In the simple Keynesian model, if the equilibrium level of income is $300 billion, the MPC is 0.75, and government expenditures increase by 20 billion. What is the new equilibrium level of income? a. $320 billion b. $380 billion c. $220 billion d. $520 billion ANSWER B
Date: September 10th, 2020
The marginal cost of investment for the firm is equal to A) 1. B) -1. C) MP’K. D) -MP’K. ANSWER A
Date: September 10th, 2020
As the quantity of capital increases, the marginal product of capital A) does not change. B) increases. C) decreases. D) may either increase or decrease. ANSWER C
Date: September 10th, 2020
In 2012, direct government purchases equaled ________ percent of federal outlays. A) 42 B) 71 C) 26 D) 55 ANSWER C
Date: September 10th, 2020
In the Friedman-Lucas money surprise model A) If actual inflation is higher than anticipated inflation, then output must be above its trend value. B) If actual inflation is higher than anticipated inflation, then output must be below its trend value. C) money is neutral. D) monetary policy does not work. ANSWER A
Date: September 10th, 2020
An increase in the demand for our exports a. increases aggregate demand and income by the amount of the investment multiplier. b. increases imports as well, having no impact on aggregate demand. c. increases aggregate demand and income by less than the amount of the investment multiplier. d. does not impact aggregate demand because this […]
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
A predominant view among Federal Reserve officials is that A) the Phillips curve is unimportant. B) the Phillips curve helps us forecast inflation. C) the Phillips curve helps us forecast the nominal interest rate. D) the Phillips curve does not exist in the data. ANSWER A
Date: September 10th, 2020
If the wealth effect of an increase in the real wage was greater than the substitution effect of an increase in the real wage a. the labor supply curve would slope upward. b. the labor supply curve would slope downward. c. the labor supply curve would be vertical. d. the labor demand curve would solely […]
Date: September 10th, 2020
