The Solow growth model tells us that the standard living in country A can be higher than in country B for all the following reasons, except A) country A has lower population growth than country B. B) country A has a higher savings rate than country B. C) country A has a higher depreciation rate […]
Date: September 10th, 2020
A machine cost $15,000 to install, and has a resale value one year later of $12,000. If the real interest rate is 10%, then the user cost of capital is ________. A) $4,500 B) $1,500 C) $3,000 D) $1,200 ANSWER A
Date: September 10th, 2020
To support the argument for an active role for government in stabilizing the economy, it must be true that A) consumers are not rational and that not all wages and prices are flexible. B) not all wages and prices are flexible and that government must be able to react quickly enough. C) government must be […]
Date: September 10th, 2020
In the real business cycle model, fluctuations in employment are explained by ________. A) changes in the composition of household assets B) intertemporal substitution as real wages and real interest rates changes C) changes in the marginal propensity to consume D) the impact of a change in price on quantity demand and quantity supplied in […]
Date: September 10th, 2020
When countries converge, A) they all grow at the same rate. B) poorer ones grow faster. C) richer ones grow faster. D) richer ones do not grow. ANSWER B
Date: September 10th, 2020
In the period 1950-2011, the inflation rate in the U.S. CPI has A) varied very little. B) been less variable than the inflation rate in the GDP price deflator. C) been more variable than the inflation rate in the GDP price deflator. D) been substantially equal to the inflation rate in the GDP price deflator […]
Date: September 10th, 2020
Suppose that a machine costs $10,000 in constant dollars and the real rate of interest is 12 percent. If the machine is expected to increase in price by 2 percent and the rate of depreciation is 5 percent, then the user cost of capital for that machine over one year is equal to ________. A) […]
Date: September 10th, 2020
Adverse selection exists because ________. A) moral hazard exists B) asymmetric information exists C) of government regulation D) financial innovation continually occurs ANSWER B
Date: September 10th, 2020
Real business cycle theorists take the comovement of aggregate output and Solow residuals as strong confirmation that economic fluctuations are caused by ________. A) changes in aggregate demand B) changes in the money supply C) changes in the rate of inflation D) productivity shocks ANSWER D
Date: September 10th, 2020
What are policy lags? Explain the three policy lags faced by the Fed when implementing monetary policy. What will be an ideal response? ANSWER Policy lags refer to the time between when a shock occurs in an economy and the time when the policy actually affects the economy. 1. Recognition lags refer to the […]
Date: September 10th, 2020
