Mt1 econ 3080

The inflation rate is a measure of how fast: a. the total income of the economy is growing. b. unemployment in the economy is increasing. c. the general level of prices in the economy is rising. d. the number of jobs in the economy is expanding.

c

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

Schumpeter's thesis of "creative destruction" is an explanation of economic progress resulting from: a. using up scarce natural resources to create new products. b. breaking down barriers to trade and development. c. new product producers driving incumbent producers out of business. d. creating new methods to destroy the environment.

c

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

The investment function slopes _____ because there are _____ investment projects that are profitable as the interest rate decreases. a. upward; fewer b. upward; more c. downward; fewer d. downward; more

d

Macroeconomics is the study of the: a. activities of individual units of the economy. b. decision making by households and firms. c. economy as a whole. d. interaction of firms and households in the marketplace.

C

If the production function is Y = 𝐴𝐾2/3𝐿1/3 in the land of Antegria, if the output per worker grows by 1 percent and the TFP increases by1 percent, then capital per worker: a. remains unchanged. b. grows by 1 percent. c. falls by 1 percent. d. grows by 2 percent.

a

Government transfer payments: a. are included as part of government purchases, G. b. can be viewed as negative tax payments, T. c. are received as payment for inputs in the factor market. d. do not affect the level of public or private saving.

b

In the circular flow model, the flow of dollars from firms to households is paid _____, and the flow of dollars from households to firms is paid _____. a. as wages, capital income, and profits; for goods and services b. for value added; as imputed values c. in current dollars; in constant dollars d. as interest and dividends; for depreciation and taxes

a

According to Thomas Malthus, large populations: a. save and invest a large amount of output, resulting in higher 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

If the GDP deflator increased by 6 percent, and nominal GDP increased by 4 percent, then real GDP _____ by _____ percent. a. decreased; 8 b. decreased; 2 c. increased; 8 d. increased; 2

b

In the Solow growth model, where s is the saving rate, y is output per worker, and i is investment per worker, consumption per worker (c) equals: a. sy. b. (1 - s) y. c. (1 + s) y. d. (1 - s) y - i.

b

In the classical model with fixed income, if the demand for goods and services is less than the supply, the interest rate will: a. increase. b. decrease. c. remain unchanged. d. increase initially and then decrease.

b

In the endogenous growth model, the steady state growth rate is determined by: a. A given parameter g. b. Participation in the research sector. c. The adoption of automation. d. The degree of decreasing return to scale.

b

If an economy with no technological change or population growth has a steady state MPK of 0.15 and a depreciation rate of 0.10, then the economy has _____ capital than the golden rule level and a(n) _____ in saving rate will lead to an increase in the consumption per worker in the long run. a. more; increase b. more; decrease c. less; increase d. less; decrease

c

If the production function is Y = 𝐴𝐾2/3𝐿1/3 in the land of Antegria, and the labor force increases by 3 percent, capital stock increases by 3 percent, and TFP grows by 3 percent, then the total output growth is _____ percent. a. 1 b. 2 c. 6 d. 9

c

If the reserve-deposit ratio is less than one, and the monetary base increases by $1 million, then the money supply will: a. increase by $1 million. b. decrease by $1 million. c. increase by more than $1 million. d. decrease by more than $1 million.

c

In the Solow growth model, for any given capital stock, the _____ determines how much output the economy produces, and the _____ determines the allocation of output between consumption and investment. a. saving rate; production function b. depreciation rate; population growth rate c. production function; saving rate d. population growth rate; saving rate

c

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).

c

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

The efficiency of labor (E in the Solo growth model or endogenous growth model): 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

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

Assume that equilibrium GDP is 2,500, Consumption is given by the equation C = 250+.5 (GDP-T), Taxes (T) are 500, Government spending is 500, and Net Exports =0. In this case, equilibrium investment is: a. 250 b. 1,000 c. 500 d. 750

d

In a classical model with fixed factors of production and flexible prices, the amount of consumption spending depends on _____, the amount of investment spending depends on _____, and the amount of government spending is determined _____. a. the interest rate; disposable income; by tax revenue b. the real wage; the real rental price of capital; by factor prices c. labor's share of output; capital's share of output; by the interest rate d. disposable income; the interest rate; exogenously

d

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

In the Solow growth model with population growth and labor-augmenting technological change, the steady state 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

The total output of an economy grows at 4 percent and the depreciation rate is 3 percent. Further, the capital stock is 6 times one year's GDP and the capital income is 30 percent of GDP. In this case, we can conclude that the economy is operating at a level of capital _____ than the Golden Rule and _____ saving will lead to more consumption in the long run. a. less; increasing b. less; decreasing c. more; increasing d. more; decreasing

d

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

When the Fed makes an open-market sale, it: a. increases the money multiplier (m). b. increases the currency-deposit ratio (cr). c. increases the monetary base (B). d. decreases the monetary base (B).

d

Which of these is a flow variable? a. wealth b. the number unemployed c. government debt d. income

d