12. In an economy with no government spending, no taxes, no imports, and no exports, which of the following is false? a. Investment cannot exceed savings b. Desired investment cannot exceed actual investment C. Savings cannot exceed investment Y = C+S 13. Which of the following is/are not among the "Lessons" from the personal financial strategies recommended by Samuelson and Nordhaus? a. Investigate your investments thoroughly. Don't just rely on tips from friends and acquaintances to guide your investment decisions. b. Avoid common-stock index funds. They tend to have high expenses and turnover- induced taxes. C. Riskier investments, like stocks, yield a lower expected return on your investment, because you stand more risk of losing your money. Thus, by buying "safer" investments, like government bonds, investors can face less risk and earn higher average returns. Diversify your investments. b. and c. 14. For an open economy with a government sector, use national accounting identities to express net exports (X - M) in terms of investment spending (I), private saving (S), taxes (T), and government spending (G). a. (X - M) = S - (T - G) - I b. (X - M) = S +(T - G) +I C. (X - M) = S +(T - G) - I (X - M) = S - (T - G) +I e None of the above 15. Other things equal, which of the following could increase the quantity of labor demanded by a competitive firm, causing the firm to make additional hires? a. A rise in the market price of the firm's output. b. A rise in the productivity of workers that means that marginal physical product rises for all levels of employment. C. An increase in the market wage. a. and b. All of the above. 16. A competitive firm that is a price taker in the labor market hires additional workers until: a. Marginal revenue product equals product price. Marginal physical product equals the market wage. Marginal physical product equals product price. Marginal revenue product equals the market wage. None of the above. 17. If the real interest rate does not change, but expected inflation rises, what should the nominal interest rate do? a. It should fall. b . It should rise. C. On average, it should remain unchanged. It must remain unchanged.18. Use the aggregate demand and short-run aggregate supply curves to infer the likely result of a decrease in government spending. a. Lower prices, but rising output. b. Stable or lower prices and an increase in output. Stable or lower prices and more unemployment. Rising prices, but lower output. 19. What is the value-added approach? a. Correctly calculating national output by making appropriate deductions for environmental degradation, crime, illness and injury, and the destruction of natural resources. b. Avoiding double counting in computing GDP by including only final goods, and therefore excluding intermediate goods and services used up in their production. C. Computing GDP (or income) by adding up total annual sales by all U.S. firms. d. Computing GDP by netting wholesale prices out of retail prices. 20. Real GDP is nominal GDP divided by the GDP deflator. a True False 21. How would one model the short-run effect of a collapse of investment spending? a. By shifting up the aggregate demand curve. b. By shifting down the aggregate demand curve. C. By shifting up the short-run aggregate supply curve. By shifting down the short-run aggregate supply curve. None of the above 22. How would one model the short-run effect of a fall in oil prices? a. By shifting up the aggregate demand curve. b. By shifting down the aggregate demand curve. C . By shifting up the short-run aggregate supply curve. By shifting down the short-run aggregate supply curve. None of the above 23. How would one model the short-run effect of a major tax increase? a. By shifting up the aggregate demand curve. b. By shifting down the aggregate demand curve. C . By shifting up the short-run aggregate supply curve. By shifting down the short-run aggregate supply curve. None of the above 24. If the value of the US dollar rises against other major global currencies, making makes imported inputs cheaper for the US, how will it affect the US short-run aggregate supply curve? a. By shifting it up. b. By shifting it down. C. Not at all, because only the US aggregate demand curve should shift. d. None of the above.25. 26. 27. 28. 29. 30. If the economy is at full employment, and then the price of oil increases, which of the following dilemmas is most likely to face economic policymakers: a. A rise in the price level that can only be reduced by tolerating increased unemployment. b. There's no real dilemma. The same aggregate demand policy that returns the general level ofprices to its initial level also returns output and employment to their initial levels. c. Difculty in preventing a rise in output without creating more ination. d. A situation that can only be described as the worst of both worlds: skyrocketing prices and rising employment. If a fall in aggregate demand causes a recession and unemployment, which of the following could help return output and employment to their original level'iI A large decrease in military spending. A large decrease in education spending. A large cut in investment spending. Increased taxes. A tax cut for the rich. A tax cut for the poor. a.,b., e., and f. Only a. and e. Only a. and b. Only e. and f. Beammooorw The marginal revenue product of labor curve is also the labor demand curve. a. True b. False The marginal revenue product of labor in a rm: falls if chronic public health problems hurt workers' productivity. falls if the rm raises the amount of capital used in production. falls if the price of the rm's nal product goes down. b. and c. a. and c. All of the above. wagers If demand for a product rises, driving up its market price, but wages in the industry don't rise: Some additional workers are likely to be hired. Output is likely to rise. The marginal physical product of labor curve will shift up. The marginal revenue product of labor curve will shift down. a. and b. a., b., and d. a.. b., and c None of the above. menpoge Which of the following would be likely to raise the wages of American workers? a. A sustained rise in investment that results in a signicant increase in the amount of capital used in workplaces. b. A fall in output prices due to a fall in demand. c. A signicant decline in workers' health due to a more sedentary lifestyle and worse diet. d. a. and c