EC 302 Final Exam Questions With Correct Answers

EC 302 Final Exam Questions With
Correct Answers
When ||does ||the ||Keynesian ||theory ||of ||consumption ||NOT ||hold? ||- ||CORRECT ||ANSWER✔✔-In ||
the ||long ||run



Other ||things ||being ||equal, ||the ||Neoclassical ||model ||of ||investment ||predicts ||that ||net ||
investment ||will ||increase ||when ||the: ||- ||CORRECT ||ANSWER✔✔-Depreciation ||rate ||falls



Which ||of ||the ||following ||is ||the ||weighted ||sum ||of ||the ||prices ||of ||a ||basket ||of ||domestically ||
and ||foreign ||produced ||goods? ||- ||CORRECT ||ANSWER✔✔-CPI



In ||the ||ModiglianiLife-Cycle ||Theory, ||if ||the ||number ||of ||years ||to ||retirement ||increases, ||life ||
resources ||will_____________

and ||current ||consumption ||will ||____________. ||- ||CORRECT ||ANSWER✔✔-Increase; ||increase



5. ||The ||sum ||of ||wages ||and ||gross ||profits ||is ||defined ||as, ||- ||CORRECT ||ANSWER✔✔-GDI ||(gross
||domestic ||income)




The ||measure ||of ||prices ||mostly ||used ||to ||announce ||inflation ||is ||the ||- ||CORRECT ||
ANSWER✔✔-CPI



n ||equilibrium, ||the ||real ||rental ||price ||of ||capital ||is ||equal ||to ||- ||CORRECT ||ANSWER✔✔-
Marginal ||Product ||of ||Capital



The ||marginal ||cost ||of ||capital ||is ||determined ||by ||all ||of ||the ||following ||EXCEPT ||- ||CORRECT ||
ANSWER✔✔-Corporate ||Profit ||Rate

, The ||marginal ||cost ||of ||capital ||is ||determined ||by ||all ||of ||the ||following ||- ||CORRECT ||
ANSWER✔✔--Rate ||of ||depreciation

-interest ||rate

-price ||of ||capital ||and ||its ||rate ||of ||change



When ||does ||the ||Keynesian ||theory ||of ||consumption ||hold ||- ||CORRECT ||ANSWER✔✔--in ||cross
||sections



-in ||cyclical ||observations



Firms ||find ||it ||profitable ||to ||add ||to ||their ||capital ||stock ||if, ||- ||CORRECT ||ANSWER✔✔-marginal ||
product ||of ||capital ||exceeds ||the ||real ||cost ||of ||capital



When ||the ||inflation ||rate ||is ||positive ||- ||CORRECT ||ANSWER✔✔-nominal ||GDP ||grows ||more ||
than ||real ||GDP



If ||the ||Keynesian ||consumption ||function ||is ||given ||by ||C ||= ||150 ||+ ||0.80Y, ||and ||Y ||increases ||by ||
1 ||unit, ||then ||savings; ||- ||CORRECT ||ANSWER✔✔-increase ||by ||0.20



As ||national ||income ||increases: ||- ||CORRECT ||ANSWER✔✔-the ||average ||propensity ||to ||
consume ||falls ||and ||gets ||nearer ||in ||value ||to ||the ||marginal ||propensity ||to ||consume



13. ||Friedman's ||theory ||of ||consumption ||focuses ||on: ||- ||CORRECT ||ANSWER✔✔-permanent ||
income



The ||marginal ||propensity ||to ||consume ||is ||equal ||to: ||- ||CORRECT ||ANSWER✔✔-change ||in ||
consumption/ ||change ||in ||income



An ||increase ||in ||the ||marginal ||propensity ||to ||consume ||will: ||- ||CORRECT ||ANSWER✔✔-lead ||to
||the ||consumption ||function ||becoming ||steeper