Question

0. For the questions use the following scenario:
   Consider an economy that abides by the standard classical model specifications. Suppose policy makers have decided to allow a large number of new immigrants to enter the country and join the workforce.

0. In the labor market, we would expect to see

1. A. a leftward shift in labor demand

2. B. a rightward shift in labor demand

3. C. a leftward shift in labor supply

4. D. a rightward shift in labor supply

0. For the production function, we would expect

P
• Y = AKαN1−α

P • Y = AKαN1−α

A. an upward shift in the production function
B. a downward shift in the production function
C. no shift, only move up the production function

D. no shift, only move down the production function

In the AS/AD space, we would expect to see

A. higher prices and higher output.

B. lower prices and lower output

C. higher prices and lower output

D. lower prices and higher output

Which of the following would be false?

A. Private savings increase.

B. Public savings increase.
C. Equilibrium investment increases.

D. Equilibrium savings increases.
E. None of the above.

Which of the following are true?
A. Real wages and interest rates rise.

B. Real wages and interest rates fall.
C. Real wages rise and interest rates fall.

D. Real wages fall and interest rates rise.

Which of the following are true?
A. Tax revenue increases due to higher income.
B. Higher prices shift aggregate supply to the right.

C. Lower prices shift aggregate demand to the right.

D. Consumption falls due to higher interest rates.

E. None of the above.

Answer 1

In the labor market, we would expect to see

D. Rightward shift in labour supply

For the production function, we would expect

P
• Y = AKαN1−α

P • Y = AKαN1−α

A. an upward shift in the production function

In the AS/AD space, we would expect to see

D. lower prices and higher output

Which of the following would be false?

E. None of the above.

Which of the following are true?

B. Real wages and interest rates fall.

Which of the following are true?

E. None of the above.