How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical real
wages? A) one
B) two
C) three
D) four
D
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When yield curves are downward sloping
A) long-term interest rates are above short-term interest rates. B) short-term interest rates are above long-term interest rates. C) short-term interest rates are about the same as long-term interest rates. D) medium-term interest rates are above both short-term and long-term interest rates.
In the basic closed-economy ISLM model, the goods market equilibrium condition is
A) output = consumption + investment + government spending. B) output = consumption + investment + government spending - tax. C) output = consumption + investment + government spending + net export. D) output = potential output.
The law of diminishing marginal returns implies that, in the short run:
A. output must fall beyond a certain point. B. price must fall beyond a certain point. C. the marginal product of the variable input must eventually decrease. D. wages of workers must eventually increase.
The following table shows Jay's estimated annual benefits of holding different amounts of money.Average money holdingsTotal benefit$100$20$200$29$300$36$400$41$500$44 How much money will Jay hold if the nominal interest rate is 8 percent? (Assume he wants his money holdings to be in multiples of $100.)
A. $100 B. $300 C. $200 D. $400