Intermediate Macroeconomics Final

all factors are paid their marginal products, and there are constant returns to scale.

Assuming that all firms maximize profits, economic profit is zero if:

positively; negatively

Consumption depends ______ on disposable income, and investment depends ______ on the real interest rate.

increases; decreases

Crowding out occurs when an increase in government spending ______ the interest rate and investment ______.

both the real wage and the real rental price of capital will rise.

If a technological advancement increases productivity, the neoclassical theory of distribution predicts that:

300.

If disposable income is 4,000, consumption is 3,500, government purchases is 1,000, and taxes minus transfers are 800, national saving is equal to:

constant returns to scale.

If output is described by the production function Y = AK0.2L0.8, then the production function has:

increase.

In the classical model with fixed income, if the demand for goods and services is greater than the supply, the interest rate will:

the interest rate.

In the classical model with fixed output, the supply and demand for goods and services are balanced by:

factors of production and production function.

In the long run, the level of national income in an economy is determined by its:

Private saving is:

disposable income minus consumption.

Public saving is:

government revenue minus government spending.

capital and labor.

The two most important factors of production are:

The marginal product of labor is:

additional output produced when one additional unit of labor is added.