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EconTest2 - Sample Questions Exam 2 Multiple Choice...

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Sample Questions: Exam 2 Multiple Choice Identify the choice that best completes the statement or answers the question. __D__ 1. Mathematically, an economic model is __________. a. a fake world b. a spreadsheet c. an accurate representation of reality d. a set of equations e. the actual macroeconomy __E__ 2. In the equation , the “bar” over the A means that it is The production function describes One of the key characteristics of the Cobb-Douglas production function is 5. Which of the following production functions exhibits constant returns to scale? a. b. c. d. e. All of the above. __D__ 6. If the production function is given by and and K = L = 8, total output equals
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The firm’s profit maximization problem is Suppose the payments to capital and labor are ( w * L *)/ Y * = 2/3 and ( r * L *)/ Y * = 1/3, respectively. One implication of this result is In the Cobb-Douglas production function , defining y = Y / L as output per person and k = K / L as capital per person, the per person production function is a. . b. . c. . d. . e. None of the above.
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__B__10. Consider Table 4.1, which compares the model to actual statistical data on per capita GDP. You observe a. the model consistently underestimates the level of per capita GDP. b. the model consistently overestimates the level of per capita GDP. c. the model does a really good job of estimating the level of per capita GDP. d. the model clearly contains all factors that affect per capita GDP. e. None of the above. __D__11. You are an economist working for the International Monetary Fund. Your boss wants to know what is the total factor productivity of China, but all you have is data on per capita GDP, y , and the per capita capital stock, k . If you assume that capital’s share of GDP is one-third, what would you use to
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