QUIZ-III-ECO-3203-W2002-solaa

C reduces consumption increases output and reduces

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Unformatted text preview: , and increases the real wage. c) reduces consumption, increases output and reduces the real wage. d) reduces consumption, reduces output, and reduces the real wage. Answer: (a) 27) Changes in total factor productivity are plausible causes of business cycles because productivity-induced business cycles correctly predict a) real wages and total hours must be procyclical. b) real wages and consumption must be procyclical. c) total hours worked consumption must be procyclical. d) consumption and government spending must be procyclical. Answer: (b) 28) Real business cycle theory argues that the primary cause of business cycles is fluctuations in a) preferences. b) government spending. c) the importance of externalities. d) total factor productivity. Answer: (d) 6 29) Intertemporal substitution of labor suggests that a) the substitution effect of a permanent increase in the real wage is larger than the substitution effect of a temporary change in the real wage. b) the substitution effect of a permanent increase in the real wage is smaller than the substitution effect of a temporary change in the real wage. c) the substitution effect of a permanent increase in the real wage is equal to the substitution effect of a temporary change in the real wage. d) hours worked are not affected by changes in real wages. Answer: (b) 30) The Solow residual attempts to measure changes in a) the impact of government spending on aggregate output. b) total factor productivity. c) changes in preferences for consumption vs. leisure. d) output produced above and beyond wage and dividend income. Answer: (b) 31) Consumption smoothing refers to a) the tendency of all consumers to choose the same amount of current consumption. b) the tendency of consumers to seek a consumption path over time that is smoother than income. c) the tendency of consumers to seek an income path over time that is smoother than consumption. d) consumer’s concerns about going heavily into debt. Answer: (b) 32) Intertemporal decisions involve economic decisions a) made within a given period of time. b) made in between two periods of time. c) involving tradeoffs across periods of time. d) that ignore concerns about the future. Answer: (c) 33) For all bonds to be indistinguishable, a) all consumers must never be expected to default on their debts. b) the government must guarantee all bonds. c) a...
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This document was uploaded on 03/03/2014.

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