Should you stay in school beyond the current semester? Describe how you might use the neoclassical theory of investment to help you decide. What will be an ideal response? ANSWER Additional schooling makes sense, if the expected marginal benefit is at least as large as the user cost. If I am close to graduation, […]
Date: September 10th, 2020
A key characteristic of the production function in the endogenous growth model presented in the text is that A) there are increasing returns to scale in human capital. B) there are decreasing returns to scale in human capital. C) there are constant returns to scale in human capital. D) at low levels of human capital, […]
Date: September 10th, 2020
What characteristic of the endogenous growth model is crucial in giving the possibility of sustained growth? A) It is embodied in people. B) It has constant returns to scale in production. C) It takes time to accumulate it. D) It grows at the same rate as consumption. ANSWER B
Date: September 10th, 2020
In a two-period model with production, a temporary increase in domestic government spending A) increases domestic output and increases the current account surplus. B) increases domestic output and decreases the current account surplus. C) decreases domestic output and increases the current account surplus. D) decreases domestic output and decreases the current account surplus. ANSWER […]
Date: September 10th, 2020
In the new Keynesian model, if an aggregate demand increase is unanticipated, then ________. A) aggregate demand will not change B) short-run aggregate supply will shift up immediately C) short-run aggregate supply will shift down immediately D) there is no immediate effect on the short-run supply curve ANSWER D
Date: September 10th, 2020
What characteristic do human and physical capital share? A) Both are controlled by the government. B) Current costs are incurred for future benefits. C) Their growth depends crucially on the growth of total factor productivity. D) The use of both exhibits rivalry. ANSWER B
Date: September 10th, 2020
When property rights are well defined and inexpensive to enforce, ________. A) collateral is an efficient solution to asymmetric information problems B) little or no collateral is needed to secure a loan C) banks become less dominant among intermediaries D) poor borrowers are at no disadvantage relative to wealthy borrowers ANSWER A
Date: September 10th, 2020
The most volatile component of total investment spending is ________. A) construction spending by firms B) spending by firms on equipment C) residential construction by households D) inventory investment ANSWER D
Date: September 10th, 2020
Referring to the graph above, a movement from point H to point I might represent ________. A) the increase in the inflation rate that occurs when the real interest rate rises B) the automatic response of monetary policy to an increase in the inflation rate C) an autonomous tightening of monetary policy D) any of […]
Date: September 10th, 2020
In the new Keynesian model, if an aggregate demand increase is anticipated, then ________. A) aggregate demand will not change B) short-run aggregate supply will shift up immediately C) short-run aggregate supply will shift down immediately D) there is no immediate effect on the short-run supply curve ANSWER B
Date: September 10th, 2020
