In an economy with no government spending, no taxes, no imports, and no exports, which of the
following is false?
a.
Investment cannot exceed savings
b.
Desired investment cannot exceed actual investment
c.
Savings cannot exceed investment
d.
$Y = C + S$
Which of the following is/are not among the "Lessons" from the personal financial strategies
recommended by Samuelson and Nordhaus?
a.
Investigate your investments thoroughly. Don't just rely on tips from friends and
acquaintances to guide your investment decisions.
b.
Avoid common-stock index funds. They tend to have high expenses and turnover-
induced taxes.
c.
Riskier investments, like stocks, yield a lower expected return on your investment,
because you stand more risk of losing your money. Thus, by buying "safer" investments,
like government bonds, investors can face less risk and earn higher average returns.
d.
Diversify your investments.
e.
b. and c.
For an open economy with a government sector, use national accounting identities to express net
exports $(X - M)$ in terms of investment spending $(I)$, private saving $(S)$, taxes $(T)$, and
government spending $(G)$.
a.
$(X - M) = S - (T - G) - I$
b.
$(X - M) = S + (T - G) + I$
c.
$(X - M) = S + (T - G) - I$
d.
$(X - M) = S - (T - G) + I$
e.
None of the above
Other things equal, which of the following could increase the quantity of labor demanded by a
competitive firm, causing the firm to make additional hires?
a.
A rise in the market price of the firm's output.
b.
A rise in the productivity of workers that means that marginal physical product rises for
all levels of employment.
c.
An increase in the market wage.
d.
a. and b.
e.
All of the above.
A competitive firm that is a price taker in the labor market hires additional workers until:
a.
Marginal revenue product equals product price.
b.
Marginal physical product equals the market wage.
c.
Marginal physical product equals product price.
d.
Marginal revenue product equals the market wage.
e.
None of the above.
