Assume that you purchased a $1,000 perpetual bond that pays a market interest rate of 5 percent. If you attempted to sell this bond today subsequent to an increased market rate of interest of 7.5 percent, then you a. could only sell this bond at a capital loss. b. could sell this bond at a […]
Date: September 10th, 2020
The intertemporal substitution of leisure effect is used to justify the assumption that current labor supply increases when the A) current real wage increases. B) current real wage decreases. C) real interest rate increases. D) real interest rate decreases. ANSWER C
Date: September 10th, 2020
Keynes thought that expectations are a. a function of current income. b. predictable and stable. c. an important determinant of consumption. d. unpredictable and influences planned investment. ANSWER C
Date: September 10th, 2020
Theoretically, an increase in the real wage A) increases leisure. B) decreases leisure. C) has an ambiguous effect on leisure. D) has no effect on leisure. ANSWER C
Date: September 10th, 2020
The short-run aggregate supply curve shows that a change in inflation will cause (a) change(s) in ________. A) output B) potential output C) expected inflation D) price shocks E) all of the above ANSWER C
Date: September 10th, 2020
The IS curve slopes upward because a. as income rises, savings rise and consumption falls, decreasing output. b. as interest rates rise, the money supply rises, increasing output. c. as interest rates rise, planned investment must fall, increasing output. d. as income increases, money demand rises, which increases interest rates. ANSWER A
Date: September 10th, 2020
The author of The Wealth of Nations; The author of the General Theory a. David Ricardo; John Maynard Keynes. b. Adam Smith; A. C. Pigou. c. Adam Smith; David Ricardo d. Adam Smith; John Maynard Keynes. e. Adam Smith; John Stuart Mills. ANSWER D
Date: September 10th, 2020
The Phillips curve shifts because A) fiscal policy changes over time. B) of total factor productivity shocks. C) of economic development. D) none of the above. ANSWER D
Date: September 10th, 2020
In the real intertemporal model with investment A) the firm maximizes the present value of profits. B) the firm maximizes current profits. C) the firm maximizes the present value of revenues. D) the firm maximizes current profits plus future profits. ANSWER A
Date: September 10th, 2020
Which of the following is true in regards to Okun’s law? A) employment does not increase commensurately with output rises because firms tend to hoard labor B) when demand increases, firms tend to work their employees harder and longer C) it is Okun’s prediction of the negative relationship between the output and unemployment gaps that […]
Date: September 10th, 2020
