Question 1

The difference between irrational bubbles and rational bubbles is

Accepted Answer

A)  irrational bubbles occur in reality; rational bubbles do not.
B)  an irrational bubble does not burst; a rational bubble does.
C)  no economists believe in irrational bubbles; all economists believe in rational bubbles.
D)  an irrational bubble inevitably bursts; a rational bubble does not.
E)  government policy cannot correct an irrational bubble problem; government policy can correct a rational bubble problem.F) B) and D)
G) All of the above

Question 2

The condition MRS1,C = w describes the representative consumer's

Accepted Answer

A)  current period work-leisure decision.
B)  future period work- leisure decision.
C)  future consumption-savings decision.
D)  current consumption-savings decision.
E)  investment decision.F) A) and B)
G) B) and D)

Question 3

The condition MRS1'C' = w' describes the representative consumer's

Accepted Answer

A)  investment decision.
B)  current period work-leisure decision.
C)  current consumption-savings decision.
D)  future consumption-savings decision.
E)  future period work-leisure decision.F) All of the above
G) A) and B)

Question 4

The total government expenditure multiplier is less than one because

Accepted Answer

A)  investment demand falls dramatically when the government goes into debt.
B)  the marginal propensity to consume is less than one.
C)  labour supply reacts to interest rate changes and consumption demand is affected by taxes.
D)  the marginal propensity to consume is greater than one.
E)  government expenditures affect labour demand.F) B) and E)
G) None of the above

Question 5

The marginal cost of investment for the firm is equal to

Accepted Answer

A)    −MP′K- M P ^ { \prime } K−MP′K .
B)    1/MP′K1 / M P ^ { \prime } K1/MP′K .
C)   1 .
D)    MP′KM P ^ { \prime } KMP′K .
E)    −1- 1−1 . F) A) and B)
G) A) and E)

Question 6

When drawn against the real interest rate, the optimal investment schedule shifts to the right if the

Accepted Answer

A)   future total factor productivity increases.
B)   current capital stock  KKK  increases.
C)   future capital stock  K′K ^ { \prime }K′  increases.
D)   future capital stock  K′K ^ { \prime }K′  decreases.
E)   current capital stock  KKK  decreases. F) B) and C)
G) A) and C)

Question 7

An increase in the default premium

Accepted Answer

A)  lowers the real interest rate and firms invest more.
B)  shifts the optimal investment schedule to the right.
C)  shifts the optimal investment schedule to the left.
D)  will prevent firms from defaulting on their loans.
E)  raises the safe credit market interest rate.F) A) and B)
G) None of the above

Question 8

An increase in total factor productivity causes the

Accepted Answer

A)  production function to shift up, labour demand to shift right, and output supply to shift right.
B)  production function to shift down, labour demand to shift left, and output supply to shift left.
C)  production function to shift down, labour demand to shift right, and output supply to shift right.
D)  production function to shift up, labour demand to shift right, and output supply to shift left.
E)  production function to shift up, labour demand to shift left, and output supply to shift right.F) A) and C)
G) A) and B)

Question 9

The response of output following a natural disaster includes

Accepted Answer

A)  a decrease in output demand and an increase in output supply.
B)  a decrease in output demand and a decrease in output supply.
C)  only a decrease in output demand.
D)  an increase in output demand and an increase in output supply.
E)  an increase in output demand and a decrease in output supply.F) A) and E)
G) C) and D)

Question 10

When future total factor productivity is expected to increase

Accepted Answer

A)  current labour demand increases and output supply increases.
B)  investment demand decreases and output demand decreases.
C)  investment demand increases and output supply decreases.
D)  investment demand increases and output demand increases.
E)  investment demand increases and output supply increases.F) C) and E)
G) D) and E)

Question 11

An increase in lifetime wealth

Accepted Answer

A)  reduces savings.
B)  increases labour supply.
C)  shifts the current labour supply curve to the left.
D)  shifts the current labour supply curve to the right.
E)  reduces the real wage.F) B) and C)
G) C) and E)

Exam 11: A Real Intertemporal Model With Investment

When future total factor productivity is expected to increase

Correct Answer
verified

The marginal cost of investment for the firm is equal to

Correct Answer
verified

The condition MRS1,C = w describes the representative consumer's

Correct Answer
verified

An increase in total factor productivity causes the

Correct Answer
verified

The total government expenditure multiplier is less than one because

Correct Answer
verified

When drawn against the real interest rate, the optimal investment schedule shifts to the right if the

Correct Answer
verified

The condition MRS1'C' = w' describes the representative consumer's

Correct Answer
verified

The difference between irrational bubbles and rational bubbles is

Correct Answer
verified

An increase in lifetime wealth

Correct Answer
verified

The response of output following a natural disaster includes

Correct Answer
verified

An increase in the default premium

Correct Answer
verified

Exam 11: A Real Intertemporal Model With Investment

When future total factor productivity is expected to increase

Correct AnswerverifiedShow Answer

The marginal cost of investment for the firm is equal to

Correct AnswerverifiedShow Answer

The condition MRS1,C = w describes the representative consumer's

Correct AnswerverifiedShow Answer

An increase in total factor productivity causes the

Correct AnswerverifiedShow Answer

The total government expenditure multiplier is less than one because

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When drawn against the real interest rate, the optimal investment schedule shifts to the right if the

Correct AnswerverifiedShow Answer

The condition MRS1'C' = w' describes the representative consumer's

Correct AnswerverifiedShow Answer

The difference between irrational bubbles and rational bubbles is

Correct AnswerverifiedShow Answer

An increase in lifetime wealth

Correct AnswerverifiedShow Answer

The response of output following a natural disaster includes

Correct AnswerverifiedShow Answer

An increase in the default premium

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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