With respect to the classical labor market analysis, it is not assumed that a. firms have complete information with respect to relevant prices. b. workers negotiate for unique wages individually. c. money wages adjust with a short lag. d. All of the above e. None of the above ANSWER A
Date: September 10th, 2020
Inventory investment is a. never positive. b. often negative. c. can be either negative or positive. d. always positive. ANSWER C
Date: September 10th, 2020
Like the monetarists, new classical economists favor a. money growth aimed at achieving a nominal GDP target. b. discretionary policy action. c. a money growth rate that stabilizes output. d. a money growth rule that guides monetary policy. ANSWER D
Date: September 10th, 2020
How might inflation, even if fully anticipated, prevent the classical dichotomy from holding, even in the long run? What will be an ideal response? ANSWER The classical dichotomy asserts that output is determined solely by the aggregate production function and the quantities of factors available. Inflation is like a negative technology shock that lowers […]
Date: September 10th, 2020
The assumption that the marginal product of labor decreases as the labor input increases implies that A) output decreases as the labor input increases. B) the wage increases as the labor input increases. C) the production function is concave. D) the production function shifts upward. ANSWER C
Date: September 10th, 2020
________ may cause a shift of the long-run aggregate supply curve. A) A major earthquake B) A change in expected inflation C) A price shock D) all of the above E) none of the above ANSWER A
Date: September 10th, 2020
In an economy with higher and more variable inflation, the new classical model would predict that the short run aggregate supply curve would a. be horizontal. b. be more horizontal. c. be steeper. d. shift more rapidly. ANSWER A
Date: September 10th, 2020
The time consistency problem implies that A) the central bank should not commit. B) central bank commitment is useful. C) discretion is better than tying your hands. D) there are problems we cannot solve. ANSWER B
Date: September 10th, 2020
If the natural rate of unemployment declines ________. A) labor is more heavily utilized B) potential output increases C) the long run aggregate supply curve shifts to the right D) all of the above E) none of the above ANSWER D
Date: September 10th, 2020
In the classical model, and increase in tax on firms that hired labor would a. decrease labor demand and the real wage and increase output. b. decrease labor supply, increase the real wage, and decrease output. c. decrease labor demand, decrease the real wage, and decrease output. d. reduce real wages and increase output. […]
Date: September 10th, 2020
