Macroeconomics Quiz for Week 1 Flashcards
A competitive, profit-maximizingfirm hires labor until the..
…price of output multiplied by the marginal product of labor equals the wage
An increase in the supply of capital will … the rental price of capital and … the marginal product of labour
Decrease; increase
An increase in the supply of capital will decrease what and increase what?
Decrease the rental price of capital and increase the marginal product of labour
If output is described by the production function Y = AK^0.2L^0.8, then the production function has what returns to scale?
Constant
Can government transfer payments be viewed as negative tax payments?
Yes
Are government transfer payments included as part of government purchases, G?
No
Are government transfer payments received as payment for inputs in the factor market?
No
Do government transfer payments affect the level of public and private saving?
Yes
National saving refers to…
income minus consumption minus government purchases
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…
…the real wage will fall, and the real rental price of capital will rise
If a technological advancement increases productivity, the long-run model predicts that the real wage will… and the reak rental price of capital will…
…both the real wage and the real rental price of capital will rise
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…
…rises by £60 billion
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.
D
Based on a Cobb–Douglas production function and perfect capital mobility, capital should flow to economies in which…
…capital is relatively scarce
The real exchange rate is determined by the equality of…
…net capital outflow and the demand for net exports