Question 1

Which of the following is consistent with diminishing marginal returns?

Accepted Answer

A)  increasing labor by 10% and output increasing 10%.
B)  increasing labor by 10% and output prices increase by less than 10%.
C)  increasing labor by 10% and the marginal product of labor increasing 10%.
D)  increasing labor by 10% and output increasing by less than 10%.E) A) and B)
F) A) and C)

Question 2

The supply of labor in the classical system is a function of the

Accepted Answer

A)  marginal product of labor.
B)  real wage.
C)  the public's preference for leisure.
D)  money wage.
E)  b and cF) A) and E)
G) C) and E)

Question 3

The supply-determined nature of output and employment is a crucial feature of

Accepted Answer

A)  the Keynesian theory.
B)  the classical system.
C)  monetarism.
D)  the rational expectations model.E) None of the above
F) A) and C)

Question 4

Which of the following is not consistent with perfect competition?

Accepted Answer

A)  all firms face the same costs.
B)  firms cannot determine the price of the goods they sell.
C)  the marginal product of labor is diminishing.
D)  firms negotiate the same wages for different workers.E) A) and B)
F) A) and C)

Question 5

Which of the following factors will not determine output and employment in the classical model?

Accepted Answer

A)  Taxes that affect the incentive to work or hire labor
B)  The level of government spending
C)  The quantity of capital
D)  Preferences for leisure
E)  None of the aboveF) B) and D)
G) B) and E)

Question 6

If a natural disaster destroys some of the capital stock,then the classical model predicts

Accepted Answer

A)  labor demand,real wages,and output will fall.
B)  labor demand and real wages will rise,output will fall.
C)  the labor market remains unchanged but output falls.
D)  None of the aboveE) A) and D)
F) A) and B)

Question 7

Briefly define an endogenous variable and an exogenous variable.What variables are endogenous in the classical model? What variables are exogenous.

Accepted Answer

An endogenous variable is a variable who...

Question 8

In the classical model,the factors determining output and employment are the factors that ascertain the position(s) of

Accepted Answer

A)  the labor supply curve only.
B)  the labor demand curve only.
C)  the aggregate production function.
D)  both the labor supply curve and the labor demand curve.
E)  Both c and dF) None of the above
G) A) and E)

Question 9

A production function relates

Accepted Answer

A)  the level of output to the level of technology.
B)  the price level to the level of aggregate output.
C)  aggregate output to the level of inputs and technology.
D)  aggregate demand to aggregate supply.E) None of the above
F) B) and C)

Question 10

In the classical model,the supply-determined nature of output is illustrated by a(n)

Accepted Answer

A)  horizontal aggregate supply curve.
B)  vertical aggregate supply curve.
C)  upward sloping aggregate supply curve.
D)  downward sloping aggregate supply curve.E) A) and D)
F) None of the above

Question 11

What two principles of mercantilism did the classicists attack?

Accepted Answer

The belief that the wealth and...

Question 12

The classical model is a model in which

Accepted Answer

A)  governmental policies are needed to ensure full employment.
B)  wages and prices are perfectly flexible.
C)  the public has perfect information.
D)  None of the above
E)  b and cF) A) and B)
G) B) and E)

Question 13

In the classical model,a tax on capital will

Accepted Answer

A)  increase the demand for labor,the real wage,and output.
B)  increase the supply of labor,reduce real wages,and increase output.
C)  decrease the demand for labor,the real wage,and output.
D)  have no effect on the labor market.
E)  increase both labor demand and supply,which will increase output.F) A) and E)
G) D) and E)

Question 14

Assuming a 5-percent decrease in both the nominal (money) wage and 5-percent increase in the price level in the classical model,then

Accepted Answer

A)  both the quantity supplied and demanded of labor will increase.
B)  the quantity supplied of labor will increase and the quantity demanded of labor will decrease.
C)  both the quantity supplied and demanded of labor will decrease.
D)  the quantity of labor supplied and demanded would remain constant.E) A) and C)
F) A) and D)

Question 15

The aggregate demand curve for labor is the

Accepted Answer

A)  vertical summation of the individual firms' demand curves.
B)  horizontal summation of the individual firms' demand curves.
C)  horizontal summation of all the individual supply curves.
D)  vertical summation of the individual firms' supply curves.E) None of the above
F) B) and D)

Question 16

With respect to an auction market,

Accepted Answer

A)  labor and output are assumed to be traded in markets that are not always in equilibrium.
B)  all participants make decisions based on announced nominal wage rates.
C)  all participants make decisions based on announced product prices.
D)  All of the above
E)  None of the aboveF) A) and D)
G) A) and E)

Question 17

Is it possible to have a production function that exhibits both a diminishing marginal product of labor and constant returns to scale? Explain.

Accepted Answer

Yes is it possible.Under constant return...

Question 18

In the classical model,a decrease in immigration would

Accepted Answer

A)  decrease labor supply,increase the real wage,and decrease output.
B)  increase labor supply and the real wage,and decrease output.
C)  increase labor demand and the real wage,and increase output.
D)  reduce real wages and reduce output.E) None of the above
F) A) and D)

Question 19

Which of the following statements is correct? Classical economists

Accepted Answer

A)  believe demand as well as supply determines aggregate output.
B)  believed in an active role for government in managing the economy through tax policy.
C)  gave little explicit attention to factors that determined the overall demand for commodities.
D)  were worried about depressions that could come about because of too little government consumption.E) C) and D)
F) B) and D)

Question 20

Explain why the labor supply curve is positively sloped.Explain why labor demand is downward sloping.

Accepted Answer

It is assumed that additional labor is s...

Exam 3: Classical Macroeconomics I: Output and Employment

The aggregate demand curve for labor is the

Correct AnswerverifiedShow Answer

Which of the following is not consistent with perfect competition?

Correct AnswerverifiedShow Answer

What two principles of mercantilism did the classicists attack?

Correct AnswerverifiedThe belief that the wealth and...View AnswerShow Answer

Assuming a 5-percent decrease in both the nominal (money) wage and 5-percent increase in the price level in the classical model,then

Correct AnswerverifiedShow Answer

Which of the following statements is correct? Classical economists

Correct AnswerverifiedShow Answer

Is it possible to have a production function that exhibits both a diminishing marginal product of labor and constant returns to scale? Explain.

Correct AnswerverifiedYes is it possible.Under constant return...View AnswerShow Answer

Which of the following factors will not determine output and employment in the classical model?

Correct AnswerverifiedShow Answer

In the classical model,a decrease in immigration would

Correct AnswerverifiedShow Answer

Explain why the labor supply curve is positively sloped.Explain why labor demand is downward sloping.

Correct AnswerverifiedIt is assumed that additional labor is s...View AnswerShow Answer

A production function relates

Correct AnswerverifiedShow Answer

The supply-determined nature of output and employment is a crucial feature of

Correct AnswerverifiedShow Answer

In the classical model,a tax on capital will

Correct AnswerverifiedShow Answer

If a natural disaster destroys some of the capital stock,then the classical model predicts

Correct AnswerverifiedShow Answer

The classical model is a model in which

Correct AnswerverifiedShow Answer

Which of the following is consistent with diminishing marginal returns?

Correct AnswerverifiedShow Answer

The supply of labor in the classical system is a function of the

Correct AnswerverifiedShow Answer

With respect to an auction market,

Correct AnswerverifiedShow Answer

In the classical model,the factors determining output and employment are the factors that ascertain the position(s) of

Correct AnswerverifiedShow Answer

Briefly define an endogenous variable and an exogenous variable.What variables are endogenous in the classical model? What variables are exogenous.

Correct AnswerverifiedAn endogenous variable is a variable who...View AnswerShow Answer

In the classical model,the supply-determined nature of output is illustrated by a(n)

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The belief that the wealth and...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Yes is it possible.Under constant return...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It is assumed that additional labor is s...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An endogenous variable is a variable who...
View Answer

Correct Answer
verified