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
An unanticipated decline in investment demand within the new classical model will cause a. the price level to fall with no effect on output. b. output to fall with no effect on the price level. c. both the price level and output to fall. d. no change in either the level of price or output. […]
Date: September 10th, 2020
For the firm in the real intertemporal model with investment A) depreciation occurs more quickly if the firm produces more output. B) depreciation takes place at a constant rate. C) depreciation can be slowed with more maintenance. D) depreciation is always 100%. ANSWER B
Date: September 10th, 2020
If the nominal GDP is $12,000 in 2005 and $15,000 in 2006, and if inflation is 10% between these years, then a. employment fell between 2005 and 2006. b. real GDP fell between 2005 and 2006. c. real GDP rose between 2005 and 2006. d. the economy experienced no growth between these years. e. everyone […]
Date: September 10th, 2020
The LM curve slopes upward because a. as income rises, savings rise, increasing 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. e. none of the above. ANSWER D
Date: September 10th, 2020
The short-run aggregate supply curve shows that inflation will change as a result of changes in ________. A) output B) potential output C) expected inflation D) price shocks E) all of the above ANSWER E
Date: September 10th, 2020
The supply of labor in the classical system is a function of the a. marginal product of labor. b. real wage. c. the public’s preference for leisure. d. money wage. e. b and c ANSWER E
Date: September 10th, 2020
The real interest rate ________ inflation ________. A) is unaffected in the long run by; because of the classical dichotomy B) moves one for one with expected; in the long run C) always increases with; but because of the Fisher effect lower expected inflation ensues D) all of the above E) none of the above […]
Date: September 10th, 2020
In the United States, the Phillips curve is not stable in that A) the intercept of the Phillips curve changes over time, but the slope does not change. B) the intercept and slope of the observed Phillips curve change over time. C) the slope of the Phillips curve changes, but its intercept does not change. […]
Date: September 10th, 2020
