Question 1 (2 points] The assumption that current-period labour supply is positively related to the current- period real wage is Justified as long as the O a) substitution effect dominates the income effect in the short run. 0 b} None of the answers are correct 0 c} substitution effect dominates the income effect in the long run. 0 d) income effect dominates the substitution effect in the long run. 0 e] income effect dominates the substitution effect in the short run. Question 2 (2 points) In a two-period model, a consumer's budget constraint in the future period is O a) c'+{1+r)s =v'- t'. O b} c'-[1+r]s = \\f- t' O c} c + s = y - t. O d)c'=v'-t'-(1+ ris. 0 e) None of the answers are correct Question 3 (2 points) When the real interest rate increases, the demand for current consumption 0 a) moves along the demand curve. 0 b:- shifts up. 0 c} remains constant. 0 d) None of the answers are oorrect. 0 e) increases for each level of current income. Question 4 (2 poi nts) A one-unit decrease in current income. and a one-unit increase in lifetime wealth O a) both have no effect on the consumer's behaviour. 0 b} have the same effect on the consumer's current and future consumption. 0 c} have different effecls on the oonsu mer's current and future consumption. 0 d) None of the answers are oorrect 0 e) imply that future consumption goes down. Question 5 (2 points] Inventory investment tends to he 0 a) None of the answers are correct 0 b} procvclical. O c} lagging. 0 cl) coincident. 0 e] leading. Question 6 (2 points) The marginal benefit from investment comes from O a) only increased undepreciated capital in the future period. 0 b} having more capital in the current period. 0 :1 None of the answers are correct 0 d) only Increased production in the future period. 0 e) increased production and more undepreciated capital in the future period. Question 3" (2 points) Optimal investment is O a) positively related with the depreciation rate. 0 b} determined bycurrent stock prices. 0 c} positively related with the real interest rate. 0 d) None of the answers are correct 0 e) negatively related with the depreciation rate. Question 8 (2 points] The total government expenditure multiplier is less than one because 0 a) the marginal propensityto consume is less than one. 0 b} investment demand falls dramatically when the government goes into debt. 0 c} the marginal propensity to consume is greater than one. 0 d) labour supply reacts to interest rate changes and consumption demand is affected by taxes. 0 e] None of the answers are correct Question ? (2 points) The response of output following a natural disaster includes 0 a) an increase in output demand and an increase in output supply. 0 b} None of the answers are correct 0 c} a decrease in output demand and an increase in output supply. 0 d) a decrease in output demand and a decrease in output supply. 0 e) an increase in output demand and a decrease in output supply. Question 10 (2 points) When there is a temporary increase in total factor productivity. 0 a) labour demand increases and output supply decreases. O b} labour demand increases and output demand increases. 0 :1 None of the answers are correct 0 d) labour demand decreases and output supply decreases. 0 e) labour demand increases and output supply increases