miceconomic 2

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Short Essay Question

1) List three of the key business cycle facts, and explain their significance.

2) List two components of GDP, and discuss the regularities in comovements of these components of GDP with real GDP itself.

3) Explain why optimization by the consumer should imply that the marginal rate of substitution of leisure for consumption is equal to the market real wage.

4) What will a consumer do if dividend income falls?

5) What will a consumer do if the real wage falls?

6) What is the effect of a decrease in total factor productivity on the firm’s labor demand decision?

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