Question 1

Which statement best defines the classical perspective?

Accepted Answer

A)  Aggregate supply determines aggregate demand.
B)  Aggregate demand does not matter for anything.
C)  Aggregate supply determines real variables such as output.
D)  Aggregate demand determines all endogenous variables.E) A) and D)
F) B) and D)

Question 2

If the demand for labor is plotted against the money wage,with the money wage on the vertical axis,then

Accepted Answer

A)  an increase in the price level will cause the labor demand schedule to shift to the right.
B)  an increase in the money wage will cause the labor demand schedule to shift to the left.
C)  an increase in the money wage will cause the labor demand schedule to shift to the right.
D)  the labor demand schedule will be upward sloping.E) None of the above
F) All of the above

Question 3

An increase in immigration would

Accepted Answer

A)  have no effect on the labor supply curve and real wages.
B)  shift the labor supply curve to the left and increase real wages.
C)  shift both the labor demand curve and the labor supply curve to the left.
D)  shift the labor supply curve to the right and decrease real wages.E) B) and D)
F) A) and B)

Question 4

The author of The Wealth of Nations; The author of the General Theory

Accepted Answer

A)  David Ricardo; John Maynard Keynes.
B)  Adam Smith; A.C.Pigou.
C)  Adam Smith; David Ricardo
D)  Adam Smith; John Maynard Keynes.
E)  Adam Smith; John Stuart Mills.F) C) and D)
G) D) and E)

Question 5

Suppose that the government imposes a tax on firms for money wages they pay.How would this change the classical aggregate supply curve? Why?

Accepted Answer

The tax would effectively increase the m...

Question 6

Explain how an increase in technology,which increases the productivity of labor,will affect the labor market,the production function,and aggregate output.Provide graphs to illustrate.

Accepted Answer

An increase in technology will shift the...

Question 7

An increase in taxes on labor earnings,everything else equal

Accepted Answer

A)  shifts the labor supply curve to the left and increases the real wage.
B)  shifts the labor supply curve to the right and increases the real wage.
C)  shifts the labor supply curve to the right and reduces the real wage.
D)  shifts the labor supply curve to the left and reduces the real wage.E) None of the above
F) A) and C) A

Question 8

Which of the following are endogenous variables within the classical model?

Accepted Answer

A)  output
B)  technology
C)  quantity of money
D)  level of capital
E)  a,b,and dF) B) and D)
G) A) and C)

Question 9

What is Real Business Cycle Theory? What drives business cycles in this model? Where do these shocks come from?

Accepted Answer

In the Real Business Cycle Theory,change...

Question 10

The marginal product of labor is

Accepted Answer

A)  the value of output for an addition dollar's worth of input.
B)  output divided by the quantity of labor.
C)  the additional output produced by adding an additional unit of labor.
D)  the price of the output produced by increasing labor.  Figure 3.1	ext { Figure } 3.1 Figure 3.1   E) A) and D)
F) A) and B)

Question 11

A vertical aggregate supply schedule implies that

Accepted Answer

A)  real wages cannot impact output.
B)  unemployment cannot impact output.
C)  aggregate demand is horizontal.
D)  the price level does not impact output.E) All of the above
F) A) and D)

Question 12

In a perfectly competitive market,firms take:

Accepted Answer

A)  the money wage as exogenous,the price level as endogenous.
B)  the money wage and price level as exogenous,the quantity of labor as endogenous.
C)  the money wage and price level as endogenous.
D)  the quantity of labor as exogenous.E) C) and D)
F) B) and C) B

Question 13

In the classical model,and increase in tax on firms that hired labor would

Accepted Answer

A)  decrease labor demand and the real wage and increase output.
B)  decrease labor supply,increase the real wage,and decrease output.
C)  decrease labor demand,decrease the real wage,and decrease output.
D)  reduce real wages and increase output.E) A) and C)
F) B) and C)

Question 14

Diminishing marginal returns refers to the fact that

Accepted Answer

A)  holding other inputs constant,additional increases in labor lead to smaller changes in output.
B)  holding other inputs constant,additional increases in labor lead to lower output.
C)  additional increases in labor always lead to smaller changes in output
D)  the returns to labor fall as real wages rise.E) C) and D)
F) All of the above A

Question 15

As the real wage increases,assuming that the substitution effect dominates,then

Accepted Answer

A)  individuals move to lower indifferent curves and consume less leisure.
B)  individuals move to higher indifferent curves and consume less leisure.
C)  individuals move to higher indifferent curves and consume more leisure.
D)  individuals stay on the same indifferent curve and consume more leisure.E) A) and D)
F) All of the above

Question 16

The classical economists attacked the mercantilist propositions that

Accepted Answer

A)  state action was necessary to direct the capitalist system.
B)  money had no intrinsic value.
C)  output was completely supply-determined.
D)  the wealth of a nation was closely linked to the country's stock of precious metals.
E)  Both a and dF) A) and E)
G) A) and C)

Question 17

If there is an increase in the price level in the classical model,

Accepted Answer

A)  the equilibrium level of output will remain unchanged.
B)  real wages remain constant.
C)  money wages will rise proportionally.
D)  all of the above.E) A) and C)
F) B) and C)

Question 18

Assuming a worker's money wage rose from $10 per hour to $20 per hour while all product price have doubled,then in the classical model,this worker would

Accepted Answer

A)  supply more labor after the wage increase.
B)  supply less labor after the wage change.
C)  supply the same amount of labor after the hourly wage increase.
D)  demand less leisure.E) A) and B)
F) A) and C)

Question 19

Which of the following will increase the marginal product of labor in the labor market?

Accepted Answer

A)  An increase in the price level and the money wage.
B)  An increase in the real wage.
C)  A decrease in the capital stock.
D)  An increase in the supply of labor.E) All of the above
F) C) and D)

Question 20

Is there a positive or negative relationship between real wages and output in the classical model? Explain.

Accepted Answer

The answer depends upon whether labor su...

Exam 3: Classical Macroeconomics I: Output and Employment

Which statement best defines the classical perspective?

Correct AnswerverifiedShow Answer

If the demand for labor is plotted against the money wage,with the money wage on the vertical axis,then

Correct AnswerverifiedShow Answer

An increase in immigration would

Correct AnswerverifiedShow Answer

The author of The Wealth of Nations; The author of the General Theory

Correct AnswerverifiedShow Answer

Suppose that the government imposes a tax on firms for money wages they pay.How would this change the classical aggregate supply curve? Why?

Correct AnswerverifiedThe tax would effectively increase the m...View AnswerShow Answer

Explain how an increase in technology,which increases the productivity of labor,will affect the labor market,the production function,and aggregate output.Provide graphs to illustrate.

Correct AnswerverifiedAn increase in technology will shift the...View AnswerShow Answer

An increase in taxes on labor earnings,everything else equal

Correct AnswerverifiedA

Which of the following are endogenous variables within the classical model?

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What is Real Business Cycle Theory? What drives business cycles in this model? Where do these shocks come from?

Correct AnswerverifiedIn the Real Business Cycle Theory,change...View AnswerShow Answer

The marginal product of labor is

Correct AnswerverifiedShow Answer

A vertical aggregate supply schedule implies that

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In a perfectly competitive market,firms take:

Correct AnswerverifiedB

In the classical model,and increase in tax on firms that hired labor would

Correct AnswerverifiedShow Answer

Diminishing marginal returns refers to the fact that

Correct AnswerverifiedA

As the real wage increases,assuming that the substitution effect dominates,then

Correct AnswerverifiedShow Answer

The classical economists attacked the mercantilist propositions that

Correct AnswerverifiedShow Answer

If there is an increase in the price level in the classical model,

Correct AnswerverifiedShow Answer

Assuming a worker's money wage rose from $10 per hour to $20 per hour while all product price have doubled,then in the classical model,this worker would

Correct AnswerverifiedShow Answer

Which of the following will increase the marginal product of labor in the labor market?

Correct AnswerverifiedShow Answer

Is there a positive or negative relationship between real wages and output in the classical model? Explain.

Correct AnswerverifiedThe answer depends upon whether labor su...View AnswerShow Answer

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The tax would effectively increase the m...
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An increase in technology will shift the...
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A

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In the Real Business Cycle Theory,change...
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B

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A

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The answer depends upon whether labor su...
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