Econ

The difference of national saving and domestic investment

The value of net exports is also the value of: - national saving - net investment - the difference of national saving and domestic investment - net saving

In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate(measured in units of the home currency divided by units of foreign currency): - falls, and home country net exports rise - rises, and home country net exports rise - rises, and home country net exports fall - falls, and home country net exports fall

falls, and home country net exports rise

In a small open economy, if consumer confidence falls and consumers decide to save more, then the real exchange rate: - falls; and net exports rise - rises, and net exports fall - and net exports both rise - and net exports both fall

falls, and net exports rise

More frequent holidays for workers in Europe than in the United States contribute to: - higher employment-to-population ratios in Europe than in the United States - fewer hours worked per year by the average employed person in Europe than the average employed person in the United States. - more hours worked per year by the average employed person in Europe than the average employed person in the United States. - lower employment-to-population ratios in Europe than in the United States

fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

In the solow growth model, increases in capital ___ output and ____ the amount of output used to replace depreciating capital. - increase; decrease - increase; increase - decrease; increase - decrease; decrease

increase; increase

To determine whether an economy is operating at its Golden Rule level of capital stock, a policymaker must determine the steady-state saving rate that produces the: - largest MPK - largest output per worker - smallest depreciation rate - largest consumption per worker

largest consumption per worker

In the solow growth model of an economy with population growth but no technological change, if population grows at rate n, then capital in the steady state grows at rate _____, and output grows at rate _____ in the steady state. - 0;0 - n;n - n;0 -0;n

n;n

In a small open economy, if consumers shift their preferences toward Japanese cars, then net exports: - fall, and the real exchange rate falls - increase, and the real exchange rate remains unchanged - remain unchanged, but the real exchange rate falls - fall, but the real exchange rate remains unchanged

remain unchanged, but the real exchange rate falls

Paying efficiency wages helps firms reduce the problem of adverse selection by: - keeping labor unions from organizing workers in the firm - providing an incentive for the best-qualified workers to remain with the firm - encouraging unsupervised workers to maintain a high level of productivity - generating additional profits that can be used to pay for more proficient hiring managers

providing an incentive for the best-qualified workers to remain with the firm

Unemployment insurance increases the amount of frictional unemployment by: - softening the economic hardship of unemployment - making the employers more reluctant to lay off workers - inducing workers to accept the first job offer that they receive - making workers more frantic in their search for new jobs

softening the economic hardship of unemployment

If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is: - 10 percent - 1 percent - about 11 percent - 9 percent

10 percent

If the per-worker is given by y=k^1/2, the saving rate is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is: - 1 - 4 - 9 - 2

4

Suppose that over the course of a year 100 people are unemployed for 4 weeks each , while 10 people are unemployed for 52 weeks each. Approximately what percentage of the total spells of unemployment were attributable to the long-term unemployed. - 9 percent - 56.5 percent - 43.5 percent - 10 percent

9 percent

The adoption of an investment tax credit in a small open economy is likely to lead to: - an increase in domestic investment but no change in domestic saving - an increase in both domestic investment and domestic saving - an increase in domestic saving but no change in domestic investment no change in either domestic investment or domestic saving.

An increase in domestic investment but no change in domestic saving

In a small open economy, policies that increase: - saving do not affect the trade balance - investment tend to cause a trade deficit - saving tend to cause a trade deficit - investment tend to cause a trade surplus

Investment tend to cause a trade deficit

Two economies are identical except that the level of capital per worker is higher in Highland than in Lowland. The production functions in both economies exhibit diminishing marginal product of capital. An extra unit of capital per worker increases output per worker: - in Highland but not in lowland - by the same amount in Highland and Lowland - more in Highland - more in Lowland

More in Lowland

If an economy is in steady state with no population growth or technological change and the marginal product of capital is less than the depreciation rate: - steady-state consumption per worker would be higher in a steady state with a lower saving rate - the depreciation rate should be decreased to achieve the Golden Rule level of consumption per worker - Steady-state consumption per worker would be higher in a steady-state with a higher saving rate - the economy is following the Golden Rule

Steady-state consumption per worker would be higher in a steady state with a lower saving rate

Assume that two economies are identical in every way except that one has a higher saving rate. According to the Solow growth model, in the steady state the country with the higher saving rate will have____ level of output per person and ____ rate of growth of output per worker compared to the country with the lower saving rate. - the same; the same - a higher; a higher - the same; a higher - a higher; the same

a higher; the same

In the Solow growth model with population growth but no technological progress, the steady-state amount of investment can be thought of as a break-even amount of investment because the quantity of investment just equals the amount of: - output needed to make the capital per worker ratio equal to the marginal product of capital - capital needed to replace depreciated capital and to equip new workers - output needed to achieve the maximum level of consumption per worker - saving needed to achieve the maximum level of output per worker

capital needed to replace depreciated capital and to equip new workers.

When exports exceed imports, all of the following are true except: - net exports are positive - domestic investment exceeds domestic saving - net capital outflows are positive - domestic output exceeds domestic spending

domestic investment exceeds domestic saving

Suppose an economy is initially in a steady state with capital per worker below the Golden Rule level. If the saving rate increases to a rate consistent with the Golden Rule, then in the transition to the new steady state consumption per worker will: - always be lower than the initial level - always exceed the initial level - first rise above and then fall below the initial level - first fall below and then rise above the initial level

first fall below and then rise above the initial level

The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the: - domestic inflation rate minus the foreign inflation rate. - foreign inflation rate minus the domestic inflation rate. domestic interest rate minus the foreign interest rate. - foreign exchange rate minus the domestic exchange rate.

foreign inflation rate minus the domestic inflation rate.

If the production function exhibits increasing returns to scale in the steady state, an increase in the rate of growth of population would lead to: - growth in total output but no growth in output per worker - growth in total output and growth in output per worker - growth in total output but a decrease in output per worker - no growth in total output or in output per worker

growth in total output and growth in output per worker.

In the solow growth model, with a given production function, depreciation rate, saving rate, and no technological change, higher rates of population growth produce: - higher steady-state growth rates of output per worker - higher steady-state ratios of capital per worker - higher steady-state growth rates of total output - higher steady-state levels of output per worker

higher steady-state growth rates of total output

An effective policy to reduce a trade deficit in a small open economy would be to: - increase taxes - impose stricter quotas on imported goods - increase government spending - increase tariffs on imports

increase taxes

If a U.S. corporation sells a product in Europe and uses the proceeds to purchase shares in a European corporation, then U.S. net exports ______ and net capital outflows ______. - decrease; decrease - increase; increase - decrease; increase - increase; decrease

increase; increase

In the Solow growth model, if investment exceeds depreciation, the capital stock will _____, and output will_______ until the steady state is attained. - increase; decrease - decrease; decrease - decrease; increase - increase; increase

increase; increase

If the government of a small open economy wishes to reduce a trade deficit, which policy action will be successful in achieving this goal? - increasing investment tax credits - increasing taxes - increasing government spending - imposing protectionist trade policies

increasing taxes

A small open economy with perfect capital mobility is characterized by all of the following except that: - its domestic interest rate always exceeds the world interest rate. - its government does not impede international borrowing or lending. - it engages in international trade - its net capital outflow always equal the trade balance.

its domestic interest rate always exceeds the world interest rate

Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the: - labor supply curve shifts to the right - labor supply curve shifts to the left - labor demand curve shifts downward and to the left - labor demand curve shifts upward and to the right

labor demand curve shifts downward and to the left

If an economy moves from a steady state with positive population growth to a zero population growth rate, then in the new steady state, total output growth will be ____, and growth of output per person will be_____ - higher; higher than it was before - lower; lower - lower; the same as it was before - higher; lower

lower: the same as it was before

Government policies directed at reducing frictional unemployment include: - making government part of the union-firm wage bargaining process - increasing the earned income credit - abolishing minimum-wage laws - making unemployment insurance 100 percent experience rated

making unemployment insurance 100 percent experience rated

Data on unemployment in the United States show that: - the duration of unemployment falls during recessions - members of the labor force over age 55 have the highest unemployment rates - most spells of unemployment are long - most weeks of unemployment are attributable to the long-term unemployed

most weeks of unemployed are attributable to the long-term unemployed

When insiders have a much greater impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be ______ the equilibrium wage. - about one half of - much less than - almost equal to - much greater than

much greater than

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the real wage were rigid, this would lead to: - no change in the real wage and a fall in unemployment - no change in the real wage and no change in unemployment - no change in the real wage and a rise in unemployment - a decrease in the real wage

no change in the real wage and a rise in unemployment

If purchasing-power parity holds, then changes in domestic saving will _____ the real exchange rate. - decrease - either increase or decrease - not change - increase

not change

The nominal exchange rate between the U.S. dollar and the Japanese yen (measured in $/yen) is the: - number of yen you can get for one dollar - number of yen you can get for lending one dollar in Japan for one year - Price of U.S. goods divided by the price of Japanese goods - Price of Japanese goods divided by the price of U.S. goods

number of yen you can get for one dollar

In the solow growth model with population growth but no technological progress, when the economy finds itself at the Golden Rule steady state, the marginal product of capital minus the rate of depreciation will equal: - the saving rate - the population growth rate - output per worker - 0

the population growth rate

Assume that a war reduces a country's labor force but does not directly affect its capital stock. Then the immediate impact will be that: - both total output and output per worker will fall - total output will rise, but output per worker will fall - both total output and output per worker will rise - total output will fall, but output per worker will rise

total output will fall, but output per worker will rise

All of the following are reasons for frictional unemployment except: - geographic mobility takes time - unemployed workers accept the first job offer that they receive - workers have different preferences and abilities - the flow of information is imperfect

unemployed workers accept the first job offer that they receive

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ______ who find a job each month, while the rate of job separation equals the percentage of the ______ who lose their job each month. - labor force; labor force - unemployed; employed - labor force; unemployed - employed; labor force

unemployed; employed

The macroeconomic problem that affects individuals most directly and severely is: - inflation - unemployment - low savings - low investment

unemployment

Examples of "active" labor-market policies include all of the following except: - subsidized employment - unemployment insurance - job-training programs - job-search assitance

unemployment insurance

Workers unemployed as a result of wage rigidity are: - actively searching for a job to match their skills. - waiting for a job to become available - relocating to another part of the country as a result of sectoral shifts - not eligible to receive unemployment insurance benefits.

waiting for a job to become available

Spells of unemployment end when the unemployed person finds a job or: - withdraws from the labor force - enters the labor force - refuses to answer unemployment survey questions - runs out of unemployment insurance compensation

withdraws from the labor force