test 2 (national income in the long-run equilinrium)

When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor: supply curve is vertical. demand curve slopes up to the right. supply curve slopes up to the right. supply curve is horizontal.

supply curve is vertical.

When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor: supply curve is vertical. supply curve slopes up to the right. supply curve is horizontal. demand curve slopes up to the right.

supply curve is vertical.

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

the interest rate.

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

the interest rate.

The factor that makes national saving equal investment, in equilibrium, is: public saving. fiscal policy. the interest rate. private saving.

the interest rate.

The factor that makes national saving equal investment, in equilibrium, is: public saving. private saving. fiscal policy. the interest rate.

the interest rate.

According to Euler's theorem, if competitive firms pay each factor its marginal product and the production function has constant returns to scale, the sum of all factor payments will equal: total investment. total saving. total output. total profits.

total output.

According to Euler's theorem, if competitive firms pay each factor its marginal product and the production function has constant returns to scale, the sum of all factor payments will equal: total profits. total output. total investment. total saving.

total output.

According to the model developed in Chapter 3, when taxes decrease without a change in government spending: consumption decreases and investment increases. consumption and investment both increase. consumption and investment both decrease. consumption increases and investment decreases.

consumption increases and investment decreases.

In examining the impact of fiscal policy, it is assumed that: government purchases, taxes, and interest rates are exogenous variables. government purchases, taxes, and interest rates are endogenous variables. consumption, investment, and the interest rate are exogenous variables. consumption, investment, and the interest rate are endogenous variables.

consumption, investment, and the interest rate are endogenous variables.

The circular flow model shows that households use income for: consumption, saving, and factor payments. taxes, saving, and factor payments. consumption, taxes, and factor payments. consumption, taxes, and saving.

consumption, taxes, and saving.

The reduction in investment brought about by the increase in the interest rate caused by increased government spending is called: a budget deficit. the identification problem. fiscal policy. crowding out.

crowding out.

A consumption function shows the relationship between consumption and: income. disposable income. taxes. personal income.

disposable income.

A consumption function shows the relationship between consumption and: taxes. disposable income. personal income. income.

disposable income.

In the classical model with fixed income, if the interest rate is too low, then investment is too and the demand for output the supply. high; exceeds low; exceeds low; falls short of high; falls short of

high; exceeds

In the classical model with fixed income, if the interest rate is too low, then investment is too and the demand for output the supply. low; exceeds high; exceeds low; falls short of high; falls short of

high; exceeds

When government spending increases and taxes are increased by an equal amount, interest rates: remain the same. increase can vary wildly. decrease.

increase

According to the model developed in Chapter 3, when government spending increases but taxes are not raised, interest rates: can vary. are unchanged. increase. decrease.

increase.

According to the model developed in Chapter 3, when government spending increases but taxes are not raised, interest rates: can vary. increase. decrease. are unchanged.

increase.

According to the model developed in Chapter 3, when government spending increases but taxes are not raised, interest rates: decrease. can vary. increase. are unchanged.

increase.

When government spending increases and taxes are increased by an equal amount, interest rates: remain the same. decrease. increase. can vary wildly.

increase.

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. In this case, when there is a technological advance that leads to an increase in investment demand: investment increases and the interest rate falls. investment and the interest rate are both unchanged. investment is unchanged and the interest rate rises. investment increases and the interest rate rises.

investment and the interest rate are both unchanged.

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. In this case, when there is a technological advance that leads to an increase in investment demand: investment and the interest rate are both unchanged. investment increases and the interest rate rises. investment is unchanged and the interest rate rises. investment increases and the interest rate falls.

investment is unchanged and the interest rate rises.

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. In this case, when there is a technological advance that leads to an increase in investment demand: investment and the interest rate are both unchanged. investment is unchanged and the interest rate rises. investment increases and the interest rate rises. investment increases and the interest rate falls

investment is unchanged and the interest rate rises.

The supply and demand for loanable funds determines the: nominal interest rate. real rental price of capital. real interest rate. real wage.

real interest rate.

The supply and demand for loanable funds determines the: real rental price of capital. real wage. nominal interest rate. real interest rate.

real interest rate.

In a closed economy, private saving equals: Y-C-G. Y-I-C. Y-T-C. Y-T.

Y-T-C

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

additional output produced when one additional unit of labor and one additional unit of capital are added.

In the United Kingdom between 1730 and 1920, during wartime, government spending tended to increase: and the interest rate remained constant. but the interest rate decreased. and the interest rate also increased. but the interest rate did not increase.

and the interest rate also increased.

In the United Kingdom between 1730 and 1920, during wartime, government spending tended to increase: and the interest rate remained constant. but the interest rate did not increase. but the interest rate decreased. and the interest rate also increased.

and the interest rate also increased.

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. In this case, when there is a technological advance that leads to an increase in investment demand: investment is unchanged and the interest rate rises. investment increases and the interest rate rises. investment and the interest rate are both unchanged. investment increases and the interest rate falls.

investment is unchanged and the interest rate rises.

The demand for loanable funds is equivalent to: national saving. private saving. investment. public saving.

investment.

Accounting profit is: equal to economic profit. less than economic profit. equal to the economic return to capital. greater than economic profit.

less than economic profit.

When the demand for loanable funds exceeds the supply of loanable funds, households want to save than firms want to invest______ and the interest rate_______. less; falls more; rises less; rises more; falls

less; rises

When the demand for loanable funds exceeds the supply of loanable funds, households want to save than firms want to invest______ and the interest rate_______. less; rises more; rises less; falls more; falls

less; rises

The identification problem arises when economists study investment and the interest rate because shifting saving schedules _________ investment while lowering the interest rate and shifting investment schedules raise investment while ___________the interest rate. lower; lowering lower; raising raise; raising raise; lowering

lower; lowering

The identification problem arises when economists study investment and the interest rate because shifting saving schedules _________ investment while lowering the interest rate and shifting investment schedules raise investment while ___________the interest rate. lower; lowering lower; raising raise; raising raise; lowering

lower; raising

According to the neoclassical theory of distribution, total output is divided between payments to capital and payments to labor depending on their: marginal productivities. relative political power. equilibrium growth rates. supply.

marginal productivities.

According to the neoclassical theory of distribution, total output is divided between payments to capital and payments to labor depending on their: relative political power. equilibrium growth rates. supply. marginal productivities.

marginal productivities.

According to the neoclassical theory of distribution, total output is divided between payments to capital and payments to labor depending on their: supply. relative political power. equilibrium growth rates. marginal productivities.

marginal productivities.

The supply of loanable funds is equivalent to: national saving. investment. public saving. private saving.

national saving.

The supply of loanable funds is equivalent to: private saving. investment. national saving. public saving.

national saving.

When economists speak of "the" interest rate, they mean: no particular interest rate, since it is assumed that various interest rates tend to move up and down together. the rate on 90-day Treasury bills. the "prime" rate on loans. the rate on 30-year government bonds.

no particular interest rate, since it is assumed that various interest rates tend to move up and down together.

When economists speak of "the" interest rate, they mean: the rate on 30-year government bonds. the rate on 90-day Treasury bills. no particular interest rate, since it is assumed that various interest rates tend to move up and down together. the "prime" rate on loans.

no particular interest rate, since it is assumed that various interest rates tend to move up and down together.

The real interest rate is the: rate of inflation minus the nominal interest rate. nominal interest rate minus the rate of inflation. rate of interest actually paid by consumers. rate of interest actually paid by banks.

nominal interest rate minus the rate of inflation.

The real interest rate is the: rate of interest actually paid by banks. nominal interest rate minus the rate of inflation. rate of inflation minus the nominal interest rate. rate of interest actually paid by consumers.

nominal interest rate minus the rate of inflation.