Macro Exam 2
Which of the following will most likely cause a change in the natural rate of unemployment? A. Changes in monetary policy B. Changes in fiscal policy C. Changes in expected inflation D. all of the above E. none of the above
Changes in the expected inflation
In the IS-LM-PC model, investment does not depend on A. r B. x C. T D. Y
Taxes
The wage setting relation is Vertical Upward slopping horizontal downward slopping
downward sloping
Suppose the aggregate production function is given by the following Y=N. Given this information, we know that labor productivity is represented by which of the following? A. 1 B. N C. N/Y D. 1/N
1 (Answer was on formula sheet)
If output per capita grows by a constant 5% per year, then the standard of living would grow by about ____ over three years A. 18% B. 20% C. 12% D. 16% E. 17%
16% (1+0.05)^3 -1 = 15.76
Non-institutionalized civilian population is 250 M of which 100 M are employed 10 M are unemployed Non-employment rate is 66% 4% 10% 60%
60% 150/250
Non-institutionalized civilian population is 250 M of which 100 M are employed 10 M are unemployed Unemployment rate is 6.6% 9.1% 11.1% 10%
9.1% 10/110
A reduction in unemployment benefits will tend to cause which of the following? A. An upward shift in the WS curve B. a downward shift in the WS curve C. an upward shift in the WS curve D. a downward shift in the PS curve E. None of the above
A downward shift in the WS curve
For this question, assume that there are decreasing returns to capital, decreasing returns to labor, and constant returns to scale. A reduction in the capital stock will cause which of the following? A. No change in output B. Increase the capital-labor ratio C. An increase in output per capita D. A reduction in output E. none of the above
A reduction in output
Based on wage setting behavior, we know that an increase in the unemployment rate will cause A. A reduction in the real wage B. An increase in the real wage C. An upward shift of the WS curve D. No change in real wage
A reduction in real wage
Henry Ford's experiment with efficiency wages resulted in A. A dramatic increase in turnover rate B. A reduction in the layoff rate C. A dramatic drop in productivity D. New problems with the work force like drunkeness E. No noticeable effects
A reduction in the layoff rate
Which of the following will not cause an increase in aggregate output (Y) in the long run? A. An increase in N B. An increase in technology C. An increase in K D. A reduction in the saving rate E. None of the above
A reduction in the saving rate
Which of the following will cause a reduction in output per worker (Y/N) A) reduction in capital stock B) a reduction in the saving rate C) a reduction in K/N D)all of the above
All of the above
For this question assume that the Phillips curve equation is represented by the following equation: πt−πt−1= (m+z) - aut. Given this information, the natural rate of unemployment will be equal to A) 0 B) m+z C) (m+z-a) D) a(m+z) E) none of the above
None of the above
Suppose the stock of capital increases by 2% and employment increases by 2%. Given this information, we know that A) output per capita will increase by less than 4% and no more than 2% B) output per capita will increase by 6% C) output will increase by 4% D) None of the above
None of the above
Which of the following is considered out of the labor force? A) those who worked full time, but in a family business B) those individuals who have started searching for employment for the first time C) those temporarily laid off who will soon be recalled D) the unemployed E) none of the above
None of the above
Which of the following individuals first discovered the relationship between unemployment and inflation for the United States? A. Samuelson and Solow B. Friedman and Phillips C. Solow and friedman D. Friedman and Phillips
Samuelson and Solow
Suppose workers and firms expect the overall price level to increase by 5%. Given this information, we expect that A. The nominal wage will increase by less than 5% B. The nominal wage will increase by more than 5% C. The real wage will increase by 5% D. The real wage will increase by exactly 5% E. The real wage will increase by less than 5%
The nominal wage will increase by exactly 5%
Which of the following situations generally exists when deflation occurs? A. The rate of inflation is falling from 10% to 3% B. Inflation and UE are both decreasing C. The price level is decreasing D. Inflation and UE are both increasing E. The natural rate of UE is zero
The price level is decreasing
Suppose the Phillips curve is represented by the following equation: πt−πt−1=20−2ut. Given this information, which of the following is most likely to occur if the actual unemployment in any period is equal to 6%? A. The rate of inflation will be constant B. the rate of inflation will increase C. The rate of inflation will decrease D. none of the above
The rate of inflation will tend to increase
In wage-setting relation, the nominal wage tends to decrease when A. The minimum wage increases B. Unemployment benefits decrease C. the price level increases D. UE decreases E. all of the above
Unemployment benefits decrease
Decreasing returns to capital (K) implies that 4% increase will cause A. Y to increase by less than 4% B. Y to increase by exactly 4% C. A reduction in output per worker (Y/N) D. A reduction in K/N
Y to increase by less than 4%
Assume that constant returns to scale exists and that N and K both increase by 2%. Given this information, we know that A. Output will increase by 4% B. Y will increase by 4% C. Y will increase by 2% D. Y will increase by less than 4% and more than 2%
Y will increase by 2%
The labor force is defined as A. The sum of the employed and unemployed B. The total number of working age individuals in the population C. The sum of the number of employed, UE, and discouraged workers D. The total number employed
employed plus unemployed
Which of the following variables is most directly determined in the labor market? A. IR B. Nominal wages C. Stock prices D. all of the above E. none of the above
nominal wages