ECO3202 Practice Test #2b

ECO3202 Practice Test #2b - ECO 3202 Applied Macroeconomics...

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Page 1 ECO 3202 Applied Macroeconomics – Practice Test #2b (See Answer Key in the last page) 1. By paying efficiency wages, firms contribute to higher wait unemployment because they: A) increase the wage bill. B) make workers more productive. C) keep the wage below the equilibrium level. D) keep the wage above the equilibrium level. 2. The unemployment insurance system may be desirable because unemployment insurance: A) raises the natural rate of unemployment. B) reduces the rate of job finding. C) increases workers' uncertainty about their incomes. D) induces workers to reject unattractive job offers. 3. In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state total output grows at a ______ percent rate. A) 0 B) 2 C) 3 D) 5 4. Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or ______ the rate of job finding. A) reduce; reduce B) increase; increase C) reduce; increase D) increase; reduce 5. The analysis in Chapter 8 of the current capital stock in the United States versus the Golden Rule level of capital stock shows that the capital stock in the United States is: A) well above the Golden Rule level. B) about equal to the Golden Rule level. C) well below the Golden Rule level. D) slightly above the Golden Rule level.
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Page 2 Use the following to answer question 6: (Exhibit: Saving and Investment in a Small Open Economy) 6. (Exhibit: Saving and Investment in a Small Open Economy) In a small open economy if the world interest rate is r 1 , then the economy has: A) a trade surplus. B) balanced trade. C) a trade deficit. D) negative capital outflows. 7. The benefits of the computer revolution had a lagged impact on productivity growth because: A) the government restricted which new computer technologies could be implemented. B) international competition limited the speed at which new computer technologies could be put into use. C) the computer industry initially represented only a small part of real GDP. D) military computer applications took precedence over commercial applications. 8. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase: A) investment in the small open economy. B) saving in the small open economy. C) exports by the small open economy. D) imports by the small open economy.
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Page 3 9. In the case of unions, the conflict of interest between different groups of workers results in insiders wanting ______, while outsiders want ______. A) more hirings; high wages B) high wages; more hirings C) high wages; fewer hirings D) fewer hirings; high wages 10. If the per-worker production function is given by y = k 1/2 , the saving rate ( s ) is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is: A) 1. B) 2.
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This note was uploaded on 12/31/2011 for the course ECO 3032 taught by Professor Danielomurgo during the Fall '11 term at FIU.

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ECO3202 Practice Test #2b - ECO 3202 Applied Macroeconomics...

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