Quiz_2-solutions econ 410

Quiz_2-solutions econ 410 - b higher interest rate cause...

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Quiz 2 February, 1, 2011 1. The Mariel Boat Lift increase labor force of Miami by 7%. The classic economic theory would predict: a) All Cubans arrived in Miami were very happy so they worked harder. b) Wages in the city of Miami should decrease, if everything else remained the same. c) The minimum wage in the city of Miami should decrease. d) The housing market in Miami became less expensive. Answer: b) 2. If war-caused higher military spending pushes the interest rate higher, it is evidence that: a) higher military spending creates more jobs
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Unformatted text preview: b) higher interest rate cause higher budget deficit c) higher budget deficit causes higher interest rate d) we do not know the causality between interest rate and budget deficit Answer: c) 3. A sudden discovery of gold mine would increase the capital of the country by 10%. What would happen? a) a higher interest rate. b) a lower wage rate. c) the share of labor in the total output would decrease. d) the share of the labor in the total output would remain the same. Answer: d)...
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