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. be unchanged.
16. If
there were a permanent increase in technology, A, we would expect real saving
to:
a. increase as the increase in real
consumption is less than real GDP. c. decrease as the increase in real
consumption is more than real GDP.
b. increase as the increase in real
consumption is more than real GDP. d. decrease as the increase in real
consumption is less than real GDP.
17. A
variable that moves in the same direction as real GDP is known as:
a. acyclical. c. countercyclical.
b. procyclical. d. exogenous.
18. A
variable that has little tendency to move during a business cycle is known as:
a. acyclical. c. countercyclical.
b. procyclical. d. exogenous.
19. A
variable that moves in the opposite direction as real GDP is known as:
a. acyclical. c. countercyclical.
b. procyclical. d. exogenous.
20. An
acyclical variable is one that:
a. moves the same direction as real GDP. c. moves
the opposite direction as real GDP.
b. has little tendency to move during a
business cycle. d. determined outside the model.
21. An
procyclical variable is one that:
a. moves the same direction as real GDP. c. moves
the opposite direction as real GDP.
b. has little tendency to move during a
business cycle. d. determined outside the model.
22. An
countercyclical variable is one that:
a. moves the same direction as real GDP. c. moves
the opposite direction as real GDP.
b. has little tendency to move during a
business cycle. d. determined outside the model.
23. US
real consumer expenditure since 1954 has been:
a. procyclical. c. a cyclical.
b. countercyclical. d. exogenous.
24. US
real gross domestic private investment since 1954 has been:
a. procyclical. c. a cyclical.
b. countercyclical. d. exogenous.
25. Since
1954, in the US:
a. real gross private investment has
varied more than real GDP, while real consumer expenditure has varied less than
real GDP. c. real gross private investment has
varied less than real GDP, while real consumer expenditure has varied more than
real GDP.
b. real gross private investment and real
consumer expenditure have varied more than real GDP. d. real gross
private investment and real consumer expenditure have varied less than real
GDP.
26. US
real average earnings of production workers since 1954 has been:
a. procyclical. c. a cyclical.
b. countercyclical. d. exogenous.
27. US
real rental price of capital since 1954 has been:
a. procyclical as the model predicts. c. procyclical
rather countercyclical as the model predicts.
b. countercyclical as the model predicts. d. countercyclical
rather procyclical as the model predicts.
28. An
example of a temporary change in technology would be:
a. a new discovery. c. a harvest
failure.
b. a new invention. d. all of the
above.
29. An
example of a temporary change in technology would be:
a. a new discovery. c. a new
invention.
b. a general strike. d. all
of the above.
30. With
a temporary change in technology the model predicts:
a. the interest rate will be procyclical. c. a
higher interest rate will motivate households to increase current real saving.
b. a lower interest rate will motivate
households to increase current real
consumption. d. all of the above.
31. With
a temporary change in technology the model predicts:
a. the interest rate will be procyclical. c. a
higher interest rate will motivate households to decrease current real saving.
b. a lower interest rate will motivate
households to decrease current real consumption. d. all of the
above.
32. With
a temporary change in technology, we would expect:
a. the income effect of consumption to be
larger. c. the intertemporal substitution effect on consumption to be
larger.
b. the income effect of consumption to be
smaller. d. the intertemporal substitution effect on consumption to be
larger.
33. With
a temporary positive change in technology we would expect real current
consumption:
a. to increase a lot. c. to
remain unchanged.
b. to decrease a lot. d. to
either increase or decrease a little.
34. With
a temporary change in technology, A, we expect little change in consumption
because:
a. the income effect on consumption is
larger. c. the intertemporal-substitution effect is larger.
b. the income effect on consumption is
smaller. d. the intertemporal-substitution effect
is smaller.
35. The
model predicts that an economic expansion caused by a temporary increase in technology, A, would
lead to:
a. high real GDP and investment. c. low
real GDP and investment.
b. low real GDP and high real investment. d. high
real GDP and low real investment.
36. Temporary
changes in technology, A, conflict with the data in that:
a. investment is clearly acyclical. c. the
wage rate is clearly countercyclical.
b. consumption is clearly procyclical. d. all
of the above.
37. A
higher real wage:
a. makes consumption more expensive. c. makes
leisure less expensive.
b. makes it a worse deal for households to
work an extra hour. d. makes leisure more expensive.
38. A
higher real wage:
a. increases the income of households
inducing them to work more. c. increases the income of households
inducing them to work less.
b. decreases the income of households
inducing them to work more. d. decreases the income of households
inducing them to work less.
39. The
overall effect of a higher real wage is:
a. to increase labor as the income and
substitution effect reinforce each other. c. to decrease labor as the income and
substitution effect reinforce each other.
b. ambiguous on labor as the income and
substitution effect work against each other. d. ambiguous because the income and
substitution effect reinforce each other.
40. We
expect that an increase in real wages will:
a. increase labor supply, if temporary. c. increase
labor supply, whether permanent or temporary.
b. increase labor supply, if permanent. d. reduce
labor supply, whether permanent or temporary.
41. An
increase in the interest rate induces worker to:
a. work more in the current period and
less in the future. c. work less in the current period and
more in the future.
b. work more in the current period and in
the future. d. work less in the current period and in the future.
42. A
higher interest rate makes:
a. future consumption cheaper. c. current
consumption more expensive.
b. future leisure cheaper. d. all
of the above.
43. A
higher interest rate makes:
a. future consumption and leisure more
expensive. c. future consumption and leisure cheaper.
b. future consumption cheaper and future
leisure more expensive. d. future consumption more expensive and
future leisure cheaper.
44. A
higher interest rate makes:
a. current consumption and leisure more
expensive. c. current consumption and leisure cheaper.
b. current consumption cheaper and
current. leisure more expensive. d. current consumption more expensive and
current leisure cheaper.
45. A
higher interest rate makes:
a. current consumption and future leisure
more expensive. c. current consumption and future leisure
cheaper.
b. current consumption cheaper and future.
leisure more expensive. d. current consumption more expensive and
future leisure cheaper.
46. Intertemporal
substitution effects motivate households to:
a. supply more labor when the wage rate is
temporarily low. c. supply less labor when the wage rate is
temporarily low.
b. supply more labor when the wage rate is
permanently low. d. supply more labor when the wage rate is
permanently low.
47. In
the US since 1964 total hours worked and employment have been:
a. acyclical. c. procyclical.
b. countercyclical. d. exogenous.
48. The
measure of labor productivity used in the popular media is:
a. Y/L c. procyclical.
b. average product of labor. d. all
of the above.
49. In
the model with an upward sloping supply curve of labor and increase demand for
labor due to a positive technological, A, change:
a. increases employment and the real wage.
c. decreases
employment and the real wage.
b. decreases employment and increases the
real wage. d. decreases employment and increases the real wage.
50. When
the labor supply of households is allowed to slope upward:
a. the model predictions match the
observed data that employment and real wages are countercyclical. c. the
model predictions do not match the observed data that employment and real wages
are procyclical.
b. the model predictions do not match the
observed data that employment and real wages are countercyclical. d. the
model predictions match the observed data that employment and real wages are
procyclical.
51. The
most important feature of U.S. real GDP in the post-World War II era most
likely is
a. the overall upward trend. c. the
large fluctuations relative to trend.
b. the high standard deviation from trend. d. the
many recessions related to politics.
52. The
equilibrium business cycle model, unlike the long-run Solow growth model,
assumes that
a. changes in capital are important. c. the
interest rate always rises.
b. changes in capital are insignificant. d. the
cyclical growth in GDP is positive.
53. Suppose
that the economy suffers a major natural disaster. The equilibrium business-cycle model predicts
that the interest rate will be
a. unchanged. c. relatively low.
b. relatively high. d. greater
than the return on capital.
54. Suppose
that the economy suffers a major natural disaster. The equilibrium business-cycle model predicts
that the real rental price of capital will be
a. unchanged. c. relatively low.
b. relatively high. d. greater
than the return on capital.
55. According
to the equilibrium business-cycle model, a major improvement in competitiveness
in a nation’s economy will affect the real wage in which way?
a. The real wage will be unchanged. c. The
real wage will be relatively low.
b. The real wage cannot be predicted. d. The
real wage will be relatively high..
56. In
the equilibrium business-cycle model, an improvement in the level of technology
causes
a. an economic expansion. c. a
trend level of GDP.
b. a recession. d. an economic
shock.
57. In
the equilibrium business-cycle model, an economic expansion typically starts
with
a. an improvement in the level of
technology. c. a decline in the level of technology
b. an increase in the stock of capital. d. a
decrease in the stock of capital.
58. In
the equilibrium business-cycle model, a recession typically starts with
a. an improvement in the level of
technology. c. a decline in the level of technology
b. an increase in the stock of capital. d. a
decrease in the stock of capital.
59. In
the equilibrium business-cycle model, a recession would be characterized by
a. a relatively low real wage and
relatively high real rental price of capital. c. a relatively high real wage and
relatively low real rental price of capital.
b. a relatively low real wage and real
rental price of capital. d. a relatively high real wage and real
rental price of capital.
60. In
the equilibrium business-cycle model, a recession would be characterized by
a. a relatively low interest rate and
relatively high real rental price of capital. c. a relatively high interest rate and
relatively low real rental price of capital.
b. a relatively high real wage and real
rental price of capital. d. a relatively low interest rate and real
rental price of capital.
61. In
the equilibrium business-cycle model, an economic expansion would be
characterized by
a. a relatively low real wage and
relatively high real rental price of capital. c. a relatively high real wage and real
rental price of capital.
b. a relatively low real wage and real
rental price of capital. d. a relatively high real wage and
relatively low real rental price of capital.
62. Which
of the following variables is procyclical, according to the equilibrium
business-cycle model?
a. the real wage rate c. the
real rental rate on capital
b. the real interest rate d. all
of the above
63. Which
of the following variables is countercyclical, according to the equilibrium
business-cycle model?
a. the real wage rate c. the
real rental rate on capital
b. the real interest rate d. none
of the above
64. The
equilibrium real-business cycle model predicts that labor productivity will be
a. procyclical. c. acyclical.
b. countercyclical. d. indeterminate.
65. The
measure known as total hours worked
a. multiplies employment by 40. c. divides
employment by 24.
b. divides employment by the average wage
rate. d. multiplies employment by the average weekly hours worked per
employee.
SHORT ANSWER
1. If
there is a positive technological change, what happens in the labor market?
2. What
does the model predict about investment when technology increases and why and
what do the data show about investment in the US?
3. What
happens to consumption when there is a permanent and temporary increase in technology,
A, and why?
4. What
is the relationship between real GDP and the cyclical part of GDP?
5. What
happens in the model, if a temporary technology change increase real wages
temporarily?
6. What
does the real business-cycle model predict will be the relationship between an
economic expansion and the real rental price of capital?
Chapter 9
TRUE/FALSE
1. When
the capital utilization rate, , is added
to the model the interest rate becomes countercyclical.
2.
The
higher the capital utilization rate, ,
the greater the depreciation rate of capital, .
3. An
increase in unemployment insurance payments decreases effective real income
while unemployed.
4. The
duration of unemployment is the number unemployed divided by the labor force.
5. Unemployment
will exist in an market clearing model, if it takes some search time for
workers to find jobs.
6. An
increase in the technology level leads to an outward shift of the demand curve
for capital services.
7. An
increase in the technology level leads to an increase in the market-clearing
real rental price of capital.
8. When
a variable capital utilization rate is added to the Barro model, the model
predicts that the capital utilization rate will be countercyclical.
9. GDP
can rise when a decrease in technology leads to an increase in the capital
utilization rate.
10. The
natural rate of unemployment in an economy occurs when the job separation rate
equals zero.
MULTIPLE CHOICE
1. The
capital utilization rate is:
a. the rate capital wears out in a
particular period. c. the percentage of capital used in
production.
b. the depreciation rate. d. all
of the above.
2. When
the capital utilization rate, ,
increases then:
a. GDP increases. c. (hours
per period)•(number of machines) increases.
b. machines are in use more hours per
period. d. all of the above.
3. When
the capital utilization rate, ,
increases then:
a. GDP decreases. c. (hours per
period)•(number of machines) increases.
b. machines are in use fewer hours per
period. d. all of the above.
4. When
the capital utilization rate, ,
increases then:
a. GDP decreases. c. (hours per
period)•(number of machines) decreases.
b. machines are in use more hours per
period. d. all of the above.
5. When
the capital utilization rate, ,
increases then:
a. GDP increases. c. (hour per
period)•(number of machines) decreases.
b. machines are in use fewer hours per
period. d. all of the above.
6. When
we allow a capital utilization rate, ,
less than 100%, then the rate of return form owning capital becomes:
a. (R/P) -
. c. (R/P)•
- .
b. (R/P)•
- ( ). d. (R/P) - ( ).
7. An
owner of capital might set their capital utilization rate below 100% because:
a. the depreciation rate goes up with the
capital utilization rate. c. to make time available for maintaining
their capital.
b. machines wear out faster when used more
intensively. d. all of the above.
8. The
optimal capital utilization rate, , is
that where:
a. (R/P)•
- ( ) is maximized. c. (R/P)• > (
)
b. (R/P)•
= ( ) d. (R/P)• < (
)
9. the
net real income from supplying capital services is:
a. (R/P)• K - ( )K. c. ( )K - (R/P)•
b. (R/P)• K + ( ). d. (R/P)• K • ( )K
10. Higher
capital utilization rates may raise the user costs of capital because higher
utilization rates may imply:
a. operating at inconvenient times. c. operating
when complementary services like transporters are unavailable or more
expensive.
b. paying overtime to employees operating
the machines. d. all of the above.
11. Higher
capital utilization rates may raise user costs of capital because higher
utilization rates may imply:
a. operating at inconvenient times. c. less
highway congestion.
b. off-peak utility prices. d. all
of the above.
12. Higher
capital utilization rates may raise user costs of capital because higher
utilization rates may imply:
a. less highway congestion. c. operating
when complementary services like transportation are unavailable or more
expensive.
b. off peak utility prices. d. all
of the above.
13. Higher
capital utilization rates may raise user costs of capital because higher
utilization rates may imply:
a. less highway congestion. c. off
peak utility prices.
b. paying overtime to employees operating
the machines. d. all of the above.
14. GDP
rises can rise in an expansion due to:
a. an increase in technology, A, directly
increasing GDP. c. an increase in technology, A, causing
an increase in the capital utilization rate, the quantity of capital services
and GDP.
b. an increase in technology, A, causing
an increase in labor, L and GDP. d. all of the above.
15. The
model predicts the capital utilization rate,
, is:
a. acyclical. c. countercyclical.
b. procyclical. d. exogenous.
16. The
model predicts that with a negative shock to technology, the capital
utilization rate, , will:
a. rise as GDP rises. c. rise
as GDP falls.
b. fall as GDP falls. d. fall
as GDP rises.
17. After
the capital utilization rate, , is
included in the model, the interest rate:
a. is still procyclical. c. becomes
procyclical.
b. is still countercyclical. d. becomes
countercyclical.
18. The
US data from 1948 to 2006 shows the capital utilization rate, , is:
a. procyclical as the model predicts. c. procyclical
the opposite the model predicts.
b. countercyclical as the model predicts. d. countercyclical
the opposite as the model predicts.
19. The
model predicts that with a positive shock to technology the capital utilization
rate, , will
a. fall as GDP falls. c. rise
as GDP rises.
b. fall as GDP rises. d. rise
as GDP falls.
20. If
the rental price of capital increases, then the capital utilization rate, ,:
a. also increases. c. remains the same.
b. decreases. d. depends on
whether the substitution rate is greater than the income effect.
21. The
unemployment rate is:
a. the number of workers in the labor
force unemployed divided by the number of workers employed. c. the
number of workers in the labor force unemployed divided by the labor force.
b. the number of workers employed divide
by the number of workers in the labor force unemployed. d. the
labor force divided by the number of workers in the labor force unemployed.
22. The
vacancy rate in the labor market is:
a. the number of job openings divided by
the number of unemployed people in the labor force. c. the ratio of
open jobs to filled jobs.
b. the number of job openings divided by
the number of workers in the labor force. d. the ratio of open jobs to the total
number of jobs that employers want occupied.
23. If
the labor force is 100 million, there are 95 million people employed, there are
98 million jobs that employers want occupied, then the number of unemployed
workers in the labor force is:
a. 5 million. c. 2 million.
b. 3 million. d. none of the
above.
24. If
the labor force is 100 million, there are 95 million people employed, there are
98 million jobs that employers want occupied, then the number of vacancies is:
a. 5 million. c. 2 million.
b. 3 million. d. none of the
above.
25. If
the labor force is 100 million, there are 95 million people employed, there are
98 million jobs that employers want occupied, then the unemployment rate is:
a. 3%. c. 5.3%.
b. 5%. d. none of the above.
26. If
the labor force is 100 million, there are 95 million people employed, there are
98 million jobs that employers want occupied, vacancy rate is:
a. 5%. c. 3.1%.
b. 3.2%. d. 3%.
27. If
the labor force is 100 million, there are 94 million people employed, there are
99 million jobs that employers want occupied, then the vacancy rate is:
a. 5%. c. 5.3%
b. 5.1% d. 1%
28. One
minus the unemployment rate, 1 - u, is:
a. the vacancy rate. c. the
employment rate.
b. the labor force. d. the
level of employment.
29. Unemployment
can exist in a market clearing model, if:
a. there are frictions in the labor
market. c. we allow for differences among workers
and jobs.
b. it takes some search time for workers
to find jobs. d. all of the above.
30. Unemployment
can exist in a market clearing model, if:
a. the labor market is in disequilibrium. c. we
allow for differences among workers and jobs.
b. we allow capital utilization of less
than 100%. d. all of the above.
31. Unemployment
can exist in a market clearing model, if:
a. there are frictions in the labor market. c. the
labor market is in equilibrium.
b. the labor supply curve is upward
sloping. d. all of the above.
32. Unemployment
can exist in a market clearing model, if:
a. all workers are identical. c. the
labor supply curve is upward sloping.
b. it takes some search time for workers
to find jobs. d. all of the above.
33. A
worker will accept a job offer, if the
real wage offer is above:
a. the worker’s effective real income when
unemployed, . c. the worker’s
reservation wage.
b. the wage the worker earned in their
last job. d. the average wage in the economy.
34. An
increase in a worker’s effective real income while unemployed, , will cause the
worker’s:
a. real wage offers to increase. c. real
reservation wage to increase.
b. real wage offers to decrease. d. real
reservation wage to decrease.
35. We
expect that an increase in the effective real income while unemployed ,
a. will reduce the job-finding rate. c. increase
real wage offers.
b. will increase the job-finding rate. d. decrease
real wage offers.
36. A
decrease in workers’ effective real incomes while unemployed, , will:
a. lower the job finding rate and raise
the expected duration of unemployment. c. raise the job finding rate and lower
the expected duration of unemployment.
b. lower the job finding rate and the
expected duration of unemployment. d. raise the job finding rate and the
expected duration of unemployment.
37. A
negative shock to productivity, A, will:
a. lower the job finding rate and raise
the expected duration of unemployment. c. raise the job finding rate and lower
the expected duration of unemployment.
b. lower the job finding rate and the
expected duration of unemployment. d. raise the job finding rate and the
expected duration of unemployment.
38. Job
separations can be due to:
a. an adverse shock to the firm’s
production function. c. a change in a worker’s circumstances
such as changing locations.
b. the job being temporary from the start
like a seasonal job. d. all of the above.
39. Job
separations can be due to:
a. a positive shock to the firm’s
production function. c. a change in a worker’s circumstances
such as changing locations.
b. an increase in technology. d. all
of the above.
40. Job
separations can be caused by:
a. an adverse shock to the firm’s
production function. c. increased technology, A.
b. foreign competition. d. all
of the above.
41. In
the Barro model, the natural rate of unemployment is the unemployment rate:
a. where job findings equal job
separations. c. the job separation rate equals the job
finding rate.
b. job findings are maximized. d. job
separations are minimized.
42. If
the job separation rate is 0.02 and the job finding rate is 0.3, then the
natural rate of unemployment is:
a. 6.25% c. 6.67%
b. 15% d. none of the above.
43. If
the job separation rate is 0.03 and the job finding rate is 0.7, then the
natural rate of unemployment is:
a. 4.2% c. 23.3%
b. 4.1% d. none of the above.
44. In
the Barro model, the natural rate of unemployment is:
a. positively related to that job
separations rate. c. fixed.
b. zero. d. positively related to the job finding
rate.
45. In
the Barro model, the natural rate of unemployment is:
a. negatively related to that job
separations rate. c. fixed.
b. zero. d. negatively related to the job finding
rate.
46. In
US data vacancies from 1954 to 2006 as measure by the help-wanted index are:
a. procyclical as the model predicts. c. procyclical
the opposite the model predicts.
b. countercyclical as the model predicts. d. countercyclical
the opposite the model predicts.
47. Discouraged
workers are:
a. those that are unemployed. c. those
who have dropped out of the labor force.
b. those that are underemployed. d. those
who are under paid.
48. The
job-finding rate is:
a. the number of hires per month divided
by the number unemployed. c. the number of hires per month divided
by the unemployment rate.
b. the number of hires per month divided
by the number employed. d. the number of hires per month divided
by the employment rate.
49. The
US data from December 2000 to February 2006 shows that the job finding rate is:
a. acyclical. c. procyclical.
b. countercyclical. d. exogenous.
50. The
US data from December 2000 to February 2006 shows that the job separation rate
is:
a. acyclical. c. procyclical.
b. countercyclical. d. exogenous.
51. Owners
of capital choose the utilization rate to
a. maximize their net real income from
supplying capital services. c. minimize their net real income from
supplying capital services.
b. maximize their net real costs from
supplying capital services. d. minimize their net real rental payments
from supplying capital services.
52. When
the Barro model allows for variable capital utilization rates, the result is
that an increase in the technology level causes
a. a decrease in the capital utilization
rate. c. a decrease in the quantity of capital services.
b. an increase in the capital utilization
rate. d. no change in the quantity of capital services.
53. When
the technology level increases,
a. the demand for capital services shifts
to the left. c. the demand for capital services shifts
to the right.
b. the supply of capital services shifts
to the right. d. both (b) and (c).
54. When
the technology level increases, the market for capital services
a. fails to clear. c. clears at the
original real rental price.
b. clears at a lower real rental price. d. clears
at a higher real rental price.
55. When
the technology level increases, the market for capital services
a. clears at a higher quantity of capital
services. c. clears at the original quantity of capital services.
b. clears at a lower quantity of capital
services. d. fails to clear.
56. On
a graph of the capital services market, the supply of capital services
a. slopes down because an increase in the
real rental price raises the capital utilization rate. c. slopes up because
an increase in the real rental price lowers the capital utilization rate.
b. slopes up because an increase in the
real rental price raises the capital utilization rate. d. slopes down
because an increase in the real rental price lowers the capital utilization
rate.
57. On
a graph of the capital services market, the demand for capital services shifts
out when
a. the technology level decreases, which
increases the marginal product of capital for any give amount of capital input. c. the
technology level increases, which increases the marginal product of capital for
any give amount of capital input.
b. the technology level decreases, which
decreases the marginal product of capital for any give amount of capital input. d. the
technology level increases, which decreases the marginal product of capital for
any give amount of capital input.
58. U.S.
data show that the labor force is
a. strongly countercyclical. c.
strongly procyclical.
b. acyclical. d. weakly procyclical.
59. U.S.
data show that the employment rate is
a. strongly procyclical. c.
strongly countercyclical.
b. acyclical. d. weakly
countercyclical.
60. An
increase in unemployment insurance payments from the government will
a. increase a person’s effective real
income while unemployed. c. have no effect on a person’s effective
real income while unemployed.
b. decrease a person’s effective real
income while unemployed. d. either (a) or (c).
61. An
increase in unemployment insurance payments from the government will
a. decrease a person’s duration of
unemployment. c. have no effect on a person’s duration
of unemployment.
b. increase a person’s duration of
unemployment. d. either (a) or (c).
62. An
increase in unemployment insurance payments from the government will
a. increase the job finding rate. c. decrease
the job-finding rate.
b. have no effect on the job-finding rate. d. either
(a) or (b).
63. The
job-separation rate is likely to be high among workers who are
a. inexperienced and difficult to
evaluate. c. in industries where there are frequent
shocks to product demand.
b. likely to experience changes in job
preferences. d. all of the above.
64. At
the natural rate of unemployment,
a. the job-separation rate is positive. c. the
job-finding rate equals zero.
b. the job-separation rate equals zero. d. both
(b) and (c).
65. At
the natural rate of unemployment,
a. the job-separation and job-finding
rates are each zero. c. tthe job-separation and job-finding
rates are both negative.
b. the job-separation and job-finding
rates are both positive. d. the job-separation rate is zero and the
job-finding rate is positive.
SHORT ANSWER
1. How
does the capital utilization enter the production function?
2. How
does the capital utilization rate affect the depreciation rate and why?
3. How
can there be unemployment in a market clearing model?
4. How
does the Barro model define the natural rate of unemployment and what does the
natural rate of unemployment depend on.
5. What
is the reservation wage?
6. How
does an increase in technology affect the market-clearing real rental price of
capital services?
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