B. depreciation and indirect business taxes.

C. depreciation, indirect business taxes, and corporate profits.

D. depreciation, indirect business taxes, corporate profits, and social insurance contributions.

4. The unemployment rate is 10 percent. The rate of job separation is 5 percent. How high does the rate of job finding have to be to keep the unemployment rate constant?
A. 10 percent
B. 45 percent
C. 50 percent
D. 90 percent

11. The unemployment resulting from wage rigidity and job rationing is called
A. the natural rate of unemployment.
B. the discouraged-worker effect.
C. structural unemployment.
D. insiders versus outsiders.

16. The unemployment caused by unions and by the threat of unionization is an instance of
A. structural unemployment.
B. the discouraged-worker effect.
C. efficiency wages.
D. conflict between insiders and outsiders.

6. The unemployment caused by the time that it takes to match workers and jobs is called
A. frictional unemployment.
B. the discouraged-worker effect.
C. structural unemployment.
D. wage rigidity.

21 The law of one price applied to the international marketplace is called
A. arbitrage.
B. nominal exchange rates.
C. real exchange rates.
D. purchasing-power parity.

1. The Solow growth model assumes that the production function exhibits
A. decreasing returns to scale.
B. constant returns to scale.
C. increasing returns to scale.
D. increasing marginal product.

12. The Golden Rule level of capital accumulation is defined as the level of the capital stock that achieves a steady state with the
A. highest rate of savings.
B. highest level of income.
C. highest level of consumption.
D. lowest level of depreciation.

7. The steady state level of income
A. the rate of saving.
B. the current level of income in the country.
C. the efficiency with which the economy employs the factors of production.
D. the population growth rate.

17. The marginal product of capital (MPK) is 1/3; the marginal product of labor (MPL) is 3. Capital is increased by 30; the labor force is increased by 10. How much does output increase?
A. 10
B. 30
C. 33
D. 40

4. The change in the capital stock is equal to
A. investment.
B. investment - depreciation.
C. investment - inflation.
D. investment - depreciation - inflation.

1. The key difference between the IS-LM model and the Mundell-Fleming Model is that the
A. Mundell-Fleming model does not take the price level as fixed.
B. Mundell-Fleming model assumes a small open economy.
C. Mundell-Fleming model stresses the interaction between markets different from those in the IS-LM model.
D. Mundell-Fleming model is not used to evaluate monetary and fiscal policy effects.

4. The Mundell-Fleming model predicts that, in Y - e space, an appreciation of the exchange rate will cause the IS* curve to
A. shift to the left.
B. shift to the right.
C. become steeper.
D. remain unchanged.

5. The Mundell-Fleming model predicts that, in Y - e space, an appreciation of the exchange rate will cause the LM* curve to
A. shift to the left.
B. shift to the right.
C. become steeper.
D. remain unchanged.

17. The consumer price index (CPI)

A. measures the price of a fixed basket of goods and services.

B. measures the price of a basket of goods and services that constantly changes as the composition of consumer spending changes.

C. measures the amount of money that it takes to produce a fixed level of utility.

D. is one of the many statistics in the National Income Accounts.

17. Unions may cause unemployment if
A. outsiders push wages down.
B. insiders force real wages higher than the market-clearing level.
C. outsiders are subject to minimum-wage legislation.
D. insiders are fired and outsiders are hired.

10. Under a system of floating exchange rates, a monetary contraction by the central bank would cause the exchange rate to
A. rise.
B. rise in the same proportion as inflation.
C. remain constant.
D. fall.

14. Under a system of fixed exchange rates, an import restriction on foreign goods would cause net exports and the level of income to
A. rise.
B. rise in the same proportion as inflation.
C. remain constant.
D. fall.

15. Under a system of fixed exchange rates
A. only monetary policy can affect income.
B. only fiscal policy can affect income.
C. both monetary and fiscal policy can affect income.
D. neither monetary nor fiscal policy can affect income.

16. Under a system of floating exchange rates
A. only monetary policy can affect income.
B. only fiscal policy can affect income.
C. both monetary and fiscal policy can affect income.
D. neither monetary nor fiscal policy can affect income.

8. Using the framework of the Solow growth model, the U.S. level of capital is presently
A. above the Golden Rule level.
B. more or less at the Golden Rule level.
C. below the Golden Rule level.
D. below the level needed to replace depreciated capital.

5. Unemployment insurance
A. frictional unemployment.
B. seasonal unemployment.
C. teenage unemployment.
D. cyclical unemployment.

9. Which of the following statements describes the difference between nominal and real GDP?

A. Real GDP includes only goods; nominal GDP includes goods and services.

Date: 2015-12-11; view: 1076