and capital for new workers. C. depreciating capital and capital for new effective workers. D. depreciating capital, capital for new workers, and capital for new effective workers.

depreciating capital, capital for new workers, and capital for new effective workers

In the steady state, the capital stock does not change because investment equals: A. output per worker. B. the marginal product of capital. C. depreciation. D. consumption.

depreciation

A "small" economy is one in which the: A. level of output is fixed. B. price level is fixed. C. domestic interest rate equals the world interest rate. D. domestic saving is less than domestic investment.

domestic interest rate equals the world interest rate

When exports exceed imports, all of the following are true except: A. net capital outflows are positive. B. net exports are positive. C. domestic investment exceeds domestic saving. D. domestic output exceeds spending.

domestic investment exceeds domestic saving

In a small, open economy, if net exports are negative, then: A. domestic spending is greater than output. B. saving is greater than investment. C. net capital outflows are negative. D. imports are less than exports.

domestic spending is greater than output

An increase in taxes shifts the IS curve, drawn with income along the horizontal axis and the interest rate along the vertical axis: A. downward and to the left. B. upward and to the right. C. upward and to the left. D. downward and to the right.

downward and to the left

When an aggregate demand curve is drawn with real GDP (Y) along the horizontal axis and the price level (P) along the vertical axis, if the money supply is decreased, then the aggregate demand curve will shift: A. downward and to the left. B. downward and to the right. C. upward and to the left. D. upward and to the right.

downward and to the left

If the national saving rate increases, the: A. economy will grow at a faster rate forever. B. capital-labor ratio will increase forever. C. economy will grow at a faster rate until a new, higher, steady-state capital-labor ratio is reached. D. capital-labor ratio will eventually decline.

economy will grow at a faster rate until a new, higher, steady-state capital-labor ratio is reached

The number of effective workers takes into account the number of workers and the: A. amount of capital available to each worker. B. rate of growth of the number of workers. C. efficiency of each worker. D. saving rate of each worker.

efficiency of each worker

Paying efficiency wages helps firms reduce the problem of moral hazard by: A. generating additional profits that can be used to improve working conditions. B. matching the wages each worker is paid to the number of units of output each worker produces. C. encouraging unsupervised workers to maintain a high level of productivity. D. providing an incentive for the best-qualified workers to remain with the firm.

encouraging unsupervised workers to maintain a high level of productivity

. In a small open economy with perfect capital mobility, the real interest rate will always be: A. above the world real interest rate. B. below the world real interest rate. C. equal to the world real interest rate. D. equal to the world nominal interest rate.

equal to the world real interest rate

The Keynesian cross shows: A. determination of equilibrium income and the interest rate in the short run. B. determination of equilibrium income and the interest rate in the long run. C. equality of planned expenditure and income in the short run. D. equality of planned expenditure and income in the long run.

equality of planned expenditure and income in the short run

When the real exchange rate rises: A. exports will decrease but imports will be unaffected. B. imports will decrease but exports will be unaffected. C. exports will increase and imports will decrease. D. exports will decrease and imports will increase.

exports will decrease and imports will increase

International differences in income per person in accounting terms must be attributed to differences in either ______ and/or ______. A. factor accumulation; production efficiency B. constant returns to scale; the marginal product of capital C. unemployment rates; depreciation rates D. consumption; interest rates

factor accumulation; production efficiency

In a small open economy, if consumer confidence falls and consumers decide to save more, then the real exchange rate: A. rises and net exports fall. B. and net exports both rise. C. falls and net exports rise. D. and net exports both fall.

falls and net exports rise

In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate: A. rises and net exports fall. B. rises and net exports rise. C. falls and net exports fall. D. falls and net exports rise. D. falls and net exports rise

falls and net exports rise

In the IS-LM model when taxation increases, in short-run equilibrium, in the usual case, the interest rate ______ and output ______. A. rises; falls B. rises; rises C. falls; rises D. falls; falls

falls; falls

In the IS-LM model when M rises but P remains constant, in short-run equilibrium, in the usual case, the interest rate ______ and output ______. A. rises; falls B. rises; rises C. falls; rises D. falls; falls

falls; rises

In the IS-LM model when M/P rises, in short-run equilibrium, in the usual case, the interest rate ______ and output ______. A. rises; falls B. rises; rises C. falls; rises D. falls; falls

falls; rises

Most economists believe that prices are: A. flexible in the short run but many are sticky in the long run. B. flexible in the long run but many are sticky in the short run. C. sticky in both the short and long runs. D. flexible in both the short and long runs.

flexible in the long run but many are sticky in the short run

English-style legal systems give ______ protections to shareholders and creditors than French Napoleonic Codes, typically resulting in ______ capital markets and faster rates of economic growth. A. greater; more developed B. greater; more corrupt C. less; more developed D. less; less corrupt

greater; more developed

The minimum wage: A. is usually about 75 percent of the average wage earned in manufacturing. B. raises the wages of highly skilled workers. C. encourages master workers to take on apprentices. D. has its greatest impact on teenage unemployment.

has its greatest impact on teenage unemployment

The efficiency of labor is a term that does not reflect the: A. high output that comes from labor cooperating with a large amount of capital. B. health of the labor force. C. education of the labor force. D. skills of the labor force acquired through on-the-job training.

high output that comes from labor cooperating with a large amount of capital

For a fixed money supply, the aggregate demand curve slopes downward because at a lower price level real money balances are ______, generating a ______ quantity of output demanded. A. higher; greater B. higher; smaller C. lower; greater D. lower; smaller

higher; greater

According to the quantity theory of money, if output is higher, ______ real balances are required, and for fixed M this means ______ P. A. higher; lower B. lower; higher C. higher; higher D. lower; lower

higher; lower

Assume two economies are identical in every way except that one has a higher population growth rate. According to the Solow growth model, in the steady state the country with the higher population growth rate will have a ______ level of total output and ______ rate of growth of output per worker as/than the country with the lower population growth rate. A. higher; the same B. higher; a higher C. lower; the same D. lower; a lower

higher; the same

Economic research shows that ______ in explaining international differences in living standards. A. physical capital is more important than is human capital B. human capital is at least as important as is physical capital C. human capital is much more important than is physical capital D. infrastructure is the most important factor

human capital is at least as important as is physical capital

The Golden Rule level of the steady-state capital stock: A. will be reached automatically if the saving rate remains constant over a long period of time. B. will be reached automatically if each person saves enough to provide for his or her retirement. C. implies a choice of a particular saving rate. D. should be avoided by an enlightened government.

implies a choice of a particular saving rate

A 5 percent reduction in the money supply will, according to most economists, reduce prices 5 percent: A. in both the short and long runs. B. in neither the short nor long run. C. in the short run but lead to unemployment in the long run. D. in the long run but lead to unemployment in the short run.

in the long run but lead to unemployment in the short run

The efficiency of labor: A. is the marginal product of labor. B. is the rate of growth of the labor force. C. includes the knowledge, health, and skills of labor. D. equals output per worker.

includes the knowledge, health, and skills of labor

The government-purchases multiplier indicates how much ______ change(s) in response to a $1 change in government purchases. A. the budget deficit B. consumption C. income D. real balances

income

The tax multiplier indicates how much ______ change(s) in response to a $1 change in taxes. A. the budget deficit B. consumption C. income D. real balances

income

An explanation for the slope of the LM curve is that as: A. the interest rate increases, income becomes higher. B. the interest rate increases, income becomes lower. C. income rises, money demand rises, and a higher interest rate is required. D. income rises, money demand rises, and a lower interest rate is required.

income rises, money demand rises, and a higher interest rate is required

If wage rigidity holds the real wage above the equilibrium level, an increase in the supply of labor will ______ the number unemployed. A. increase B. decrease C. not change D. possibly increase, decrease, or leave unchanged

increase

The production function feature called constant returns to scale means that if we: A. multiply capital by z1 and labor by z2, we multiply output by z3. B. increase capital and labor by 10 percent each, we increase output by 10 percent. C. increase capital and labor by 5 percent each, we increase output by 10 percent. D. increase capital by 10 percent and increase labor by 5 percent, we increase output by 7.5 percent.

increase capital and labor by 10 percent each, we increase output by 10 percent

In the IS-LM model, a decrease in output would be the result of a(n): A. decrease in taxes. B. increase in the money supply. C. increase in money demand. D. increase in government purchases.

increase in money demand

In the IS-LM model, a decrease in the interest rate would be the result of a(n): A. increase in the money supply. B. increase in government purchases. C. decrease in taxes. D. increase in money demand.

increase in the money supply

Starting from a steady-state situation, if the saving rate increases, the rate of growth of capital per worker will: A. increase and continue to increase unabated. B. increase until the new steady state is reached. C. decrease until the new steady state is reached. D. decrease and continue to decrease unabated.

increase until the new steady state is reached

In the Keynesian-cross model, if taxes are reduced by 100, then planned expenditures ______ for any given level of income. A. increase by 100 B. increase by more than 100 C. decrease by 100 D. increase, but by less than 100

increase, but by less than 100

If a short-run equilibrium occurs at a level of output above the natural rate, then in the transition to the long run, prices will ______ and output will ______. A. increase; increase B. decrease; decrease C. increase; decrease D. decrease; increase

increase; decrease

If the real exchange rate depreciates from 1 Japanese good per U.S. good to 0.5 Japanese good per U.S. good, then U.S. exports ______ and U.S. imports ______. A. increase; increase B. decrease; decrease C. increase; decrease D. decrease; increase

increase; decrease

In the Solow growth model, if investment exceeds depreciation, the capital stock will ______ and output will ______ until the steady state is attained. A. increase; increase B. increase; decrease C. decrease; decrease D. decrease; increase

increase; increase

Empirical evidence supports the theory that free trade: A. increases economic growth. B. decreases economic growth. C. increases imports, but decreases exports because of greater global competition. D. increases both imports and exports, but does not contribute to overall economic growth.

increases economic growth

The unemployment insurance system may be desirable because unemployment insurance: A. raises the natural rate of unemployment. B. reduces the rate of job finding. C. increases workers' uncertainty about their incomes. D. induces workers to reject unattractive job offers.

induces workers to reject unattractive job offers

The variable that links the market for goods and services and the market for real money balances in the IS-LM model is the: A. consumption function. B. interest rate. C. price level. D. nominal money supply.

interest rate

An LM curve shows combinations of: A. taxes and government spending. B. nominal money balances and price levels. C. interest rates and income, which bring equilibrium in the market for real money balances. D. interest rates and income, which bring equilibrium in the market for goods and services.

interest rates and income, which bring equilibrium in the market for real money balances

In the IS-LM model under the usual conditions in a closed economy, an increase in government spending increases the interest rate and crowds out: A. prices. B. investment. C. the money supply. D. taxes.

investment

In the Solow growth model the saving rate determines the allocation of output between: A. saving and investment. B. output and capital. C. consumption and output. D. investment and consumption.

investment and consumption

If taxes are raised, but the Fed prevents income from falling by raising the money supply, then: A. both consumption and investment remain unchanged. B. consumption rises but investment falls. C. investment rises but consumption falls. D. both consumption and investment fall

investment rises but consumption falls

Business cycles are: A. regular and predictable. B. irregular but predictable. C. regular but unpredictable. D. irregular and unpredictable.

irregular and unpredictable

If the production function describing an economy is Y = 100K0.25L0.75, then the share of output going to labor: A. is 25 percent. B. is 75 percent. C. depends on the quantities of labor and capital. D. depends on the state of technology.

is 75 percent

The real exchange rate: A. measures how many Japanese yen one really gets for a U.S. dollar. B. is equal to the nominal exchange rate multiplied by the domestic price level divided by the foreign price level. C. is equal to the nominal exchange rate multiplied by the foreign price level divided by the domestic price level. D. is the price of a domestic car divided by the price of a foreign car.

is equal to the nominal exchange rate multiplied by the domestic price level divided by the foreign price level

According to the theory of liquidity preference, the supply of real money balances: A. decreases as the interest rate increases. B. increases as the interest rate increases. C. increases as income increases. D. is fixed.

is fixed

The Keynesian-cross analysis assumes planned investment: A. is fixed and so does the IS analysis. B. depends on the interest rate and so does the IS analysis. C. is fixed, whereas the IS analysis assumes it depends on the interest rate. D. depends on expenditure and so does the IS analysis.

is fixed, whereas the IS analysis assumes it depends on the interest rate

If all prices are stuck at a predetermined level, then when a short-run aggregate supply curve is drawn with real GDP (Y) along the horizontal axis and the price level (P) along the vertical axis, this curve: A. is horizontal. B. is vertical. C. slopes upward and to the right. D. slopes downward and to the right.

is horizontal

If an economy with no population growth or technological change has a steady-state MPK of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the steady-state capital stock: A. is greater than the Golden Rule level. B. is less than the Golden Rule level. C. equals the Golden Rule level. D. could be either above or below the Golden Rule level.

is less than the Golden Rule level

Over the business cycle, investment spending ______ consumption spending. A. is inversely correlated with B. is more volatile than C. has about the same volatility as D. is less volatile than

is more volatile than

The world interest rate: A. is equal to the domestic interest rate. B. makes domestic saving equal to domestic investment. C. is the interest rate charged on loans by the World Bank. D. is the interest rate prevailing in world financial markets.

is the interest rate prevailing in world financial markets

One reason for unemployment is that: A. it takes time to match workers and jobs. B. all jobs are identical. C. the labor market is always in equilibrium. D. a laid-off worker can immediately find a new job at the market wage

it takes time to match workers and jobs

A small open economy with perfect capital mobility is characterized by all of the following except that: A. its domestic interest rate always exceeds the world interest rate. B. it engages in international trade. C. its net capital outflows always equal the trade balance. D. its government does not impede international borrowing or lending

its domestic interest rate always exceeds the world interest rate

The change in capital stock per worker (Δk) may be expressed as a function of s = the saving ratio, f(k) = output per worker, k = capital per worker, and δ = the depreciation rate, by the equation: A. k = sf(k)/δk. B. k = sf(k) × δk. C. k = sf(k) + k. D. k = sf(k) - δk.

k = sf(k) - δk

To determine whether an economy is operating at its Golden Rule level of capital stock, a policymaker must determine the steady-state saving rate that produces the: A. largest MPK. B. smallest depreciation rate. C. largest consumption per worker. D. largest output per worker.

largest consumption per worker

If Congress passed a tax increase at the request of the president to reduce the budget deficit, but the Fed held the money supply constant, then the two policies together would generally lead to ______ income and a ______ interest rate. A. lower; lower B. lower; higher C. no change in; lower D. no change in; higher

lower; lower

The aggregate demand curve generally slopes downward and to the right because, for any given money supply, M, a higher price level, P, causes a ______ real money supply M/P, which ______ the interest rate and ______ spending: A. lower; raises; reduces B. higher; lowers; increases C. lower; lowers; increases D. higher; raises; reduces

lower; raises; reduces

A competitive, profit-maximizing firm hires labor until the: A. marginal product of labor equals the wage. B. price of output multiplied by the marginal product of labor equals the wage. C. real wage equals the real rental price of capital. D. wage equals the rental price of capital.

marginal product of labor equals the wage

If the short-run aggregate supply curve is horizontal, then the: A. classical dichotomy is satisfied. B. money supply cannot affect prices in the short run. C. money supply cannot affect output in the short run. D. money supply is irrelevant in the short run.

money supply cannot affect prices in the short run

Two economies are identical except that the level of capital per worker is higher in Highland than in Lowland. The production functions in both economies exhibit diminishing marginal product of capital. An extra unit of capital per worker increases output per worker: A. more in Highland. B. more in Lowland. C. by the same amount in Highland and Lowland. D. in Highland, but not in Lowland.

more in Lowland

The formula for the steady-state ratio of capital to labor (k*), with no population growth or technological change, is s: A. divided by the depreciation rate. B. multiplied by the depreciation rate. C. divided by the product of f(k*) and the depreciation rate. D. multiplied by f(k*) divided by the depreciation rate.

multiplied by f(k*) divided by the depreciation rate

The formula for the steady-state ratio of capital to labor (k*) with population growth at rate n but no technological change, where s is the saving rate, is s: A. divided by the sum of the depreciation rate plus n. B. multiplied by the sum of the depreciation rate plus n. C. divided by the product of f(k*) and the sum of the depreciation rate plus n. D. multiplied by f(k*) divided by the sum of the depreciation rate plus n.

multiplied by f(k*) divided by the sum of the depreciation rate plus n

The formula for the steady-state ratio of capital to labor (k*) with population growth at rate n but no technological change, where s is the saving rate, is s: A. divided by the sum of the depreciation rate plus n. B. multiplied by the sum of the depreciation rate plus n. C. divided by the product of f(k*) and the sum of the depreciation rate plus n. D. multiplied by f(k*) divided by the sum of the depreciation rate plus n.

multiplied by f(k*) divided by the sum of the depreciation rate plus n

In the Solow model with technological progress, the steady-state growth rate of total output is: A. 0 B. g C. n D. n + g

n + g

In the Solow growth model of an economy with population growth but no technological change, if population grows at rate n, total output grows at rate ______ and output per worker grows at rate ______. A. n ; n B. n ; 0 C. 0; 0 D. 0 ; n

n ; 0

The IS curve plots the relationship between the interest rate and ______ that arises in the market for ______. A. national income; goods and services B. the price level; goods and services C. national income; money D. the price level; money

national income; goods and services

Net capital outflow is equal to: A. national saving minus the trade balance. B. domestic investment plus the trade balance. C. domestic investment minus national saving. D. national saving minus domestic investment.

national saving minus domestic investment

If domestic saving is less than domestic investment, then net exports are ______ and net capital outflows are ______. A. positive; positive B. positive; negative C. negative; negative D. negative; positive

negative; negative

The aggregate demand curve is the ______ relationship between the quantity of output demanded and the ______. A. positive; money supply B. negative; money supply C. positive; price level D. negative; price level

negative; price level

Okun's law is the ______ relationship between real GDP and the ______. A. negative; unemployment rate B. negative; inflation rate C. positive; unemployment rate D. positive; inflation rate

negative; unemployment rate

The real exchange rate is determined by the equality of: A. saving and the demand for net exports. B. investment and the demand for net exports. C. net capital outflow and the demand for net exports. D. the negative value of net capital outflow and the demand for net exports.

net capital outflow and the demand for net exports

With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK): A. net of depreciation be equal to n + g. B. net of depreciation be equal to the depreciation rate plus n + g. C. plus n be equal to the depreciation rate plus g. D. plus g be equal to the depreciation rate plus n.

net of depreciation be equal to n + g

With population growth at rate n but no technological change, the Golden Rule steady state may be achieved by equating the marginal product of capital (MPK): A. net of depreciation to n. B. to n. C. net of depreciation to the depreciation rate plus n. D. to the depreciation rate.

net of depreciation to n

A possible externality associated with the process of accumulating new capital is that: A. a reduction in labor productivity may occur. B. new production processes may be devised. C. old capital may be made more productive. D. the government may need to adopt an industrial policy.

new production processes may be devised

The real interest rate is equal to the: A. amount of interest that a lender actually receives when making a loan. B. nominal interest rate plus the inflation rate. C. nominal interest rate minus the inflation rate. D. nominal interest rate.

nominal interest rate minus the inflation rate

The nominal exchange rate between the U.S. dollar and the Japanese yen is the: A. number of yen you can get for lending one dollar in Japan for one year. B. number of yen you can get for one dollar. C. price of U.S. goods divided by the price of Japanese goods. D. price of Japanese goods divided by the price of U.S. goods.

number of yen you can get for one dollar

The IS-LM model is generally used: A. only in the short run. B. only in the long run. C. both in the short run and the long run. D. in determining the price level.

only in the short run

If the short-run aggregate supply curve is horizontal, then a change in the money supply will change ______ in the short run and change ______ in the long run. A. only prices; only output B. only output; only prices C. both prices and output; only prices D. both prices and output; both prices and output

only output; only prices

Discouraged workers are counted as: A. part of the labor force. B. out of the labor force. C. employed. D. unemployed

out of the labor force

The production function y = f(k) means: A. labor is not a factor of production. B. output per worker is a function of labor productivity. C. output per worker is a function of capital per worker. D. the production function exhibits increasing returns to scale.

output per worker is a function of capital per worker

The production function y = f(k) means: A. labor is not a factor of production. B. output per worker is a function of labor productivity. C. output per worker is a function of capital per worker. D. the production function exhibits increasing returns to scale.

output per worker is a function of capital per worker

If an economy is in a steady state with no population growth or technological change and the capital stock is above the Golden Rule level and the saving rate falls: A. output, consumption, investment, and depreciation will all decrease. B. output and investment will decrease, and consumption and depreciation will increase. C. output and investment will decrease, and consumption and depreciation will increase and then decrease but finally approach levels above their initial state. D. output, investment, and depreciation will decrease, and consumption will increase and then decrease but finally approach a level above its initial state.

output, investment, and depreciation will decrease, and consumption will increase and then decrease but finally approach a level above its initial state

Assume that the economy starts from long-run equilibrium. If the Federal Reserve increases the money supply, then ______ increase(s) in the short run and ______ increase(s) in the long run. A. prices; output B. output; prices C. output; output D. prices; prices

output; prices

For the purposes of the Keynesian cross, planned expenditure consists of: A. planned investment. B. planned government spending. C. planned investment and government spending. D. planned investment, government spending, and consumption expenditures.

planned investment, government spending, and consumption expenditures

Wage rigidity: A. forces labor demand to equal labor supply. B. is caused by sectoral shifts. C. prevents labor demand and labor supply from reaching the equilibrium level. D. increases the rate of job finding.

prevents labor demand and labor supply from reaching the equilibrium level

If the transactions velocity of money remains constant while the quantity of money doubles, the: A. price of the average transaction must double. B. number of transactions must remain constant. C. price of the average transaction multiplied by the number of transactions must remain constant. D. price of the average transaction multiplied by the number of transactions must double.

price of the average transaction multiplied by the number of transactions must double

A short-run aggregate supply curve shows fixed ______, and a long-run aggregate supply curve shows fixed ______. A. output; output B. prices; prices C. prices; output D. output; prices

prices; output

. One explanation for greater economic development in moderate versus tropical climates is that institutions established by colonial settlers in moderate climates ______, while institutions established by colonists in tropical climates ______. A. were based on English common law; were based on the Napoleonic Code B. were based on the Napoleonic Code; were based on English common law C. protected property rights; were extractive and authoritarian D. were extractive and authoritarian; protected property rights

protected property rights; were extractive and authoritarian

A competitive firm chooses the: A. price at which to sell the product produced. B. wage to pay labor. C. quantity of labor and capital to employ. D. rental price to pay capital.

quantity of labor and capital to employ

Permitting a lower minimum wage for teenagers would likely: A. raise teenage unemployment. B. raise teenage wages overall. C. prevent teenagers from getting job experience. D. raise unemployment among unskilled adults.

raise unemployment among unskilled adults

Permitting a lower minimum wage for teenagers would likely: A. raise teenage unemployment. B. raise teenage wages overall. C. prevent teenagers from getting job experience. D. raise unemployment among unskilled adults.

raise unemployment among unskilled adults

The one-to-one relation between the inflation rate and the nominal interest rate, the Fisher effect, assumes that the: A. money supply is constant. B. velocity is constant. C. inflation rate is constant. D. real interest rate is constant.

real interest rate is constant

Efficiency-wage theories suggest that a firm may pay workers more than the market-clearing wage for all of the following reasons except to: A. reduce labor turnover. B. improve the quality of the firm's labor force. C. increase worker effort. D. reduce the firm's wage bill.

reduce the firm's wage bill

Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or ______ the rate of job finding. A. reduce; reduce B. increase; increase C. reduce; increase D. increase; reduce

reduce; increase

. In the Solow growth model of Chapter 7, the economy ends up with a steady-state level of capital: A. only if it starts from a level of capital below the steady-state level. B. only if it starts from a level of capital above the steady-state level. C. only if it starts from a steady-state level of capital. D. regardless of the starting level of capital.

regardless of the starting level of capital

In a small open economy, if consumers shift their preferences toward Japanese cars, then net exports: A. fall and the real exchange rate falls. B. fall but the real exchange rate remains unchanged. C. remain unchanged but the real exchange rate falls. D. and the real exchange rate remain unchanged.

remain unchanged but the real exchange rate falls

A change in income in the IS-LM model for a fixed price level: A. represents a shift in the aggregate demand curve. B. represents a movement along the aggregate demand curve. C. has the same effect on the aggregate demand curve as a change in income in the IS-LM model resulting from a change in the price level. D. does not represent a change in the aggregate demand curve.

represents a shift in the aggregate demand curve

In a small open economy, when the government reduces national saving, the equilibrium real exchange rate: A. rises and net exports fall. B. rises and net exports rise. C. falls and net exports fall. D. falls and net exports rise.

rises and net exports fall

In the IS-LM model when M remains constant but P rises, in short-run equilibrium, in the usual case, the interest rate ______ and output ______. A. rises; falls B. rises; rises C. falls; rises D. falls; falls

rises; falls

In the IS-LM model when government spending rises, in short-run equilibrium, in the usual case, the interest rate ______ and output ______. A. rises; falls B. rises; rises C. falls; rises D. falls; falls

rises; rises

If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately: A. f/(f + s). B. (f + s)/f. C. s/(s + f). D. (s + f)/s.

s/(s + f)

If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately: A. f/(f + s). B. (f + s)/f. C. s/(s + f). D. (s + f)/s.

s/(s + f)

. If the marginal product of capital net of depreciation equals 8 percent, the rate of growth of population equals 2 percent, and the rate of labor-augmenting technical progress equals 2 percent, to reach the Golden Rule level of the capital stock the ______ rate in this economy must be ______. A. saving; increased B. population growth; decreased C. depreciation; decreased D. total output growth; decreased

saving; increased

In the IS-LM model when the Federal Reserve decreases the money supply, people ______ bonds and the interest rate ______, leading to a(n) ______ in investment and income. A. buy; rises; increase B. sell; falls; decrease C. sell; rises; decrease D. buy; rises; decrease

sell; rises; decrease

Investment per worker (i) as a function of the saving ratio (s) and output per worker (f(k)) may be expressed as: A. s + f(k). B. s - f(k). C. sf(k). D. s/f(k).

sf(k)

The type of legal system in a country and the level of corruption in a country have been found to be: A. unrelated to the rate of economic growth in a country. B. significant determinants of the rate of economic growth in a country. C. important topics for political discussion, but not economic explanations of growth. D. important variables explaining the Golden Rule level of capital.

significant determinants of the rate of economic growth in a country

When f(k) is drawn on a graph with increases in k noted along the horizontal axis, the: A. graph is a straight line. B. slope of the line eventually gets flatter and flatter. C. slope of the line eventually becomes negative. D. slope of the line eventually becomes steeper and steeper

slope of the line eventually gets flatter and flatter

When drawn on a graph with income along the horizontal axis and the interest rate along the vertical axis, the IS curve generally: A. is vertical. B. is horizontal. C. slopes upward and to the right. D. slopes downward and to the right

slopes downward and to the right

Unemployment insurance increases the amount of frictional unemployment by: A. making workers more frantic in their search for new jobs. B. inducing workers to accept the first job offer that they receive. C. making employers more reluctant to lay off workers. D. softening the economic hardship of unemployment.

softening the economic hardship of unemployment

In a small open economy, if the world real interest rate is above the rate at which national saving equals domestic investment, then there will be a trade ______ and ______ net capital outflow. A. surplus; negative B. deficit; positive C. surplus; positive D. deficit; negative

surplus; positive

Public policies in the United States designed to stimulate technological progress do not include: A. tax breaks to encourage homeownership. B. the temporary monopoly granted by the patent system. C. tax breaks for research and development. D. subsidies given by the National Science Foundation.

tax breaks to encourage homeownership

According to the quantity theory of money, ultimate control over the rate of inflation in the United States is exercised by: A. the Organization of Petroleum Exporting Countries (OPEC). B. the U.S. Treasury. C. the Federal Reserve. D. private citizens.

the Federal Reserve

The natural rate of unemployment is: A. the average rate of unemployment around which the economy fluctuates. B. about 10 percent of the labor force. C. a rate that never changes. D. the transition of individuals between employment and unemployment.

the average rate of unemployment around which the economy fluctuates

The value of net exports is also the value of: A. Net investment B. Net saving C. National saving D. the excess of national saving over domestic investment

the excess of national saving over domestic investment

In the classical model with fixed output, the supply and demand for goods and services are balanced by: A. government spending. B. taxes. C. fiscal policy. D. the interest rate.

the interest rate

The LM curve shows combinations of ______ that are consistent with equilibrium in the market for real money balances. A. inflation and unemployment B. the price level and real output C. the interest rate and the level of income D. the interest rate and real money balances

the interest rate and the level of income

The interaction of the IS curve and the LM curve together determine: A. the price level and the inflation rate. B. the interest rate and the price level. C. investment and the money supply. D. the interest rate and the level of output.

the interest rate and the level of output

When f(k) is drawn on a graph with increases in k noted along the horizontal axis, the slope of the line denotes: A. output per worker. B. output per unit of capital. C. the marginal product of labor. D. the marginal product of capital.

the marginal product of capital

In a steady state: A. no hiring or firings are occurring. B. the number of people finding jobs equals the number of people losing jobs. C. the number of people finding jobs exceeds the number of people losing jobs. D. the number of people losing jobs exceeds the number of people finding jobs

the number of people finding jobs equals the number of people losing jobs

In a steady state: A. no hiring or firings are occurring. B. the number of people finding jobs equals the number of people losing jobs. C. the number of people finding jobs exceeds the number of people losing jobs. D. the number of people losing jobs exceeds the number of people finding jobs.

the number of people finding jobs equals the number of people losing jobs

In the Solow growth model, the assumption of constant returns to scale means that: A. all economies have the same amount of capital per worker. B. the steady-state level of output is constant regardless of the number of workers. C. the saving rate equals the constant rate of depreciation. D. the number of workers in an economy does not affect the relationship between output per worker and capital per worker.

the number of workers in an economy does not affect the relationship between output per worker and capital per worker

In the Solow growth model, the assumption of constant returns to scale means that: A. all economies have the same amount of capital per worker. B. the steady-state level of output is constant regardless of the number of workers. C. the saving rate equals the constant rate of depreciation. D. the number of workers in an economy does not affect the relationship between output per worker and capital per worker.

the number of workers in an economy does not affect the relationship between output per worker and capital per worker

An economic change that does not shift the aggregate demand curve is a change in: A. the money supply. B. the investment function. C. the price level. D. taxes.

the price level

In the long run, what determines the level of total production of goods and services in an economy? A. the interest rate and the amount of national saving B. the quantity of capital and labor and production technology C. consumption, investment, and government spending D. the marginal products of capital and labor, constant returns to scale, and competition

the quantity of capital and labor and production technology

In the Solow model with technological progress, by increasing the efficiency of labor at rate g: A. the real wage and the real rental price of capital both grow at rate g. B. the real wage grows at rate g but the real rental price of capital is constant. C. the real wage is constant but the real rental price of capital grows at rate g. D. both the real wage and the real rental price of capital are constant.

the real wage grows at rate g but the real rental price of capital is constant

If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts output will grow and that the new steady state will approach: A. a higher output level than before. B. the same output level as before. C. a lower output level than before. D. the Golden Rule output level.

the same output level as before

Frictional unemployment is unemployment caused by: A. wage rigidity. B. minimum-wage legislation. C. the time it takes workers to search for a job. D. clashes between the motives of insiders and outsiders.

the time it takes workers to search for a job

An "open" economy is one in which: A. the level of output is fixed. B. government spending exceeds revenues. C. the national interest rate equals the world interest rate. D. there is trade in goods and services with the rest of the world.

there is trade in goods and services with the rest of the world

An "open" economy is one in which: A. the level of output is fixed. B. government spending exceeds revenues. C. the national interest rate equals the world interest rate. D. there is trade in goods and services with the rest of the world.

there is trade in goods and services with the rest of the world

All of the following are reasons for frictional unemployment except: A. workers have different preferences and abilities. B. unemployed workers accept the first job offer that they receive. C. the flow of information is imperfect. D. geographic mobility takes time.

unemployed workers accept the first job offer that they receive

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ______ who find a job each month, while the rate of job separation equals the percentage of the ______ who lose their job each month. A. labor force; labor force B. labor force; unemployed C. employed; labor force D. unemployed; employed

unemployed; employed

In the Keynesian-cross model, actual expenditures equal: A. GDP B. the money supply. C. the supply of real balances. D. unplanned inventory investment

unplanned inventory investment

An increase in government spending generally shifts the IS curve, drawn with income along the horizontal axis and the interest rate along the vertical axis: A. downward and to the left. B. upward and to the right. C. upward and to the left. D. downward and to the right.

upward and to the right

Leading economic indicators are: A. the most popular economic statistics. B. data that are used to construct the consumer price index and the unemployment rate. C. variables that tend to fluctuate in advance of the overall economy. D. standardized statistics compiled by the National Bureau of Economic Research.

variables that tend to fluctuate in advance of the overall economy

The quantity theory of money assumes that: A. income is constant. B. velocity is constant. C. prices are constant. D. the money supply is constant.

velocity is constant

Discouraged workers are individuals who: A. have jobs that do not match their skills (e.g., a PhD driving a taxi cab). B. have been unemployed for more than 26 weeks. C. call themselves unemployed but are not seriously looking for a job. D. want a job but have given up looking for one.

want a job but have given up looking for one

All of the following are considered major functions of money except as a: A. medium of exchange. B. way to display wealth. C. unit of account. D. store of value.

way to display wealth

If two economies are identical (with the same population growth rates and rates of technological progress), but one economy has a lower saving rate, then the steady-state level of income per worker in the economy with the lower saving rate: A. will be at a lower level than the steady state of the high-saving economy. B. will be at a higher level than the steady state of the high-saving economy. C. will be at the same level as the steady state of the high-saving economy. D. will grow at a slower rate than the high-saving economy.

will be at a lower level than the steady state of the high-saving economy