According to Robert Gordon (1969, 1999), the extraordinary expansion of physical production in 194245 was achieved by
(a) massive government investment in new plants and equipment.
(b) finally bringing into production manufacturing plants and equipment that had been idle
since the early 1930s so that big government investment was not necessary.
(c) the Federal Reserve's peg on the bond market, which enrolled the private sector to
mobilize the necessary capital to invest in new plant and equipment.
(d) none of the above.
Question 2New Keynesian theories of efficiency wages imply
a. voluntary unemployment.
b. real wage rigidity.
c. changes in unemployment represent changes in the natural rate of unemployment.
d. market clearing in the labor market in the long-run.
e. None of the above
Question 3If consumption is given by C = 300 + .6 (Y-T) and I = 300 40r, the IS curve is
a. Y = 600 2.4T 40r + G.
b. Y = 600 + .6Y -100r G
c. Y = 1500 1.5T 100r + 2.5G
d. Y = 1500 + .6T 100r G
e. none of the above.
Question 4The equation of exchange is a(n)
a. identity relating the volume of transactions at current prices to the stock of money times the turnover rate of each dollar.
b. truism and by itself does not explain the variables it contains.
c. identity relating the volume of transactions at base year prices to the stock of money times the turnover rate of each dollar.
d. Both a and b
e. Both b and c
Question 5On the eve of the American Revolution, the majority of colonists were naturally born in the colonies rather than immigrants from elsewhere.
Indicate whether the statement is true or false
Question 6State banks failed to find a way to print money under the Constitution.
Indicate whether the statement is true or false
Question 7The slope of the LM curve has been shown to depend most crucially on the interest elasticity of
a. consumption.
b. saving.
c. money demand.
d. investment.
Question 8For the gold standard to achieve its maximum functioning efficiency, central banks should theoretically play the rules of the game. What are these rules?
(a) Central bank policy should tie the flow of their gold reserves to their current accounts.
(b) Central banks should lean against the wind and follow policies that offset gold movements.
(c) Central banks should raise interest rates as gold flows in and lower them as gold flows out.
(d) Central banks should sell securities as gold flows in and buy them as gold flows out.
Question 9If the tax function is T = t0 + t1Y where t1 equals 1/3, and if the marginal propensity to consume out of disposable income is 3/4, then the change in GDP per unit change in t0 (Y/t0) will be
a. 1.
b. + 1.
c. 1.5.
d. 2.
e. + 1.5.
Question 10Which of the following statements is (are) correct? In the insider/outsider model there is
a. unemployment due to the real wage being set above the market clearing level.
b. cyclical unemployment in response to changes in aggregate demand.
c. structural unemployment in response to hysteresis.
d. Both a and b
e. all of the above
Question 11Government revenue generated by the issue of currency is known as ________.
A) monetizing the debt
B) triage
C) seignorage
D) hyperinflation
Question 12Pegging the bond market in 194245 meant that World War II (194145)
(a) would be financed by free-market interest-rate determination.
(b) fixed high interest rates.
(c) fixed low interest rates.
(d) sent high interest rates floating above the peg.
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