Econ 4002.01 ch.3 HW

Other things equal, an increase in the interest rate leads to: -no change in the quantity of investment goods demanded. -an increase in the quantity of investment goods demanded. -sometimes an increase and sometimes a decrease in the quantity of investment goods demanded. -a decrease in the quantity of investment goods demanded

a decrease in the quantity of investment goods demanded

Consumption depends positively on ______ and investment depends negatively on ______

disposable income; the real interest rate

National saving refers to: -income minus consumption minus government spending. -disposable income minus consumption. -income minus investment. -taxes minus government spending

income minus consumption minus government spending

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

increase

In the neoclassical model with fixed income, if there is a decrease in government spending with no change in taxes, then public saving ______ and private saving ______. -decreases; does not change -decreases; increases -increases; does not change -increases; increases

increases; does not change

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

investment decreases

An economy's factors of production and its production function determine the economy's: -output of goods and services. -population growth rate. -labor force participation rate. -budget surplus or deficit

output of goods and services

A competitive, profit-maximizing firm hires labor until the: -price of output multiplied by the marginal product of labor equals the wage. -wage equals the rental price of capital. -marginal product of labor equals the wage. -real wage equals the real rental price of capital

price of output multiplied by the marginal product of labor equals the wage

If saving exceeds investment demand, and consumption is not a function of the interest rate: -the interest rate will fall. -saving will fall. -the demand for loans exceeds the supply of loans. -the interest rate will rise

the interest rate will fall

In a Cobb-Douglas production function the marginal product of labor will increase if: -the quantity of capital increases. -average labor productivity decreases. -capital's share of output increases. -the quantity of labor increases

the quantity of capital increases

According to the neoclassical theory of distribution, in an economy described by a Cobb-Douglas production function, when average labor productivity is growing rapidly: -economic profits will be positive. -workers will experience high rates of real wage growth. -labor's share of income will be decreasing. -labor's share of total income will be increasing

workers will experience high rates of real wage growth

If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then C increases by: 0.15 units. 0.5 units. 1 unit. 0.85 units

0.85 units

At any particular point in time, the output of the economy: -is fixed because the supplies of capital and labor and the technology are fixed. -varies because the supplies of capital and labor vary. -varies because the technology for turning capital and labor into goods and services varies. -is fixed because the demand for goods and services is fixed

is fixed because the supplies of capital and labor and the technology are fixed

Assume that an increase in consumer confidence raises consumers' expectations of future income and thus the amount they want to consume today for any given income. This shift, in a neoclassical economy, will: -raise investment and lower the interest rate. -raise both investment and the interest rate. -lower investment and raise the interest rate. -lower both investment and the interest rate.

lower investment and raise the interest rate

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. -supply. -marginal productivities. -equilibrium growth rates.

marginal productivities

In equilibrium, total investment equals: -private saving. -household saving. -public saving. -national saving

national saving