ECON EXAM MIDTERM

In the Solow growth model, an economy in the steady state with a population growth rate of n but no technological growth will exhibit a growth rate of output per worker at rate: A) 0. B) n. C) delta. D) (n + delta).

A) 0.

An adverse supply shock ______ the short-run aggregate supply curve ______ the natural level of output. A) raises; but cannot affect B) raises; and may also lower C) lowers; but cannot affect D) lowers; and may also lower

B) raises; and may also lower

When an economy begins above the Golden Rule level, reaching the Golden Rule level: A) results in lower consumption at all times in the future. B) results in higher consumption at all times in the future. C) requires initially reducing consumption to increase consumption in the future. D) requires initially increasing consumption to decrease consumption in the future.

B) results in higher consumption at all times in the future.

Economists call the changes in the composition of demand among industries and regions: A) insider-outsider conflicts. B) sectoral shifts. C) moral hazard. D) adverse selection.

B) sectoral shifts.

According to efficiency-wage theories, firms benefit by paying higher-than-equilibrium wages because worker _____ increases. A) productivity B) turnover C) unionization D) shirking

A) productivity

When GDP growth declines, investment spending typically ______ and consumption spending typically ______. A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases

C) decreases; decreases

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

C) depends on the knowledge, health, and skills of labor.

If the production function exhibits increasing returns to scale in the steady state, an increase in the rate of growth of population would lead to: A) growth in total output and growth in output per worker. B) growth in total output but no growth in output per worker. C) growth in total output but a decrease in output per worker. D) no growth in total output or in output per worker.

C) growth in total output but a decrease in output per worker.

The Solow residual will fall even if technology has not changed if there is: A) population growth. B) endogenous growth. C) labor hoarding. D) balanced growth.

C) labor hoarding.

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 for less than the minimum wage. 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 pilots' union. D) Joan is willing to work for less than the going wage, but there are no jobs available.

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

Which of the following characteristics made the 2008-2009 recession differ most sharply from previous recessions? A) a large spike in the duration of unemployment B) a large increase in teenage unemployment C) higher rates of female unemployment than rates of male unemployment D) an increase in the rate of job separation and a decrease in the rate of job finding

A) a large spike in the duration of unemployment

Unions contribute to structural unemployment when collective bargaining results in wages: A) above the equilibrium level. B) below the minimum wage. C) below the equilibrium level. D) above the level of unemployment compensation.

A) above the equilibrium level.

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.

A) always exceed the initial level.

Starting from long-run equilibrium, if the velocity of money increases (due to, for example, the invention of automatic teller machines), the Fed might be able to stabilize output by: A) decreasing the money supply. B) increasing the money supply. C) decreasing the price level. D) increasing the price level.

A) decreasing the money supply.

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.

A) downward and to the left.

As the relative demand for unskilled workers falls, wages for unskilled workers ______, and unemployment compensation becomes a ______ attractive option. A) fall; more B) fall; less C) rise; more D) rise; less

A) fall; more

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

A) higher; greater

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

A) 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

A) increase; increase

In the Solow growth model, increases in capital ______ output and ______ the amount of output used to replace depreciating capital. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

A) increase; increase

Starting from long-run equilibrium, if a drought pushes up food prices throughout the economy, the Fed could move the economy more rapidly back to full employment output by: A) increasing the money supply, but at the cost of permanently higher prices. B) decreasing the money supply, but at the cost of permanently lower prices. C) increasing the money supply, which would restore the original price level. D) decreasing the money supply, which would restore the original price level.

A) increasing the money supply, but at the cost of permanently higher prices.

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.

A) it takes time to match workers and jobs.

In the two-sector endogenous growth model, the fraction of labor in universities (u) affects the steady-state: A) level of income. B) growth rate of income. C) level of income and growth rate of income. D) level of income, growth rate of income, and growth rate of the stock of knowledge.

A) level of income.

If the short-run aggregate supply curve is horizontal, then changes in aggregate demand affect: A) level of output but not prices. B) prices but not level of output. C) both prices and level of output. D) neither prices nor level of output.

A) level of output but not prices.

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.

A) net of depreciation be equal to n + g.

If the marginal product of capital net 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) saving; decreased D) population growth; increased

A) saving; increased

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.

A) the average rate of unemployment around which the economy fluctuates.

When the real wage is above the level that equilibrates supply and demand: A) the quantity of labor supplied exceeds the quantity demanded. B) the quantity of labor demanded exceeds the quantity supplied. C) there is no unemployment. D) the labor market clears.

A) the quantity of labor supplied exceeds the quantity demanded.

The generosity of unemployment insurance benefits is measured by: A) the replacement rate and the duration of benefits. B) the median wage and the unemployment rate. C) the price level and duration of unemployment. D) the job-finding rate and the job-separation rate.

A) the replacement rate and the duration of benefits.

In the Solow growth model, if two countries are otherwise identical (with the same production function, same saving rate, same depreciation rate, and same rate of population growth) except that Country Large has a population of 1 billion workers and Country Small has a population of 10 million workers, the steady-state level of output per worker will be _____, and the steady-state growth rate of output per worker will be _____. A) the same in both countries; the same in both countries B) higher in Country Large; higher in Country Large C) higher in Country Small; higher in Country Small D) higher in Country Large; higher in Country Small

A) the same in both countries; the same in both countries

Assume that a war reduces a country's labor force but does not directly affect its capital stock. Then the immediate impact will be that: A) total output will fall, but output per worker will rise. B) total output will rise, but output per worker will fall. C) both total output and output per worker will fall. D) both total output and output per worker will rise.

A) total output will fall, but output per worker will rise.

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 in the steady state of the high-saving economy. B) will be at a higher level than in the steady state of the high-saving economy. C) will be at the same level as in the steady state of the high-saving economy. D) will grow at a slower rate than in the high-saving economy.

A) will be at a lower level than in the steady state of the high-saving economy.

Spells of unemployment end when the unemployed person finds a job or: A) withdraws from the labor force. B) enters the labor force. C) runs out of unemployment insurance compensation. D) refuses to answer unemployment survey questions.

A) withdraws from the labor force.

The recent worldwide slowdown in economic growth began in the early: A) 1960s. B) 1970s. C) 1980s. D) 1990s.

B) 1970s.

If y = k1/2, the country saves 10 percent of its output each year, and the steady-state level of capital per worker is 4, then the steady-state levels of output per worker and consumption per worker are: A) 2 and 1.6, respectively. B) 2 and 1.8, respectively. C) 4 and 3.2, respectively. D) 4 and 3.6, respectively.

B) 2 and 1.8, respectively.

Empirical investigations into whether differences in income per person are the result of differences in the quantities of the factors of production available or differences in the efficiency with which the factors are employed typically find: A) a negative correlation between the quantity of factors and the efficiency of use. B) a positive correlation between the quantity of factors and the efficiency of use. C) no correlation between the quantity of factors and the efficiency of use. D) large gaps between the quantity of factors accumulated and the efficiency of use.

B) a positive correlation between the quantity of factors and the efficiency of use.

An increase in the saving rate starting from a steady state with less capital than the Golden Rule causes investment to ______ in the transition to the new steady state. A) increase B) decrease C) first increase and then decrease D) first decrease and then increase

B) decrease

The short run refers to a period: A) of several days. B) during which prices are sticky and cyclical unemployment may occur. C) during which capital and labor are fully employed. D) during which there are no fluctuations.

B) during which prices are sticky and cyclical

Suppose an economy is initially in a steady state with capital per worker below the Golden Rule level. If the saving rate increases 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 and then rise above the initial level. C) first rise above and then fall below the initial level. D) always be lower than the initial level.

B) first fall below and then rise above the initial level.

Public policy to increase the job finding rate includes _____, and public policy to decrease the job separation rate includes _____. A) government employment agencies; higher unemployment insurance benefits B) government employment agencies; 100 percent experience-rated unemployment insurance C) higher minimum wage laws; payment of unemployment benefits for longer periods D) higher efficiency wages; partially experience-rated unemployment insurance

B) government employment agencies; 100 percent experience-rated unemployment insurance

In the case of unions, the conflict of interest between different groups of workers results in insiders wanting ______, while outsiders want ______. A) more hirings; high wages B) high wages; more hirings C) high wages; fewer hirings D) fewer hirings; high wages

B) high wages; more hirings

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

B) human capital is at least as important as physical capital

Starting from a steady-state situation, if the saving rate increases, 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.

B) increase until the new steady state is reached.

The endogenous growth model's assumption of constant returns to capital is more plausible if capital is defined to include: A) plant and equipment. B) knowledge. C) depreciation. D) technology.

B) knowledge.

Earlier retirement in Europe than in the United States contributes to: A) higher employment-to-population ratios in Europe than in the United States. B) lower employment-to-population ratios in Europe than in the United States. C) more hours worked per year by the average employed person in Europe than the average employed person in the United States. D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

B) lower employment-to-population ratios in Europe than in the United States.

Government policies directed at reducing frictional unemployment include: A) abolishing minimum-wage laws. B) making unemployment insurance 100 percent experience rated. C) increasing the earned income credit. D) making government part of the union-firm wage bargaining process.

B) making unemployment insurance 100 percent experience rated.

Data on unemployment in the United States show that: A) most spells of unemployment are long. B) most weeks of unemployment are attributable to the long-term unemployed. C) members of the labor force over age 55 have the highest unemployment rates. D) the duration of unemployment falls during recessions.

B) most weeks of unemployment are attributable to the long-term unemployed.

In the Solow growth model, an economy in the steady state with a population growth rate of n but no technological growth will exhibit a growth rate of total output at rate: A) 0. B) n. C) delta. D) (n + delta).

B) 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.

B) new production processes may be devised.

If the short-run aggregate supply curve is horizontal and the long-run aggregate supply curve is vertical, 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

B) only output; only prices

If the short-run aggregate supply curve is horizontal, and each member of the general public chooses to hold a larger fraction of his or her income as cash balances, then: A) output and employment will increase in the short run. B) output and employment will decrease in the short run. C) prices will increase in the short run. D) prices will decrease in the short run.

B) output and employment will decrease in the short run.

The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state? A) output per effective worker, capital per effective worker, real wage B) output per worker, capital per worker, real wage C) real rental price of capital, real wage, output per worker D) capital-output ratio, output per worker, capital per worker

B) output per worker, capital per worker, real wage

According to Thomas Malthus, large populations: A) require the capital stock to be spread thinly, thereby reducing living standards. B) place great strains on an economy's productive resources, resulting in perpetual poverty. C) are a prerequisite for technological advances and higher living standards. D) are not a factor in determining living standards.

B) place great strains on an economy's productive resources, resulting in perpetual poverty.

Most spells of unemployment are ______ term, and most weeks of unemployment are attributable to ______-term unemployment. A) short; short B) short; long C) long; long D) long; sort

B) short; long

Long-run growth in real GDP is determined primarily by ______, while short-run movements in real GDP are associated with ______. A) variations in labor-market utilization; technological progress B) technological progress; variations in labor-market utilization C) money supply growth rates; changes in velocity D) changes in velocity; money supply growth rates

B) technological progress; variations in labor-market utilization

In the Solow growth model with population growth but no technological progress, when the economy finds itself at the Golden Rule steady state, the marginal product of capital minus the rate of depreciation will equal: A) 0. B) the population growth rate. C) the saving rate. D) output per worker.

B) the population growth rate.

According to the Kremerian model, large populations improve living standards because: A) crowded conditions put more pressure on people to work hard. B) there are more people who can make discoveries and contribute to innovation. C) more people have the opportunity for leisure and recreation. D) most people prefer to live with many other people.

B) there are more people who can make discoveries and contribute to innovation.

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.

B) unemployed workers accept the first job offer that they receive.

A policy that increases the job-finding rate _____ the natural rate of unemployment. A) will increase B) will decrease C) will not change D) could either increase or decrease

B) will decrease

When capital increases by DK units and labor increases by DL units, output (DY) increases by: A) DK + DL units. B) MPL + MPK units. C) (MPK × DK) + (MPL × DL) units. D) (MPL × DK) + (MPK × DK) units.

C) (MPK × DK) + (MPL × DL) units.

If the U.S. production function is Cobb-Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the Golden Rule steady-state capital-output ratio is 4.29, to reach the Golden Rule steady state, the saving rate must be: A) 17.5 percent. B) 25 percent. C) 30 percent. D) 42.9 percent.

C) 30 percent.

If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing approximately at a rate of: A) 2 percent. B) 3 percent. C) 5 percent. D) 6 percent.

C) 5 percent.

Which of the following is the best example of structural unemployment? A) Tim is looking for a job with flexible hours but has not been offered one yet. B) Vickie lost her job as a graphic artist at a movie studio because she did not have training in computer-generated animation. C) Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available. D) Fatima lost her job at a packing plant but has not looked very intensively for a new job because she still has two months of unemployment insurance benefits left.

C) Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available.

In the Solow growth model with population growth but no technological change, which of the following will generate a higher steady-state growth rate of total output? A) a higher saving rate B) a lower depreciation rate C) a higher population growth rate D) a higher capital per worker ratio

C) a higher population growth rate

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

C) a higher; the same

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of: A) increases in human capital. B) increases in physical capital. C) advances in information technology. D) an increase in the saving rate.

C) advances in information technology.

Assume that two countries both have the per-worker production function y = k1/2, neither has population growth or technological progress, depreciation is 5 percent of capital in both countries, and country A saves 10 percent of output whereas country B saves 20 percent. If country A starts out with a capital-labor ratio of 4 and country B starts out with a capital-labor ratio of 2, in the long run: A) both country A and country B will have capital-labor ratios of 4. B) both country A and country B will have capital-labor ratios of 16. C) country A's capital-labor ratio will be 4, whereas country B's will be 16. D) country A's capital-labor ratio will be 16, whereas country B's will be 4.

C) country A's capital-labor ratio will be 4, whereas country B's will be 16.

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.

C) largest consumption per worker.

Assume that 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 output per person and ______ rate of growth of output per worker compared to the country with the lower population growth rate. A) higher; the same B) higher; a higher C) lower; the same D) lower; a lower

C) lower; the same

The Solow residual equals the percentage change in output: A) plus the percentage changes in factor inputs weighted by each factor's share of output. B) minus the percentage changes in prices of factor inputs. C) minus the percentage changes in factor inputs weighted by each factor's share of output. D) plus the percentage changes in each factor's share of output.

C) minus the percentage changes in factor inputs weighted by each factor's share of output.

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.

C) output per worker is a function of capital per worker.

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

C) protected property rights; were extractive and authoritarian

When an economy's capital is below the Golden Rule level, reaching the Golden Rule level: A) produces lower consumption at all times in the future. B) requires higher consumption levels at all times. C) requires initially reducing consumption to increase consumption in the future. D) requires initially increasing consumption to decrease consumption in the future.

C) requires initially reducing consumption to increase consumption in the future.

Stagflation occurs when prices ______ and output ______. A) fall; falls B) fall; increases C) rise; falls D) rise; increases

C) rise; falls

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.

C) saving rate.

The Solow model predicts that two economies will converge if their economies have the same: A) capital stocks. B) populations. C) steady states. D) production functions.

C) steady states.

In the two-sector endogenous growth model, income growth persists because: A) the production function shifts exogenously. B) the saving rate exceeds the rate of depreciation. C) the creation of knowledge in universities never slows down. D) the fraction of the labor force in universities is large.

C) the creation of knowledge in universities never slows down.

Examples of "active" labor-market policies include all of the following except: A) job-search assistance B) subsidized employment C) unemployment insurance D) job-training programs

C) unemployment insurance

If the capital stock equals 200 units in year 1 and the depreciation rate is 5 percent per year, then in year 2, assuming no new or replacement investment, the capital stock would equal _____ units. A) 210 B) 200 C) 195 D) 190

D) 190

A favorable supply shock occurs when: A) environmental protection laws raise costs of production. B) the Fed increases the money supply. C) unions push wages up. D) an oil cartel breaks up and oil prices fall.

D) an oil cartel breaks up and oil prices fall.

In the Solow growth model with population growth and labor-augmenting 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.

D) depreciating capital, capital for new workers, and capital for new effective workers.

More frequent holidays for workers in Europe than in the United States contribute to: A) higher employment-to-population ratios in Europe than in the United States. B) lower employment-to-population ratios in Europe than in the United States. C) more hours worked per year by the average employed person in Europe than the average employed person in the United States. D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

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

D) irregular and unpredictable.

When a long-term 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) slopes upward and to the right. B) slopes downward and to the right. C) is horizontal. D) is vertical.

D) is vertical.

By paying efficiency wages, firms contribute to higher unemployment because they: A) increase the wage bill. B) make workers more productive. C) keep the wage below the equilibrium level. D) keep the wage above the equilibrium level.

D) keep the wage above the equilibrium level.

Sectoral shifts: A) lead to wage rigidity. B) explain the payment of efficiency wages. C) depend on the level of the minimum wage. D) make frictional unemployment inevitable.

D) make frictional unemployment inevitable.

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.

D) n + g.

Suppose that an economy is in its steady state and the capital stock is above the Golden Rule level. Assuming that there are no population growth or technological change, if 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.

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

Centralized union wage bargaining with government intervention in Sweden gives relatively more influence to ______, while firm-level union wage bargaining in the United States gives relatively more influence to ______. A) efficiency wages; sectoral shifts B) sectoral shifts; efficiency wages C) insiders; outsiders D) outsiders; insiders

D) outsiders; insiders

In the Solow growth model of Chapter 8, 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.

D) regardless of the starting level of capital.

The unemployment resulting when real wages are held above equilibrium is called ______ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called ______ unemployment. A) efficiency; inefficiency B) efficiency; structural C) frictional; efficiency D) structural; frictional

D) structural; frictional

Frictional unemployment is inevitable because: A) different sectors do not shift. B) the economy needs to be lubricated. C) workers never quit their jobs to change careers. D) the demand for different goods always fluctuates.

D) the demand for different goods always fluctuates.

Monetary neutrality is a characteristic of the aggregate demand-aggregate supply model in: A) both the short run and the long run. B) neither the short run nor the long run. C) the short run but not in the long run. D) the long run but not in the short run.

D) the long run but not in the short run.

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

D) the marginal product of capital.

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.

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

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _____, and the growth in the stock of knowledge is determined by _____. A) the fraction of labor in universities; the saving rate B) the efficiency of labor; the saving rate C) the production function; the efficiency of labor D) the saving rate; the fraction of labor in universities

D) the saving rate; the fraction of labor in universities

Conditional convergence occurs when economies converge to: A) the same steady state as other economies. B) the Golden Rule steady state. C) the balanced-growth steady state. D) their own individual steady states.

D) their own individual steady states.

Discouraged workers are individuals who: A) have jobs that do not match their skills (e.g., a Ph.D. 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.

D) want a job but have given up looking for one.

If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be: A) 0.02. B) 0.08. C) 0.10. D). 0.18 (0.10-0.02= 0.08 so... 0.10+0.08)

D). 0.18 (0.10-0.02= 0.08 so... 0.10+0.08)