Reference no: EM13221001
(1) The marginal product of labor (measured in units of output) for Expando Corp. is given by MPN = A(400-N) where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $.150 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $100?
a) 233.33 b) 333.33 c) 266.67 d) 366.67
(2) Rachel earns nothing during her learning period, 600 during her working period, and 300 during her retirement period. She has no initial assets. The real interset rate is 0.25. Rachel is not allowed to borrow by the banks. Whenever possible, Rachel wants to smooth consumption between periods. How much will she save during her working period?
a) 233.33 b) 166.67 c) 200 d) 133.33
(3) Calculate the user cost of capital of a machine that costs $100,000 and depreciates at a rate of 25%, when the nominal interest rate is 4% and the expected inflation rate is 1%.
a) $25,000 b) $28,000 c) $29,000 d) $3,000
(4) If the nominal money supply grows 2%, real income falls 2%, and the income elasticity of money demand is 0.8, then the inflation rate is a) 3.6% b) 0% c) 4.0% d)3.4%
(5) Suppose that all workers place a value on their leisure of 40 goods per day. The production function relating output per say Y to the number of people working per day N is Y = 250N - 1.5N^2 and the marginal product of labor is MPN = 250 - 3N A 20% tax is levied on wages. Output her day would be
a) 5625 b) 11250 c)10000 d) 7250
(6) Suppose the real GDP is 10,000 and remains constant, nominal GDP is initially 15,000, inflation is 10%, and the debt-GDP ratio is 0.5. What is the largest nominal deficit that the government can run without raising the debt-GDP ratio?
a) 250 b) 500 c) 750 d) 1000
(7) Consider a small open economy with desired national saving of S^d = 300 - 11,000r^w and desired investment of I^d = 500 - 200r^w. If r^w - 0.15, and output = 2,000, then absorption equals
a) 520 b) 510 c) 490 d) 495
(8) Consider a small open economy with desired national saving of S^d = 300 - 11,000r^w and desired investment of I^d = 500 - 200r^w. If r^w - 0.15, then a rise in government spending of 100 with no change in private saving causes net exports to become
a) 1,180 b) 1,280 c) 1,480 d) 1,380
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