If dividend income increases, the following does not happen A) the consumer chooses to consume more leisure. B) the consumer chooses to consume more consumption goods. C) the budget constraint shifts to the right. D) the substitution effect exceeds the income effect. ANSWER D
Date: September 10th, 2020
If there is limited commitment and the government is no better at collecting on its debts than is the private sector, then A) Ricardian equivalence holds. B) the private sector can benefit from a government loan program. C) Ricardian equivalence does not hold. D) the Fisher relation does not hold. ANSWER A
Date: September 10th, 2020
Explain how an increase in the public’s taste towards less leisure would affect the labor market, the production function, and aggregate output. Provide graphs to illustrate. What will be an ideal response? ANSWER An decrease in the demand for leisure would shift the labor supply curve to the right (up), which would decrease the […]
Date: September 10th, 2020
Explain how an increase in technology, which increases the productivity of labor, will affect the labor market, the production function, and aggregate output. Provide graphs to illustrate. What will be an ideal response? ANSWER An increase in technology will shift the labor demand curve to the right, leading to an increase in the real […]
Date: September 10th, 2020
What impact do you think that the movement of women from working in the household to working in the market has had on GDP? Why? Do you think that this points to a problem with GDP? What will be an ideal response? ANSWER By moving to the market, women’s work is now counted in […]
Date: September 10th, 2020
With consumption on the vertical axis and leisure on the horizontal axis, the slope of the budget line is equal to A) w. B) -w. C) π. D) -π. ANSWER B
Date: September 10th, 2020
Briefly define an endogenous variable and an exogenous variable. What variables are endogenous in the classical model? What variables are exogenous. What will be an ideal response? ANSWER An endogenous variable is a variable whose value is determined within or by the model whereas the value of an exogenous variable is determined by forces […]
Date: September 10th, 2020
In the Keynesian model, exogenous variables include a. planned investment. b. taxes. c. planned inventories and government spending. d. planned investment and government spending. e. all of the above ANSWER E
Date: September 10th, 2020
In the two-period model with limited commitment, if the collateral constraint binds A) increases in the present value of collateral increase current consumption and reduce future consumption. B) increases in the present value of collateral increase current consumption one-for-one. C) increases in the present value of collateral decrease current consumption and increase future consumption. D) […]
Date: September 10th, 2020
From the equation of exchange, if both real income (Y) and the quantity of money (M) double and the price level (P) remains constant, then velocity (V) ________ and nominal income ________. A) remains constant; doubles B) doubles; remains constant C) doubles; doubles D) decreases by 50 percent; quadruples E) none of the above […]
Date: September 10th, 2020
