Intermediate Macroeconomics I
Economics
(1) Multiple Choice Questions
Consider the static equilibrium model in Chapter 5:
Production function: Y=zKN
Utility function: U=min[C,al]
Moreover, K=2,z=1,G=2,h=10,a=1
1. What is the PPF and the MRT?
(a) C=18-2l and 2
(b) C=18-2l and 1
(c) C=20-l and 2
(d) C=20-l and 1
2. Suppose the utility parameter โaโ increases from 1 to 4, what is the effect on
employment?
(a) Increases from 4 to 5
(b) Increases from 4 to 6
(c) Increases from 3 to 6
(d) Increases from 4 to 7
3. Suppose the utility parameter โaโ increases from 1 to 4, what is the effect on
the utility level?
(a) Increases from 6 to 10
(b) Increases from 6 to 12
(c) decreases from 10 to 6
(d) decreases from 12 to 6
4. Suppose the utility parameter โaโ increases from 1 to 4, what is the effect on
the wage rate?
(a) Increases
(b) decreases
(c) unchanged
(d) none of the above
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