QUIZ-III-ECO-3203-F2003-sola

C future total factor productivity z increases d

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Unformatted text preview: otal factor productivity z increases. b) current total factor productivity z decreases. c) future total factor productivity z’ increases. d) future total factor productivity z’ decreases. Answer: (c). 51) A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the aggregate demand curve to the a) right by more than the rightward shift in aggregate supply. b) right by less than the rightward shift in aggregate supply. c) left by more than the leftward shift in aggregate supply. d) left by less than the leftward shift in aggregate supply. Answer: (a) 52) In response to a temporary increase in government spending, the representative consumer consumes a) more and takes more leisure. b) more and takes less leisure. c) less and takes more leisure. d) less and takes less leisure. Answer: (d) 9 53) In response to a permanent increase in government spending, the permanent income hypothesis would suggest that, to a first approximation, consumption demand should a) be unaffected. b) fall by less than the increase in government spending. c) fall exactly as much as the increase in government spending. d) fall by more than the increase in government spending. Answer: (c) 54) According to S. Rao Aiyagari, Lawrence Christiano and Martin Eichenbaum, output a) increases more with a temporary increase in government spending than with a permanent increase in government spending. b) increases less with a temporary increase in government spending than with a permanent increase in government spending. c) decreases more with a temporary increase in government spending than with a permanent increase in government spending. d) decreases less with a temporary increase in government spending than with a permanent increase in government spending. Answer: (b) 55) A likely explanation for the extremely large reduction in investment spending during World War II would be a) the extremely large increase in output during the period. b) the extremely large increase in real interest rates during the period. c) that consumption spending fell very little. d) there was m...
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This document was uploaded on 03/03/2014.

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