n the Source of funds side of the household budget constraint what 2 sources does a household have to spend 1. 2. 3. True I False: An increase in the deprecation rate lowers the capital utilization rate. 4. True 1 False: Super Neutrality of money' says an increase in the ination rate from 111% to 15% will harm the economy. 5. Who benets from unexpected ination? 6. What assumption makes it ok to assume the market prediction for ination is the best guess. Assume the production function is Y = l*{K'5*L"} If the real wage is 111 and the rental price of capital is 50: What is the Quation for nding the prot maximizing amount of labor '1'. E. 9. What is the guation for nding the prot maximizing amount of capital 11}. 1 1. 12. How much labor and capital are used. I am looking for numbers. 13. 14. 15. 16. 17. What is the MPL (a number} 13. What is MPK (a number} 19. How much is output? {a number) 20. If a household buys a bond are the}; a saver or lender? You live 2 periods. You are born with nothing and you must die with nothing. In period I you have labor income of IIIII}. In period 2 you have labor income of 20!] In both periods you may consume ((31 and C2} as well as buy or sell bonds {B}. Bonds earn an interest rate of 10%. Write out period 1*: budget constraint using the notations and ntnnbers ABOVE 21. 22 23. 24. 25. Write out period 2's budget constraint using the notations and ntnnbers ABOVE 26. 2?. 23. 29. 31}. DERIVE the 2 period budget constraint. 31. 32. 33. 34. 35. If you constnnc 150 in period 2. What is consumption in period 1'? 36. 31". 33. 39. 4!). James is awarded a prize of $1000 for hen econ. student of the year. James will likely: 41. Work: More or Less 42. Change his Consumption: More or Less than the Sl this year. .larnes is given a raise of $l an hour. Because of the raise he decides to work fewer shifts. This suggests which effect dominated his decision. 43. 44. Ccterus Par-ihrrs a TEMPORARY increase in technology will cause 45. real wage increase. or decrease or not change 46. real interest rate increase. or decrease or not change 4?. Price Level increase. or decrease or not change 43. Labor dernand increase. or decrease or not change 49. Capital utilization increase. or decrease or not change 5!}. Labor supply increase. or decrease or not change 51. Savings Rate increase. or decrease or not change Ccterus Par-ihrrs a PERMANENT increase in technology will cause 52. Real wage increase. or decrease or not change 53. Real interest rate increase. or decrease or not change 54. Ination rate increase. or decrease or not change 55. Labor dernand increase. or decrease or not change 56. Labor supply increase. or decrease or not change 5?. Savings rate increase. or decrease or not change 53. A higher real Iii-\"age: a. makes consumption more expensiVe. b. makes leisure less expansive. c. makes it a worse deal for households to work an extra hour. :1. makes leisure more expensiVe. Production function Y=4!3*{K~\"*L'\"); Kapital K = 1; Labor Supply = {real wage)\": What is the equation for labor demand? 59. 6D. 61. What is the equilibrium real wage? 62. 63. What is the Equilibrium amount of Labor Input? 64. 65. What is total output? 66. 6'1". Jl-ull ..-...-- IIcuLu - What is the rental price of capital? 63. 69. TI). In the solow model, the steady state of RGDP per capital will: 'l'l. with a higher savings rate Increase decrease no change 72. with a lower population gmwth rate Increase decrease no change 73. with a higher depreciation rate Increase decrease no change 74. with a lower population Increase decrease no change T5. with a higher level of capital Increase decrease no change 76. with a lower level of technology Increase decrease no change 7?. What explains why unemployment is never [I no matter how good the economy? Why don*t households use all available capital in the short run if the capital has already been porchased'? 1'3. E. If interest rates rise we would expect consumption by college students today to rise or fall and why? El]. 31. 32