EconTst2

# EconTst2 - 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 ____D______. 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 E a. a parameter that is fixed or exogenous. b. a variable that is fixed or exogenous. c. a parameter that is variable or exogenous. d. a variable that is endogenous. e. a and b are correct. __A__ 3. The production function describes A a. how any amount of capital and labor can be combined to generate output. b. how particular amounts of capital and labor can be combined to generate output. c. how any amount of capital and a particular amount of labor can be combined to generate output. d. how any amount of labor and a particular amount of capital can be combined to generate output. e. None of the above. __C__ 4. One of the key characteristics of the Cobb-Douglas production function is C a. increasing returns to scale. b. decreasing returns to scale. c. constant returns to scale. d. that it compacts all inputs into a single equation. e. that it is an exact replication of a firm’s production function. __E__ 5. Which of the following production functions exhibits constant returns to scale? E 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 D a. Y = 2. b. Y = 6. c. Y = 14. d. Y = 8. e. None of the above. __D__ 7. The firm’s profit maximization problem is D

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a. b. c. d. e. All of the above are correct. __D__ 8. 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 D a. ( w * L */ r * K *) = Y *. b. w * L * – r * K * = Y *. c. w * L * × r * K * = Y *. d. w * L * + r * K * = Y *. e. ( w * L */ Y *)( r * K */ Y *) = 0. __D__ 9. 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 D a. . b. . c. . d. . e. None of the above.
__B__ 10. Consider Table 4.1, which compares the model to actual statistical data on per capita GDP. You observe B 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 find total factor productivity? D a. b.

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## This note was uploaded on 10/17/2011 for the course 4586 203 taught by Professor Shelow during the Spring '11 term at Duke.

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EconTst2 - Sample Questions: Exam 2 Multiple Choice...

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