practicequestions4spring2004 - ECONOMICS 102 SPRING 2004...

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E CONOMICS 102 S PRING 2004 P RACTICE Q UESTIONS 4 Topics covered: The Classical Long-Run model Keynesian Model Employment growth Capital Stock growth Cost of Economic growth B INARY Q UESTIONS 1) “The economy will experiment business cycles but it will return to full employment within a few years or even less”. This statement is most likely to reflect the views of a. A Keynesian. b. A Classical Economist. 2) Under the market clearing assumption, an excess supply of a certain good will a. Drive the price of the good up. b. Lead to a fall in the price of the good. 3) Fiscal Policies in the Classical model a. Are unnecessary, because the economy will achieve the potential output and full employment automatically. b. Can be used only if a country is not running a budget deficit. 4) If output grows slower than the population, then the average standard of living (represented by GDP per capita) will a. Fall. b. Rise. 5) In the last 5 years, the country of Wonderland experienced growth in employment. Analysis shows that this growth is due to an increase in the number of workers that firms hire at any given wage. We can deduce that the real hourly wage in this country is
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This note was uploaded on 08/08/2008 for the course ECON 102 taught by Professor Drozd during the Spring '08 term at University of Wisconsin.

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practicequestions4spring2004 - ECONOMICS 102 SPRING 2004...

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