ECON304 Multiple Choice Exam1
If F(K,L) = ((AK^a)(L^(1-a)) is an economy's production function, what is labor's share of output?
(1-a)
Ruritania has a labor force of 50 million people. Currently 48.2 million are employed. What is the Ruritanian unemployment rate?
3.6%
Assuming the production function is y=sqrt(k), what is the steady state capital stock for an economy with a saving rate of 0.4 and a depreciation rate of 0.2?
4
Which statement is TRUE when the economy starts with MORE capital than the Golden Rule level?
Decreasing the capital stock to the Golden Rule level benefits opt current and future generations
Which is an example of the Cobb-Douglas production function?
F(K,L) = (AK^a)(L^(1-a))
What is the most important measure of overall economic performance?
Gross domestic product
Which best described the path of US inflation over time?
Inflation in recent decades has been less volatile
In the Solow growth model, which expression defines the marginal product of capital?
MPK= f(k+1)-f(k)
The prices of capital goods are:
Not included in the CPI but are included in the GDP deflator
The inflation rate measures how fast:
Price are rising
At the Golden Rule level of capital, what must the marginal product of capital equal?
The depreciation rate
The neoclassical theory of distribution suggests that factor demand is based on:
The marginal productivity of the factor
What does real GDP Measure?
The total income of everyone in the economy in a given time period adjusted for price changes.
Which best describes the path of US unemployment over time?
There is no discernible long term trend in unemployment
The Golden Rule level of capital maximizes
consumption
What statement is TRUE about economists' models?
macroeconomists employ a variety of models, each focused on a specific problem or set of problems
Steady state consumption is the gap between
output and depreciation
The neoclassical theory of distribution combined with the Cobb-Douglas production function suggest a linkage between:
productivity growth and real wages
