QUESTION 1

1. In the one-period closed-economy equilibrium model, an increase in government spending G will ______________.
2. A.reduce hours worked
3. B.lower output
4. C.raise private consumption and output
5. D.lower private consumption

QUESTION 2

1. In the one-period closed-economy equilibrium model, an increase of total factor productivity, in equilibrium, will lead to ______________.
2. A.a lower utility level if the substitution effect is greater than the income effect
3. B.less hours worked if the substitution effect is greater than the income effect
4. C.more hours worked if the substitution effect is greater than the income effect
5. D.no change in the utility level

QUESTION 3

1. According to the Laffer Curve, ______________
2. A.lower tax rates always lead to more tax revenue.
3. B.there is a unique tax rate for each level of revenue.
4. C.higher tax rates always lead to less tax revenue.
5. D.there may exist two tax rates that deliver the same level of tax revenue.

QUESTION 4

1. In the one-period closed-economy model, a proportional tax on labor income leads to an inefficient economic outcome, because proportional income tax _______________.
2. A.prevents people from trying to pursue new jobs where more money can be made
3. B.only benefits the richest of the rich and makes the poor worse off
4. C.gives consumers a disincentive to work and tends to lower aggregate consumption and output
5. D.prevents consumers from purchasing any consumption and leisure goods

QUESTION 5

1. In the one-sided search model of labor market, the payoff (welfare) of an unemployed worker ______________.
2. A.is independent of employment insurance benefits
3. B.increases with the size of employment insurance benefits
4. C.depends only on government intervention in the labor market
5. D.decreases as market wages increase

QUESTION 6

1. In the one-sided search model of labor market, an increase in the job offer rate, in equilibrium, _____________________.
2. A.increases the reservation wage
3. B.reduces the welfare of the employed
4. C.reduces the welfare of the unemployed
5. D.increases the unemployment rate

QUESTION 7

1. What determines the reservation wage in the one-sided search model of labor market?
2. A.The number of available jobs in the area of the unemployed person determines the wage they are willing to accept.
3. B.How long a person has been unemployed is the major factor in determining the reservation wage.
4. C.The wage at which an unemployed worker is indifferent between accepting a job and continuing to search for work.
5. D.The age of the unemployed individuals is the determining factor of the wage they can receive in accepting a new job.

QUESTION 8

1. In the one-sided search model of labor market, which of the following is true about the steady-state equilibrium?
2. A.The unemployment rate is zero.
3. B.There is no change in employment status.
4. C.All job offers are accepted.
5. D.The flow of workers from employment to unemployment equals the flow of workers from unemployment to employment.

QUESTION 9

1. Suppose that it took 20 years for an economy to double its real GDP per capita. What was the average annual growth rate of the real GDP per capita during the 20 years?
2. A.3.46%
3. B.2.50%
4. C.2.00%
5. D.1.38%

QUESTION 10

1. Suppose that total factor productivity remains unchanged. Which of the following is true about the steady-state equilibrium of the Malthusian growth model?
2. A.The population stays at a constant equilibrium level.
3. B.Aggregate consumption grows at a constant rate.
4. C.Aggregate output grows at a constant rate.
5. D.The population grows at a constant rate.

QUESTION 11

1. An important prediction of the Malthusian growth model is that improvements in technology for producing goods ______________________
2. A.have no effect on both the equilibrium size of the population and the equilibrium level of consumption per worker.
3. B.increase both the equilibrium size of the population and the equilibrium level of consumption per worker.
4. C.increase the equilibrium size of the population and have no effect on the equilibrium level of consumption per worker.
5. D.increase the equilibrium size of the population and decrease the equilibrium level of consumption per worker.

QUESTION 12

1. Which of the following is true regarding the assumptions in the Solow growth model?
2. A.Capital is fixed.
3. B.Investment is fixed.
4. C.The saving rate is exogenous.
5. D.Population does not grow.

QUESTION 13

1. The Solow growth model generates no growth. Which of the following is true in the steady-state equilibrium of the Solow model?
2. A.Population size stays at a constant equilibrium level.
3. B.Aggregate output has no growth.
4. C.Capital per worker stays at a constant equilibrium level.
5. D.Consumption per worker grows at a constant rate.

QUESTION 14

1. Which of the following can increase the steady-state capital per worker in the Solow growth model?
2. A.A higher saving rate.
3. B.A higher depreciation rate of capital.
4. C.A lower level of total factor productivity.
5. D.A higher population growth rate.

QUESTION 15

1. The Solow growth model suggests that, to improve a country's standard of living in the long run, _______________
2. A.total factor productivity must decline.
3. B.the population must grow.
4. C.more natural resources must be found.
5. D.total factor productivity must keep improving.

QUESTION 16

1. Suppose the aggregate production function is given by, where Y is the aggregate output, A is total factor productivity, K is the aggregate capital sock, and N is the aggregate labor input. Over the period 2001-2011, on average, the aggregate output rose 1.99% per year, the aggregate capital rose 3.18% per year, and the labor input rose 1.44% per year. Given this information, we know that the total factor productivity contributed _________ to the growth of aggregate output.
2. A.-0.03 percentage points
3. B.0.01 percentage points
4. C.0.03 percentage points
5. D.0.00 percentage points