302samplemidterm - ECON 302 1. SAMPLE MIDTERM QUESTIONS A...

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1 ECON 302 SAMPLE MIDTERM QUESTIONS 1. A non-parallel shift in the production function implies: a. only a substitution effect b. only a wealth effect c. both a wealth and substitution effect ** d. that the marginal product of labour schedule stays in its original position. 2. The wealth effect from a downward shift in the production function causes individuals to work __________ and to consume ___________. a. more; more b. more; less** c. less; more d. less; less 3. In a Crusoe-type world, people necessarily select the level of consumption and labour supply so that: a. each period's marginal product of labour is the maximum it can be b. each period's marginal product of labour equals the interest rate c. each periods total output is the maximum it can be d. none of the above.** 4. For a temporary decrease in income, what is the correct relationship between an individual's Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS)? a. MPC rises and MPS remains roughly constant b. MPC is close to one and MPS is close to zero c. MPS is close to one and MPC is close to zero**
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This note was uploaded on 03/09/2011 for the course ECON 302 taught by Professor Alvero during the Spring '09 term at The University of British Columbia.

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302samplemidterm - ECON 302 1. SAMPLE MIDTERM QUESTIONS A...

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