ECO 302 Week 6 Quiz - Strayer
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Chapter 8 and 9
TRUE/FALSE
1. Intertemporal
substitution effects are substitution effects over time.
2. When
the marginal product of labor increases due to a positive technology change,
the real wage falls.
3. The
model predicts that in response to a permanent positive change in technology
real consumption will be procyclical.
4. An
increase in the interest rate makes future consumption cheaper and future
leisure more expensive.
5. The
income effect on labor supply is positive.
6. A
trend line for U.S. GDP since World War II is mostly flat.
7. In
the equilibrium business cycle model, an improvement in the level of technology
will increase the real wage rate.
8. In
the equilibrium business cycle model, an improvement in the level of technology
will decrease the interest rate.
9. In
the equilibrium business cycle model, an improvement in the level of technology
will decrease the interest rate.
10. The
equilibrium business cycle model predicts that the real wage will be procyclical.
11. The
equilibrium business cycle model predicts that the real rental price of capital
will be procyclical.
12. The
equilibrium business cycle model predicts that real investment will be
countercyclical.
MULTIPLE CHOICE
1. The
cyclical part of real GDP is
a. trend real GDP less real GDP. c. real
GDP/trend real GDP.
b. real GDP less trend real GDP. d. trend
real GDP/real GDP.
2. Real
GDP equals:
a. trend real GDP plus the cyclical part
of GDP c. trend real GDP less the cyclical part
of GDP.
b. trend real GDP times the cyclical part
of GDP. d. trend real GDP divided by the cyclical part of GDP.
3. An
equilibrium business-cycle model:
a. uses shocks to GDP to find equilibrium
conditions. c. uses equilibrium conditions to determine how shocks affect
real GDP and other macroeconomic variables. .
b. uses GDP to find equilibrium shocks to
the economy. d. uses GDP to find equilibrium
conditions.
4. An
increase in the level of technology, A, causes:
a. an increase in the MPL c. a
movement along the MPL hiring more labor.
b. a decrease in the MPL d. a
movement along the MPL hiring less labor.
5. The
model predicts that an economic expansion caused by an increase in technology,
A, will:
a. drive down the real wage. c. drive
up the real wage.
b. cause labor supply to be greater than
labor demand. d. lead to a relatively low real wage.
6. The
model predicts that in a recession caused by an decrease in technology, A, we
would observe:
a. a relatively low real wage. c. a
relatively high real wage.
b. an excess demand for labor. d. an
increase in the MPL
7. If
technology, A, increases, then:
a. the MPK and the demand for capital
services increase. c. the MPK increases and the demand for
capital services decreases.
b. the MPK and the demand for capital
services decrease. d. the MPK decreases and the demand for
capital services increases.
8. The
model predicts that if there is a technology, A, shock, the real rental price
of capital will:
a. be relatively high during an economic
expansion or a recession. c. be relatively high during an economic
expansion and relatively low during a recession.
b. be relatively low during an economic
expansion or a recession. d. be relatively low during an economic
expansion and relatively high during a recession.
9. The
model predicts that if there is a technology, A, shock, the interest rate, i,
will be:
a. relatively high during an economic
expansion or a recession. c. relatively high during an economic
expansion and relatively low during a recession.
b. relatively low during an economic
expansion or a recession. d. relatively low during an economic
expansion and relatively high during a recession.
10. During
an economic expansion due to an increase in technology, A, consumption will:
a. tend to rise due to the income effect. c. tend
to fall due to the intertemporal substitution effect of the interest rate
rising.
b. may rise or fall depending on whether
the income effect is greater than the substitution effect or not. d. all
of the above.
11. During
an economic expansion due to an increase in technology, A, consumption will:
a. tend to fall due to the income effect. c. tend
to rise due to the intertemporal substitution effect of the interest rate
rising.
b. may rise or fall depending on whether
the income effect is greater than the substitution effect or not. d. all
of the above.
12. During
an economic expansion due to an increase in technology, A, consumption will:
a. tend to rise due to the income effect. c. tend
to rise due to the intertemporal substitution effect of the interest rate
rising.
b. be unchanged. d. tend to fluctuate.
13. During
an economic expansion due to an increase in technology, A, consumption will:
a. tend to fall due to the income effect. c. tend
to fall due to the intertemporal substitution effect of the interest rate
rising.
b. be unchanged. d. tend to fluctuate.
14. If
technology, A, increases permanently then we would expect:
a. consumption to decrease as the
substitution effect would be greater than the income effect of the change. c. consumption
to increase as the substitution effect would be greater than the income effect
of the change.
b. consumption to increase as the income effect
would be greater than the substitution effect of the change. d. consumption
to decrease as the income effect would be greater than the substitution effect
of the change.
15. If
there is a permanent increase in technology, A, then we expect consumption to:
a. increase by more than real GDP. c. increase
but by less than real GDP.
b. increase by the same amount as real GDP. d.
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