chap 10 (part 2)
The efficiency wage model contains the assumption that labor productivity __________ the wage rate, so that a firm maximizing its profits __________ pay workers an above-market wage rate. Select one: a. is independent of; may b. is independent of; will never c. depends on; may d. depends on; will never
C
Here is a consumption function: C = C0 + MPC(Yd). If C0 = $200, then we know that Select one: a. if Yd is zero, C will be $200. b. when Yd rises, C rises by $200. c. when Yd falls, C falls by MPC times C0. d. C will always equal C0.
A
Here is a consumption function: C = C0 + MPC(Yd). The C0 term is usually defined as Select one: a. autonomous consumption. b. point-zero consumption. c. mandatory consumption. d. propensitory consumption. e. none of the above
A
If income rises from $1,000 to $1,400 and consumption rises from $1,100 to $1,440, the marginal propensity to save (MPS) is Select one: a. 0.15. b. 0.85. c. 0.25. d. 0.20.
A
Keynes believed that investment is Select one: a. dependent on a number of factors, including business expectations. b. mainly determined by changes in interest rates. c. unrelated to business expectations. d. related to business expectations only during recessionary periods.
A
The consumption function is a function showing the relationship between consumption and Select one: a. disposable income. b. exports. c. interest rates. d. investment.
A
The efficiency wage model is an explanation of wage __________ and thus a support for __________ macroeconomics. Select one: a. flexibility; Keynesian b. flexibility; classical c. inflexibility; Keynesian d. inflexibility; classical
C
The marginal propensity to consume plus the marginal propensity to save is Select one: a. equal to zero. b. greater than zero but less than one. c. equal to one. d. greater than one.
C
The ratio of the change in consumption to the change in income is called the Select one: a. marginal utility of consumption. b. average utility of consumption. c. marginal propensity to consume. d. average propensity to consume.
C
According to the efficiency wage model, firms tend to pay workers Select one: a. the market-clearing wage that efficiently equates labor supplied and demanded. b. in excess of the market-clearing wage to provide an incentive for productivity and efficiency. c. less than the market-clearing wage to assure themselves a pool of workers ready to replace workers who quit. d. less than the market-clearing wage to minimize labor cost per unit of production.
B
Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.80, then we know that Select one: a. as Yd rises by $1, Co rises by $0.80. b. as Yd rises by $1, C rises by $0.80. c. Yd rises by $0.80. d. as C0 rises by $0.80, Yd rises by $1.
B
Keynes believed that Select one: a. Say's law would hold in a laissez-faire economy. b. the economy would always be near or on its production possibilities frontier. c. wages and prices are often inflexible in the downward direction. d. the equilibrium level of output will always be at the full-employment level of output.
C
Which of the following statements is false? Select one: a. Keynes believed that monopolistic elements in the economy will prevent immediate price declines. b. Keynes believed that during periods of high unemployment, labor unions will prevent wages from falling fast enough to restore full employment. c. Keynes believed that interest rate flexibility will ensure that saving is equal to investment. d. Keynes did not believe in Say's law.
C
Which statement is consistent with what Keynes believed about consumption and disposable income? Select one: a. Consumption depends upon disposable income and falls as disposable income rises. b. Consumption rises by the same amount as disposable income rises. c. Consumption rises by less than disposable income rises. d. Disposable income depends upon consumption.
C
Autonomous consumption is Select one: a. the change in consumption that results as a person's (or nation's) income increases or decreases. b. that portion of total consumption that is dependent upon the level of income. c. the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult. d. that portion of total consumption that is independent of the level of income.
D
If autonomous consumption rises by $20 and, as a result, Real GDP rises by $200, then the multiplier is Select one: a. 4. b. 5. c. 6. d. 10. e. none of the above
D
If income rises from $1,000 to $1,400 and consumption rises from $800 to $1,168, the marginal propensity to consume is __________ percent. Select one: a. 8 b. 85 c. 15 d. 92
D
Two economists, Smith and Jones, are discussing the currently high unemployment rate. Smith says that something ought to be done quickly because the economy may not be able to restore itself to full employment. Jones says that it is better to take a "hands-off" approach. Which of the following is most likely to be true? Select one: a. Smith and Jones are most likely both Keynesian economists with a few minor differences of opinion. b. Smith and Jones are most likely both classical economists with a few minor differences of opinion. c. Jones is likely to be a Keynesian economist and Smith is likely to be a classical economist. d. Smith is likely to be a Keynesian economist and Jones is likely to be a classical economist. e. none of the above.
D
