Macroeconomics Quiz for Week 1 Flashcards

1
Q

A competitive, profit-maximizingfirm hires labor until the..

A

…price of output multiplied by the marginal product of labor equals the wage

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2
Q

An increase in the supply of capital will … the rental price of capital and … the marginal product of labour

A

Decrease; increase

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3
Q

An increase in the supply of capital will decrease what and increase what?

A

Decrease the rental price of capital and increase the marginal product of labour

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4
Q

If output is described by the production function Y = AK^0.2L^0.8, then the production function has what returns to scale?

A

Constant

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5
Q

Can government transfer payments be viewed as negative tax payments?

A

Yes

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6
Q

Are government transfer payments included as part of government purchases, G?

A

No

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7
Q

Are government transfer payments received as payment for inputs in the factor market?

A

No

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8
Q

Do government transfer payments affect the level of public and private saving?

A

Yes

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9
Q

National saving refers to…

A

income minus consumption minus government purchases

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10
Q

If increased immigration raises the labour force, the long-run model predicts that the real wage will… and the reak rental price of capital will…

A

…the real wage will fall, and the real rental price of capital will rise

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11
Q

If a technological advancement increases productivity, the long-run model predicts that the real wage will… and the reak rental price of capital will…

A

…both the real wage and the real rental price of capital will rise

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12
Q

The government raises lump-sum taxes on income by £100 billion. If the marginal propensity to consume is 0.6, investment in long-run equilibrium…

A

…rises by £60 billion

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13
Q

When exports exceed imports, all of the following are true except:
A. net exports are positive
B. domestic output exceeds domestic spending
C. net capital outflows are positive
D. domestic investment exceeds domestic saving.

A

D

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14
Q

Based on a Cobb–Douglas production function and perfect capital mobility, capital should flow to economies in which…

A

…capital is relatively scarce

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15
Q

The real exchange rate is determined by the equality of…

A

…net capital outflow and the demand for net exports

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