1. Technological progress occurs when the economy gets more output
A. without any more capital or labor
B. by using more capital per worker
C. by using more capital but not more workers
D. by using more labor but not more capital
2. An increase in the capital stock will
A shift the production function downward
B shift the production function upward
C flatten the production function
D steepen the production function
3. Increases in net investment generally result in
A lower levels of capital stock and lower levels of depreciation
B lower levels of capital stock and higher levels of depreciation
C higher levels of capital stock and higher levels of depreciation
D higher levels of capital stock and lower levels of depreciation
4. Nations that borrow from abroad to support current consumption
A will always be better off in the future
B will always sacrifice future consumption
C sacrifice future consumption only if the investments are not profitable
D will always sacrifice current consumption
5. Trade deficits always lead to future decreases in consumption if the trade deficits
A support current investment
B support current consumption
C support either current investment or current consumption
D require borrowing from abroad
6. To determine the change in the capital stock, the level of new investment must be adjusted for depreciation because some new investment
A is not used immediately
B merely replaces existing, but worn out, capital
C replaces existing workers
D is more efficient than existing capital
7. According to classical economists
A demand creates its own supply
B wages and prices are inflexible downward
C the market system ensures full employment.
D Say's law is invalid
8. Other things being equal, a decrease in an economy's exports will
A increase domestic aggregate expenditures and the equilibrium level of output
B decrease domestic aggregate expenditures and the equilibrium level of output
C have no impact on domestic aggregate expenditures or output
D change autonomous consumption
9. Potential output will decrease if
A there is an increase in the price level
B there is a decrease in the price level
C there is technological change that increases labor productivity
D workers choose shorter work schedules in order to enjoy more leisure time
10. A wage rate above what is necessary to attract a sufficient number of workers is known as a(n)
A inefficient wage
B market-clearing wage
C efficiency wage
D minimum wage