QUIZ-III-ECO-3203-F2003-sola

C representative consumer is a borrower d

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Unformatted text preview: fect. b) substitution effect dominates the income effect. c) representative consumer is a borrower. d) representative consumer is a lender. Answer: (b) 38) The demand for current consumption, as plotted against current income, shifts to the right due all of the following except a) a decrease in current taxes. b) a decrease in future taxes. c) an increase in current income. d) an increase in future income. Answer: (c) 39) Next period’s capital is equal to current-period investment a) plus the amount of current capital left over after depreciation. b) minus the amount of current capital left over after depreciation. c) plus the amount of current period depreciation. d) minus the amount of current period depreciation. Answer: (a) 40) When drawn against the current real wage, the labor demand curve is a) upward sloping because the marginal product of labor rises with the quantity of labor employed. b) upward sloping because the marginal product of labor declines with the quantity of labor employed. c) downward sloping because the marginal product of labor rises with the quantity of labor employed. d) downward sloping because the marginal product of labor declines with the quantity of labor employed. 7 Answer: (d) 41) The marginal cost of investment for the firm is equal to a) 1. b ) − 1. c) MP’K. d) − MP’K. Answer: (a) 42) The marginal benefit from investment for the firm is equal to a) b) c) d) MP' K +1 + d (1 + r ) MP' K −1 + d (1 + r ) MP' K +1 − d (1 + r ) MP' K −1 − d (1 + r ) . . . . Answer: (c) 43) When drawn against the real interest rate, the optimal investment schedule shifts to the right if a) current total 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) 44) When drawn against the real interest rate, the optimal investment schedule shifts to the right if the a) current capital stock K increases. b) current capital stock K decreases. c) future capital stock K’ increases. d) future capital stock K’ increases. Answer: (b). 45) Investment will be more variable if the re...
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