Consider a person who like consumption (C) and dislikes labor (N) in this way: U = ln(C) – N  This is a one-period model of course.  The person gets to consume by earning wages and by getting a “national dividend” (D) from the government. To keep it simple, we’ll assume that one hour of work yields an one extra unit of the consumption good.  C = N + D This person maximizes utility subject to the above budget constraint. Question: For this person, if the national dividend (D) rises by one unit, how much does total consumption (C) change as a result? In other words, what is dC*/dD for this person?  Answer with a number. If you think dC*/dD is 7, write 7. 

In the modern U.S., the central bank can directly control the monetary base (MB). 

Kling emphasizes that “Specialization and Trade” are the province of only a small minority of participants in the economy. 

In his theoretical work with Kydland, Ed Prescott found that business fluctuations (a.k.a. “business cycles) were a normal part of a fully real economy. 

In Androvia, output is made using this Cobb-Douglas production function: Y = 7K0.4 What is the marginal product of capital in Androvia? 

Consider a Baby Solow economy where TFP = 1, capital starts off at K0=1000, the savings rate is 50%, and the annual depreciation rate of capital is 10%. What is the steady-state capital stock? 

Robert Lucas, in “Econometric Policy Evaluation: A Critique,” contended that the best way to predict the effect of a tax cut on consumption was to look at the historical relationship between consumption and income. 

Consider an economy where all output (Y) is either consumer goods (C) or investment goods (I) . If income (Y) varies a lot from year to year, and people try to live according the permanent income hypothesis (PIH), which category of output will tend to be more volatile? 

According to GLS’s discussion of productivity accounting results, what’s the most important driver of GDP per capita differences across countries?  Cross-country differences in…

Which is surely true in the Augmented Solow Model’s steady state?