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Macroeconomics, Cdn. 4e (Williamson)

Chapter 5 A Closed-Economy One-Period Macroeconomic Model
1) An economy that has no interaction with the rest of the world is called
A) an isolated economy.
B) a closed economy.
C) a parochial economy.
D) a rogue nation.
E) an interdependent economy.
Answer: B
Type: MC Page Ref: P. 129
2) An economy that engages in international trade is called

A) a cooperative economy.
B) a modern economy.
C) an engaged economy.
D) an open economy.
E) an independent economy.
Answer: D
3) Goods and services provided by the government are called

A) government goods.
B) public goods.
C) free goods.
D) social goods.
E) national goods.
Answer: B
4) An example of a public good is

A) national defence
B) transfer payments
C) government pension payments
D) both A) and C)
Answer: A
1
© 2013 Pearson Education Canada
Type: MC Page Ref: P.130, 161
5) In an economic model, an exogenous variable is

A) a stand-in for more complicated variables.
B) determined by the model itself.
C) determined outside the model.
D) a variable that has no effect on the workings of the model.
E) closely linked to a closed economy.
Answer: C
2
6) In an economic model, an endogenous variable is
A) a stand-in for more complicated variables.
B) determined by the model itself.
C) determined outside the model.
D) a variable that has no effect on the workings of the model.
E) closely linked to a closed economy.
Answer: B
7) In an economic model, government spending is assumed to be

A) endogenous.
B) exogenous.
C) not included in a closed economy.
D) not included in an open economy.
E) only an public goods.
Answer: B
8) In a one-period model, government is likely to run

A) a deficit but not a surplus.
B) a surplus but not a deficit.
C) either a surplus or a deficit.
D) neither a surplus nor a deficit.
E) on a fiscal year basis.
Answer: D
9) In a one-period economic model, the government budget constraint requires that government
spending
A) = taxes + transfers.
B) = taxes + borrowing.
C) > 0.
D) = taxes.
E) taxes + transfers + borrowing.
Answer: D
10) Fiscal policy refers to a government's choices over its

A) expenditures, taxes, transfers, and borrowing.
B) expenditures, taxes, issuance of money, and borrowing.
C) expenditures, foreign affairs, issuance of money, and borrowing.
D) issuance of money, taxes, environmental regulations, and foreign affairs.
E) changing the money supply, defense, and borrowing.
Answer: A
3
11) In an economic model,
A) endogenous variables determine exogenous variables.
B) exogenous variables determine endogenous variables.
C) the government budget constraint determines exogenous variables.
D) fiscal policy determines endogenous variables.
E) endogenous and exogenous variables are determined simultaneously.
Answer: B
12) Making use of an economic model is a process of

A) solving hundreds of simultaneous equations.
B) running experiments to determine how changes in the endogenous variables will change the
exogenous variables.
C) running experiments to determine how changes in the exogenous variables will change the
endogenous variables.
D) resolving inconsistencies in the actions of economic agents.
E) determining how a closed economy is linked to an open economy.
Answer: C
13) A competitive equilibrium is a state of affairs in which

A) markets clear, and output is maximized.
B) output is maximized, and all agents are equally well-off.
C) all agents are equally well-off and agents are price-takers.
D) agents are price-takers, and markets clear.
E) output and total factor productivity are maximized.
Answer: D
14) Examples of exogenous variables include

A) real wages, consumption, and taxes.
B) real wages, aggregate output, and labour demand.
C) government spending, total factor productivity, and capital stock.
D) labour supply and labour demand.
E) consumption, government spending and capital stock.
Answer: C
15) In the one-period competitive model we have been studying,

A) both consumption and total factor productivity are exogenous.
B) consumption is exogenous and total factor productivity is endogenous.
C) consumption is endogenous and total factor productivity is exogenous.
D) both consumption and total factor productivity are endogenous.
E) consumption and taxes are exogenous.
Answer: C
4
16) In the production function, output is given by
A) consumption and taxes.
B) consumption and government spending.
C) capital stock and employment.
D) capital stock and leisure.
E) production technology and the capital stock.
Answer: C
17) A relationship that shows the technological possibilities for an economy as a whole is called a
A) production function.
B) utility possibilities frontier.
C) production possibilities frontier.
D) budget constraint.
E) competitive equilibrium.
Answer: C
18) The production possibilities frontier in the one-period model is a

A) behavioural relationship between consumption and leisure.
B) behavioural relationship between consumption and government spending.
C) technological relationship between consumption and leisure.
D) technological relationship between consumption and government spending.
E) technological relationship between consumption and the capital stock.
Answer: C
19) The rate at which one good can be converted technologically into another is called
A) the marginal rate of transformation.
B) the marginal rate of substitution.
C) the marginal product of labour.
D) rate of conversion.
E) the marginal product of capital.
Answer: A
20) Points on the production possibilities frontier have the property that they
A) are inherently unattainable.
B) show the maximum amount of leisure that can be consumed for given amounts of goods consumed.
C) show the maximum amount of goods that can be consumed for given amounts of government
spending.
D) show the maximum amount of leisure that can be consumed for given amounts of hours worked.
E) show the maximum amount of goods that can be consumed in a competitive equilibrium.
Answer: B
5
21) A competitive equilibrium has the following property:
A) = slope of PPF.
B) = PPF.
C) = MPN.
D) = t.
E) MRSl,c = TFP.
Answer: C
22) The marginal rate of transformation is

A) the rate at which hours worked can be converted into an economy's capital stock.
B) - (slope of the PPF).
C) equivalent to the marginal rates of substitution.
D) is derived from the marginal product of labour.
E) is equal to the wage rate ∗ TFP.
Answer: B
23) The marginal rate of transformation is equal to

A) marginal product of capital.
B) marginal product of labour.
C) marginal rate of substitution of leisure.
D) marginal rate of substitution for capital.
E) the real wage rate divided by total factor productivity.
Answer: C
24) A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods so
that
A) anyone can be made better off.
B) no one can be made worse off.
C) someone can be made better off without making someone else worse off.
D) someone can be made better off without making everyone else worse off.
E) everyone id made better off.
Answer: C
25) A Pareto optimum is a point that

A) a malevolent dictator would choose.
B) a cooperative coalition of some altruistic consumers would choose.
C) a cooperative coalition of some socially responsible firms would choose.
D) a social planner would choose.
E) is experienced at competitive equilibrium.
Answer: D
6
26) A Pareto optimum requires
A) = slope of PPF.
B) = MPK.
C) = .
D) . = w.
E) MRSL,C = TFP.
Answer: C
27) A Pareto optimum

A) can be found in a closed and open economy.
B) is found where the budget line is tangent to the indifference curve.
C) is the same as a competitive equilibrium.
D) is where the consumption line is tangent to the PPF.
E) the slope of the PPF.
Answer: C
Type: MC Page Ref: P. 137-138
28) Much of the writings of Adam Smith are in close agreement with
A) the necessity of trade restrictions.
B) the first fundamental theorem of welfare economics.
C) the second theorem of welfare economics.
D) where competitive equilibrium is.
E) the relationship between the production function and the PPF.
Answer: B
29) The first fundamental theorem of welfare economics states that

A) under certain conditions, a competitive equilibrium is Pareto optimal.
B) a competitive equilibrium is always Pareto optimal.
C) under certain conditions, a Pareto optimum is a competitive equilibrium.
D) a Pareto optimum is always a competitive equilibrium.
E) a Pareto optimum does not have to be a competitive equilibrium.
Answer: A
30) The second fundamental theorem of welfare economics states that

A) under certain conditions, a competitive equilibrium is Pareto optimal.
B) a competitive equilibrium is always Pareto optimal.
C) under certain conditions, a Pareto optimum is a competitive equilibrium.
D) a Pareto optimum is always a competitive equilibrium.
E) a Pareto optimum does not have to be a competitive equilibrium.
Answer: C
7
31) The concept of Pareto optimality is a
A) utopian concept.
B) useful concept because it guarantees economic equality.
C) useful concept because it guarantees economic efficiency.
D) useful concept that carefully balances a society's desires for equality and efficiency.
E) useful concept because it guarantees economic equity.
Answer: C
32) A competitive equilibrium may fail to be Pareto optimal due to

A) inequality.
B) externalities.
C) social efficiency.
D) profit maximizing firms..
E) government intervention.
Answer: B
33) An externality is any activity for which an individual firm or consumer does not take into account all
A) of the ramifications of its actions on others.
B) associated costs.
C) associated benefits.
D) associated costs and benefits.
E) negative impacts on the economy.
Answer: D
34) Immunization from communicable diseases generate

A) overproduction.
B) a Pareto optimum.
C) the provision of public goods.
D) negative externalities.
E) positive externalities.
Answer: E
35) An example of a negative externality is

A) a chemical factory dumping waste in a river upstream from a popular fishing spot.
B) a chemical factory that enters a town and bids up wages, and, therefore, increases the cost of other
firms.
C) a chemical factory producing fertilizers that kills plants, rather than help them as advertised.
D) a chemical factory producing fertilizers that do not, in fact, help plants grow.
E) a chemical factory that conducts research into the safe disposal if chemicals.
Answer: A
8
36) The presence of a distorting tax on wage income can result in
A) < .
B) < .
C) < w.
D) < MPN.
E) MRSL,C = MPN.
Answer: D
37) Relative to the social optimum, monopoly power directly leads to

A) underproduction.
B) overproduction.
C) too much leisure.
D) too little leisure.
E) social efficiency.
Answer: A
38) The real wage is determined by

A) the competitive equilibrium.
B) -(slope of PPF).
C) +(slope of indifference curve)
D) the marginal product of capital.
E) the marginal rate of transformation.
Answer: B
39) An increase in government spending shifts the PPF

A) upward, but does not change its slope.
B) upward, and also changes its slope.
C) downward, but does not change its slope.
D) downward, and also changes its slope.
E) downward and also the marginal rate of transformation.
Answer: C
40) An increase in government spending

A) increases consumption, increases hours worked, and increases the real wage.
B) reduces consumption, increases hours worked, and increases the real wage.
C) reduces consumption, increases hours worked, and reduces the real wage.
D) reduces consumption, reduces hours worked, and reduces the real wage.
E) increases consumption, reduces hours worked, and increases the real wage.
Answer: C
9
41) Changes in government spending are not likely causes of business cycles because government
spending induced business cycles would, counterfactually predict
A) countercyclical real wages.
B) procyclical real wages.
C) countercyclical employment.
D) procyclical employment.
E) countercyclical consumption.
Answer: A
42) Changes in government spending are not likely causes of business cycles because government
spending induced business cycles would, counterfactually predict
A) countercyclical consumption.
B) procyclical consumption.
C) countercyclical employment.
D) procyclical employment.
E) countercyclical real wages.
Answer: A
43) An increase in total factor productivity involves

A) a more educated workforce.
B) a reduced real wage.
C) a better technology for converting factor inputs into aggregate output.
D) an increase in the capital stock.
E) more government spending.
Answer: C
44) The experience of the Canadian economy during World War II confirms the prediction that a
dramatic increase in government spending is likely to
A) increase both real GDP and consumption.
B) increase real GDP and decrease consumption.
C) decrease real GDP and increase consumption.
D) decrease both real GDP and consumption.
E) increase real GDP, while keeping consumption constant.
Answer: B
45) An increase in total factor productivity shifts the production function

A) upward and reduces the marginal product of labour.
B) upwards and increases the marginal product of labour.
C) downward and reduces the marginal product of labour.
D) downward and increases the marginal product of labour.
E) downward and also reduces its slope.
Answer: B
10
46) An increase in total factor productivity shifts the production function
A) upward, but does not change its slope.
B) upward, and also changes its slope.
C) downward, but does not change its slope.
D) downward, and also changes its slope.
E) upward, but reduces the marginal product of labour.
Answer: B
47) An increase in total factor productivity

A) increases consumption, increases output, and increases the real wage.
B) reduces consumption, increases output, and increases the real wage.
C) reduces consumption, increases output and reduces the real wage.
D) reduces consumption, reduces output, and reduces the real wage.
E) increases consumption, reduces output, and increases the real wage.
Answer: A
48) In response to an increase in total factor productivity

A) both the substitution effect and the income effect suggest that hours worked should increase.
B) the substitution effect suggests that hours worked should increase, while the income effect suggests
that hours worked should decrease.
C) the substitution effect suggests that hours worked should decrease, while the income effect suggests
that hours worked should increase.
D) both the substitution effect and the income effect suggest that hours worked should decrease.
E) the net effect is a reduction in the welfare of the representative consumer.
Answer: B
49) Changes in total factor productivity are plausible causes of business cycles because productivity-
induced business cycles correctly predict
A) real wages and total hours must be procyclical.
B) real wages and consumption must be procyclical.
C) total hours worked and consumption must be procyclical.
D) consumption and government spending must be procyclical.
E) consumption and total factor productivity must be procyclical.
Answer: B
50) Real business cycle theory argues that the primary cause of business cycles is fluctuations in
A) preferences.
B) government spending.
C) the importance of externalities.
D) total factor productivity.
E) monetary shocks.
Answer: D
11
51) Intertemporal substitution of labour suggests that
A) the substitution effect of a permanent increase in the real wages is larger than the substitution effect
of a temporary change in the real wage.
B) the substitution effect of a permanent increase in the real wages is smaller than the substitution effect
of a temporary change in the real wage.
C) the substitution effect of a permanent increase in the real wages is equal to the substitution effect of a
temporary change in the real wage.
D) hours worked are not affected by changes in real wages.
E) in the short run, the substitution effect of an increase in the real wage does not outweigh the income
effect.
Answer: B
52) The Solow residual attempts to measure changes in

A) the impact of government spending on aggregate output.
B) total factor productivity.
C) changes in preferences for consumption versus leisure.
D) output produced above and beyond wage and dividend income.
E) changes in preferences for work versus leisure.
Answer: B
53) The widening productivity gap between Canada and the United States is largely explained by
A) superior technological innovation in the United States.
B) high oil prices in the 1980s.
C) growth in Canada was concentrated in low-productivity sectors.
D) higher taxes in Canada.
E) government policy.
Answer: A
54) The Laffer Curve illustrates the relationship between

A) the income effect and the substitution effect.
B) consumption and taxes.
C) investment and interest rates.
D) total factor productivity and wage rates.
E) tax revenue and income tax rates.
Answer: E
55) According to the Laffer Curve

A) there may exist two tax rates that deliver the same level of tax revenue.
B) lower tax rates always lead to higher tax revenue.
C) higher tax rates always lead to more tax revenue.
D) higher tax rates always lead to less tax revenue.
E) there is a unique tax rate for each level of revenue.
Answer: A
Type: MC Page Ref: P.159
12
56) To choose the optimal level of government expenditures, G*, the government
A) must know the preferences of all consumers over private and public goods
B) needs only to balance the budget as any level of G is Pareto optimal
C) minimize the tax burden
D) must know the preferenes of all consumers and mimimize the tax burden.
E) obtain the correct balance between military spending and social programs.
Answer: A
57) In the model where G = qt, when q increaes, the substitution effect
A) reduces C and increases G.
B) reduces both C and G.
C) decreases G and increases C.
D) increases both C and G.
E) increases C and decreases G.
Answer: A
58) In the model where G = qT, when q increases, the income effect
A) increases both C and G.
B) decreases G and increases C.
C) reduces C and increases G.
D) reduces both C and G.
E) increases C and decreases G.
Answer: A
59) In the model where q, when q increases, government spending, if choosen optimally, should
A) increase.
B) decrease.
C) stay the same.
D) decrease at the same rate as taxes.
E) decrease faster than taxes.
Answer: A
60) According to our model, increasing G during a recession, as the CEAP did,
A) makes the economy worse off, since the equilibrium allocation of resources is Pareto optimal
B) will help the economy recover and increase economic welfare
C) will increase consumption spending by consumers according to the multiplier effect
D) has no effect
E) had a multiplier much greater than one
Answer: A
13
61) What are three reasons for a competitive equilibrium not being Pareto optimal? What two questions
arise from these inefficiencies?
Answer: A competitive equilibrium may not be Pareto optimal because of market failures such as
positive or negative externalities distorting taxes, such as sales taxes, income taxes and property taxes,
which distort decision making, and monopoly power. These inefficiencies beg the question as to why
economists analyze economies that are efficient in that a competitive equilibrium for the economy is
Pareto optimal? The main reason is that economies with inefficiencies behave similarly to an economic
model without inefficiencies. The second question raised deals with whether Adam Smith was off track
when he concluded that unrestricted markets lead to socially efficient outcomes. This is still the
preferred outcome. The inefficiencies lead to government intervention which may cost the economy
more than the gains achieved from correctly these private market failures.
Type: ES Page Ref: P. 139-141
62) When we adjust the model to include consumer preferences over both C and G, the government can
optimally choose government spending. Explain some of the difficulties the government may encounter
in trying to determine G*. Specifically, compare this problem with the one the market solves in
competitive equilibrium in the original model where G is fixed exogenously.
Answer: In principal, the problem the government faces is the same as when G is fixed exogenously. It
needs to set G* so that the consumers' indifference curve is just tanget to the PPF. The primary difficulty
that arises is knowing the preferences of all consumers over C and G. In the market allocation when G is
fixed, however, such knowledge is not required. Individual economic agents respond optimally to
market prices, markets clear, and from the First Welfare Theorem the resulting equilibrium happens to
be Pareto optimal. The market equilibrium does not require anyone other than consumers to have
knowledge of their preferences, which could be difficult for the government to determine.
Type: ES Page Ref: P.161-164
14
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Henry Hotspur, in whose behalfe this may be sayd as followeth.”]
[556]
How Henry Percy Earle of
Northumberland, was for his couetous
and trayterous attempt put to death at
Yorke, Anno 1407.[557]
1.
O morall Senec, true finde I thy saying,

That neither kinne,[558] riches, strength, or fauour,
Are free from fortune, but are aye decaying:
No worldly welth is ought saue doubtfull labour,
Man’s life in earth is like vnto a tabour,
Which nowe to myrth doth mildly men prouoke
And straight to warre, with a more sturdy stroke.
2.
All this full true I Percy finde by proofe,

Which whilom was earle of Northumberland:
And therefore, Baldwine, for my pier’s[559] behoofe,
To note men’s falles sith thou hast tane in hand,
I would thou should my state well vnderstand:
For fewe kinges were more than I redouted,[560]
Whom double fortune lifted vp and louted.
3.
As for my kinne their noblenesse is knowen,

My valiaunt acts were[561] folly for to prayse,
Where through the Scots[562] so oft were ouerthrowen,
That who but I was doubted in my dayes:
And that king Richarde found at all assayes,
For neuer Scots[563] rebelled in his raigne,
But through my force were eyther caught or slayne.
4.
A brother I had was earle of Worcester,

Alwayes in office and fauour[564] with the king,
And by my wife dame Elinor Mortimer,
A sonne I had[565] which so the Scots[566] did sting,
That being yong, and but a very spring,
Henry Hotspur they gaue him vnto name,[567]
And though I say it, hee did deserue the same.
5.
Wee three triumphed in king Richard’s time,

Till fortune ought both him and vs a spite:
But chiefly mee, whome clerely from[568] any crime,
My king did banishe from his fauour quite,
Proclayming mee a trayterous knight:[569]
Where through false slaunder forced mee to bee,
That which before I did most deadly flee.
6.
Let men beware how they true folke defame,

Or threaten on them the blame of vices nought,
For infamy breedeth wrath, wreke followeth shame:
Eke open slannder often times hath brought
That to effect, that erst was neuer thought:
To bee misdeemed men suffer in a sort,
But none can beare the griefe of misreport.
7.
Because my king did shame mee wrongfully,
I hated him and in deede[570] became his foe:
And while hee did at warre in Ireland lye,
I did conspire to turne his weale to woe:
And through the duke of Yorke and other moe,
All royall power from him wee quickely tooke,
And gaue the same to Henry Bolenbroke.
8.
Neither did wee this onely[571] for this cause,

But to say truth, force draue vs to the same:
For hee despising God and all his lawes,
Slewe whome hee would, made sinne a very game:
And seeing neyther age[572] nor counsaile could him
tame,
Wee thought it well done for the kingdome’s sake,
To leaue his rule, that did all rule forsake.
9.
But when sir Henry had attaynde his place,

Hee strayght became in all poynts worse then hee,
Destroyed the peeres, and slewe king Richard’s grace,
Against his othe made to the lordes and mee:
And seeking quarels how to disagree,
Hee shamelesly required mee and my sonne,
To yeelde hym Scots[573] which wee in fielde had
wonne.
10.
My nephue also Edmund Mortimer,

The very heyre apparant to the crowne,
Whome Owen Glendour held as prisoner,
Vilely bound[574] in dungeon deepe cast downe,
Hee would not raunsome, but did felly frowne
Against my brother and mee,[575] which[576] for him
spake,
And him proclaymed traytour for our sake.
11.
This foule despite did cause vs to conspire,

To put him downe as wee did Richard erst,
And that wee might this matter set on fire,
From Owen’s jaile, our coosin wee remerst,
And vnto Glendour all our griefes reherst,
Who made a bond with Mortimer and mee,
To priue the king and part the realme in three.
12.
But when king Henry heard of this deuise,

Toward[577] Owen Glendour hee sped him very quicke,
Mynding by force to stop hur[578] enterprise:
And as the deuill would, than fell I sicke,
Howbeit my brother, and sonne, more polliticke
Than prosperous, with an hoast from Scotland brought,
Encountred him at Shrewesbury, where they fought.
13.
The one was tane and kild, the other slayne,

And shortly after was Owen put to flight,
By meanes whereof I forced was to fayne,
That I knewe nothing of the former fight:
Fraude oft auayles more then doth sturdy might,
For by my faining I brought him in beliefe,
I knewe not that wherein my part was chiefe.
14.
And while the king thus tooke mee for his frend,
I sought all meane my former wrong to wreake,
Which that I might bring to the sooner end,
To the bishop of Yorke I did the matter breake,
And to th’earle marshall likewise did I speake,
Whose father was through Henrie’s cause exiled,
The bishop’s brother with trayterous death defiled.
15.
These strayt assented to doe what they could,

So did the lord Hastings and lord Fauconbridge:
Which altogether promised they would
Set all their power the king’s dayes to abridge:
But see the spite, before the byrdes were flydge
The king had word and seasoned[579] on the nest,
Whereby, alas, my freendes were all opprest.
16.
The bloudy tyrant brought them all to end

Excepted mee, which into Scotland scapt,[580]
To George of Dunbar th’earle of March, my frend,
Who in my cause all that hee could ey scrapt:
And when I had for greater succour gapt,[581]
Both at the Frenchmen and the Fleming’s hand,
And could get none, I tooke such as I fand.
17.
And with the helpe of George my very frend,

I did enuade Northumberland full bolde,
Whereas the folke drewe to mee still on end,[582]
Bent to death my party to vpholde:
Through helpe of these, full many a fort and holde,
The which the king right manfully had mand,
I easely wonne, and seised in my hand.
18.
Not so content (for vengeaunce draue mee on)
I entred Yorkeshire, there to wast and spoile:
But ere I had far in the countrye gone,
The shiriffe thereof, Rafe Rokesby did assoyle
My trobled hoast of much part of our toyle:
For hee assaulting freshly tooke through power,
Mee and lord Bardolph both, at Bramham More.
19.
And thence conueyed vs to the towne of Yorke,

Untill hee knewe what was the kinge’s entent:[583]
There loe lord Bardolph kinder than the storke,
Did lose his head, which was to London sent,
With whome for friendship mine in like case went,
This was my hap my fortune or my faute,
This life I led and thus I came to naught.
20.
Wherefore, good Baldwine, will the peeres take heede,

Of slaunder, malice, and conspiracy,
Of couetise, whence all the rest proceede,
For couetise ioynt with contumacy,
Doth cause all mischiefe in men’s hartes to breede:
And therefore this to esperance my word,
Who causeth bloudshed shall not escape[584] the
sword.[585]
[By that this was ended, I had found out the story of Richard earle
of Cambridge: and because it contained matter in it, though not very
notable, yet for the better vnderstanding of the rest, I thought it
meete to touch it, and therefore saide as followeth: “You haue saide
well of the Percies and fauourably; for in deede, as it should
appeare, the chiefe cause of their conspiracy against king Henry,
was for Edmund Mortimer their cousin’s sake, whome the king very
maliciously proclaymed to haue yeelded him selfe to Owen
coulourably, when, as in deede, hee was taken forcibly against his
will and very cruelly ordered in prison. And seeing wee are in hand
with Mortimer’s matter, I will take vpon mee the person of Richard
Plantagenet, earle of Cambridge, who for his sake likewise died. And
therefore I let passe Edmund Holland, earle of Kent, whome Henry
the fourth made admirall to scoure the seas, because the Britayns
were abroad. Which earle (as many thinges happen in war) was
slaine with an arrowe at the assaulte of Briacke:[586] shortly after
whose death this king died, and his sonne Henry the fift of that
name, succeded in his place. In the beginning of this Henry the fifte’s
raigne, died this Richard, and with him Henry the lord Scrope and
other, in whose behalfe this may bee saide.”]
How Richard Plantagenet[587] Earle of
Cambridge entending the king’s
destruction, was put to death at
Southamton, Anno Dom. 1415.[588]
1.
Haste maketh waste, hath commonly ben sayd,

And secrete mischiefe seelde hath lucky speede:
A murdering minde with proper poyze is wayd,
All this is[589] true, I finde it in[590] my creede:
And therefore, Baldwine, warne all states take heede,
How they conspire any other to betrappe,
Least mischiefe ment, light in the miner’s lappe.[591]
2.
For I lord Richard, heyre Plantagenet,

Was earle of Cambridge and right fortunate,
If I had had the grace my wit to set,
To haue content mee with mine owne estate:
But, O, false honours, breeders of debate,
The loue of you our lewde hartes doth[592] allure,
To leese our selues by seeking you vnsure.
3.
Because my brother Edmund Mortimer,

Whose eldest sister was my wedded wife,
I meane that Edmund that was prisoner
In Walles so long, through Owen’s busie strife,
Because I say that after Edmunde’s life,
His rightes and titles must by lawe bee mine,
For hee ne had, nor could encrease his line.
4.
Because the right of realme and crowne was ours,

I searched meanes to helpe him thereunto:
And where the Henries held it by theyr powres,
I sought a shift their tenures to vndoe,
Which being force, sith force or sleight must doe,
I voide of might, because their powre was strong,
Set priuy sleight against their open wrong.
5.
But sith the death of most part of my kin

Did dashe my hope, through out the father’s dayes
I let it slip, and thought it best begin,
Whan as the sonne should dred least such assaies:
For force through spede, sleight speedeth through
delayes,
And seeld doth treason time so fitly finde,
As whan all daungers most bee out of minde.
6.
Wherefore while Henry, of that name the fifte,

Prepard his army to goe conquere Fraunce,
Lord Scroope and I thought to attempt a drift
To put him downe, my brother to auaunce:
But were it[593] God’s will, my lucke, or his good chaunce
The king wist wholly where about wee went
The night before to shipward hee him bent.
7.
Then were wee straight as traytours apprehended,

Our purpose spied, the cause thereof was hid,
And therefore, loe a false cause wee pretended,
Where through my brother was fro daunger rid:
Wee sayd, for hire of[594] French kinge’s coyne wee did
Behight to kill the king: and thus with shame
Wee staind our selues, to saue our frend fro blame.
[595]
8.
When wee had thus confest so foule a treason,

That wee deserued, wee suffered by the lawe:
See, Baldwine, see, and note (as it is reason)
How wicked deedes to woefull endes doe drawe:
All force doth faile, no craft is worth a strawe
To attayne thinges lost, and therefore let them goe,
For might ruleth[596] right, and will though truth[597] say
no.[598]
[Whan stout Richarde had stoutely sayd his minde: “Belike,”
sayd[599] one, “this Richard was but a litle man, or els litle fauoured
of the[600] writers, for our cronicles speake very litle of him. But
seeing wee be come nowe to king Henrie’s voyage into Fraunce, we
cannot lacke valiaunt men to speake of, for among so many as were
led and sent by the king out of this realme thyther, it cannot be
chosen but some, and that a great somme were slayne among them:
wherefore to speake of them all, I thinke not needefull. And therefore
to let passe Edwarde duke of Yorke, and the earle of Suffolke,
slayne both at the battayl of Agïncourt, as were also many other, let
vs end the time of Henry the fift, and come to his sonne Henry the
sixt: whose nonage brought Fraunce and Normandy out of bondage,
and was cause that so[601] few of our noble men died aged: of
whome to let passe the nombre, I will take vpon mee the person of
Thomas Montague, earle of Salisbury, whose name was not so good
at home (and yet hee was called the good earle) as it was dreadful
abroade: who exclayming vpon the mutability of fortune may iustly
say[602] in maner as followeth.”]
How Thomas Montague Earle[603] of
Salisbury in the middest of his glory,
was chaunceably slayne at
Orleaunce[604] with a piece of
ordinaunce, the 3. of Nouember, Anno
1428.[605]
1.
What fooles bee we to trust vnto our strength,

Our wit, our courage, or our noble fame,
Which time it selfe must nedes deuour at length,
Though froward fortune could not foile the same:
But seeing this goddesse guideth all the game,
Which still to chaunge doth set her onely lust,
Why toyle wee so for thinges so harde to trust?
2.
A goodly thing it is, surely, good report,[606]

Which noble hartes doe seeke by course of kinde:
But seeing[607] the date so doubtfull and so short,
The way so rough whereby wee doe it finde,
I cannot choose but prayse the princely minde
That preaseth for it, though wee finde opprest,
By foule defame, those that deserue it best.
3.
Concerning whome, marke, Baldwine, what I say,
I meane the vertuous, hindred of their brute,
Among which nombre reckon well I may
My valiaunt father Iohn lord Montacute,
Who lost his life I iudge through[608] iust pursute:
I say the cause and not the casuall speede
Is to be wayed, in euery kinde of deede.
4.
This rule obserued, how many shall wee finde

For vertue’s sake with infamy opprest?
How many[609] againe, through helpe of fortune blinde,
For ill attemptes atchieued, with honour blest?
Successe is worst oftimes whan cause is best:
Therefore, say I, God send them sory haps,
That iudge the causes by their afterclaps.
5.
The end in deede is iudge of euery thing,

Which is the cause or latter poynt of time:
The first true verdict at the first may bring,
The last is slow, or slipper as the slime,
Oft chaunging names of innocence and crime:
Duke Thomas’ death was justice two yeares long,
And euer since, sore tyranny and wrong.
6.
Wherefore, I pray thee, Baldwine, way the cause,

And prayse my father as hee doth deserue?
Because earle Henry, king agaynst all lawes,
Endeuoured king Richard for to starue
In iayle, whereby the regall crowne might swarue
Out of the line to which it than was due,
(Whereby God knowes what euill might ensue.)
7.
My lord Iohn Holland, duke of Excester,

Which was deare cosin to this wretched king,
Did moue my father, and the earle[610] of Glocester,
With other lordes to ponder well the thing:
Who seeing the mischiefe that began to spring,
Did all consent this Henry to depose,
And to restore king Richard to the rose.
8.
And while they did deuise a prety trayne,

Whereby to bring their purpose better[611] about,
Which was in maske this Henry to haue slaine,
The duke of Aumerle blew their counsaile out:
Yet was their purpose good there is no doubt:
What cause can bee more worthy for a knight,
Than saue his king, and helpe true heyres to right?
9.
For this with them my father was destroyde,

And buried in the dunghill of defame:
Thus euill chaunce their glory did auoide,
Whereas theyr cause doth claime eternall fame:
Whan deedes therefore vnluckely doe frame,
Men ought not iudge the aucthors to bee naught,
For right through might is often oueraught.
10.
And God doth suffer that it should bee so,

But why, my wit is feeble to decise,
Except it bee to heape vp wrath[612] and wo
On wicked heades that iniuries deuise:
The cause why mischiefes many times arise,
And light on them that would men’s wronges redresse,
Is for the rancour that they beare, I gesse.
11.
God hates[613] rigour though it furder right,

For sinne is sinne, how euer it bee vsed:
And therefore suffereth shame and death to light,
To punishe vice, though it bee well abused:
Who furdereth right is not thereby excused,
If through the same hee doe some other wrong:
To euery vice due guerdon doth belong.
12.
What preach I now, I am a man of warre,

And that my body[614] I dare say doth professe,
Of cured woundes beset with many a skarre,
My broken jaw vnheald can say no lesse:
O fortune, fortune, cause of all distresse,
My father had great cause thy fraud to curse
But much more I, abused ten times worse.
13.
Thou neuer flatteredst him in all thy[615] life,

But mee thou dandledst like thy[616] darling deare:
Thy giftes I found in euery corner rife,
Where euer[617] I went I met thy smiling cheare:
Which was not for a day or for a yeare,
But through the raygne of three right worthy kinges,
I found thee forward in all kinde of thinges.
14.
The while king Henry conquered in Fraunce

I sued the warres and still found victory,
In all assaultes, so happy was my chaunce,
Holdes yeelde or won did make my enemies sory:
Dame Prudence eke augmented so my glory,
That in all treaties euer I was one,
Whan weyghty matters were agreed vpon.
15.
But when this king this mighty conquerour,

Through death vnripe was both his realmes bereft,
His seely infant did receiue his power,
Poore litle babe full yong in cradell left,
Where crowne and scepter hurt him with the heft,
Whose worthy vncles had the gouernaunce,
The one at home, the other abroad in Fraunce.
16.
And I which was in peace and warre well skilled,[618]

With both these rulers greately was esteemed:
Bare rule at home as often as they willed,
And fought in Fraunce whan they it needefull deemed,
And euery where so good my seruice seemed,
That English men to mee great loue did beare,
Our foes the French, my force fulfilled with feare.
17.
I alwayes thought it fitly for a prince,

And such as haue the regiment of realmes,
His subiecte’s hartes with mildnes to conuince,
With justice mixt, auoyding all extreames:
For like as Phœbus with his cherefull beames,
Doth freshly force the fragrant flowres to florish,
So ruler’s mildnes subiect’s loue doth norish.[619]
18.
This found I true: for through my milde behauiour,
Their hartes I had with mee to liue and die,
And in their speach bewrayer of[620] theyr fauour,
They cald mee still good earle of Salisbury,[621]
The lordes confest the[622] commons did not lye:
For vertuous life, free hart, and lowly minde,
With high and lowe shall alwayes fauour finde.
19.
Which vertues chiefe become a man of warre,

Whereof in Fraunce I found experience:
For in assautes due mildnes passeth farre
All rigour, force, and sturdy violence:
For men will stoutly sticke to their defence,
When cruell captaines couet after spoile,[623]
And so enforst, oft geue theyr foes the foile.
20.
But when they knowe they shal be frendly vsed,

They hazard not their heades but rather yeelde:
For this my offers neuer were refused
Of any towne, or surely very seelde:
But force and furies fyt bee for the fielde,
And there in deede I vsed so the same,
My foes would flye if they but[624] heard my name.
21.
For whan lord Steward and earle Vantadore

Had cruelly besieged Crauant towne,
Which we[625] had wonne, and kept long time before
Which lieth in Awxer on the riuer Youne,
To raise the siege the regent sent mee downe:[626]
Where, as I vsed all rigour that I might,
I killed all that were not saued by flight.
22.
When th’erle of Bedford, then in Fraunce lord regent,

Knewe in what sort I had remoued the siege,[627]
In Brye and Champayne hee made mee vicegerent,
And lieutenaunt for him and for my liege:
Which caused mee to goe[628] to Brye, and there besiege
Mountaguillon with twenty weekes assaut,
Which at the last was yeelded mee for naught.[629]
23.
And for the duke of Britayne’s brother, Arthur,

Both earle of Richmond and of Yuery,
Against his oth from vs had made departure,
To Charles the Dolphin our chiefe enemy,
I with the regent went to Normandy,
To take his towne of Yuery which of spight,
Did to vs daily all the harme they might.
24.
They at the first compounded by a day

To yeelde, if rescues did not come before,
And while in hope to fight, wee at it lay,
The dolphin gathered men two thousand score,
With earles, lordes,[630] and captaynes ioly store:
Of which the duke of Alanson was guide,
And sent them downe to see if wee would bide.
25.
But they left vs, and downe to Vernoyle went,

And made their vaunt they had our army slayne,
And through that lye, that towne from vs they hent,
Which shortly after turned to their payne:
For there both armies met vpon the plaine:
And wee eight thousand, whom they [flew, not] slew
before,
Did kill of them, ten thousand men and more.
26.
When wee had taken Vernoyle thus againe,

To driue the Dolphin vtterly out of Fraunce,[631]
The regent sent mee to Aniovy[632] and to Mayne,
Where I besieged the warlike towne of Mawns:
There lord of Toyser’s, Baldwin’s valiaunce
Did well appeare, which would not yeelde the towne,
Till all the towres and walles were battered downe.
27.
But here now, Baldwine, take it in good part,

Though that I brought this Baldwine there to yeelde,
The lyon fearce for all his noble hart,
Being ouer matched, is forst to flye the fielde:[633]
If Mars himselfe there had ben with his shielde,
And in my stormes had stoutly mee withstood,
Hee should haue yeeld, or els haue shed my bloud.
28.
This worthy knight both hardy, stout, and wise,

Wrought well his feat: as time and place require,
When fortune failes, it is the best aduise
To strike the sayle, least all lye in the mire:
This haue I sayd to th’end thou take no ire,
For though no cause bee found, so nature frames,
Men haue a zeale to such as beare theyr names.
29.
But to retourne, in Mayne wan I at length,

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Test Bank for Macroeconomics Fourth Canadian Edition

Canadian 4th Edition Williamson 0321733975

Macroeconomics, Cdn. 4e (Williamson)

2) An economy that engages in international trade is called

3) Goods and services provided by the government are called

4) An example of a public good is

5) In an economic model, an exogenous variable is

7) In an economic model, government spending is assumed to be

8) In a one-period model, government is likely to run

10) Fiscal policy refers to a government's choices over its

12) Making use of an economic model is a process of

13) A competitive equilibrium is a state of affairs in which

14) Examples of exogenous variables include

15) In the one-period competitive model we have been studying,

18) The production possibilities frontier in the one-period model is a

22) The marginal rate of transformation is

23) The marginal rate of transformation is equal to

25) A Pareto optimum is a point that

27) A Pareto optimum

29) The first fundamental theorem of welfare economics states that

30) The second fundamental theorem of welfare economics states that

32) A competitive equilibrium may fail to be Pareto optimal due to

34) Immunization from communicable diseases generate

35) An example of a negative externality is

37) Relative to the social optimum, monopoly power directly leads to

38) The real wage is determined by

39) An increase in government spending shifts the PPF

40) An increase in government spending

43) An increase in total factor productivity involves

45) An increase in total factor productivity shifts the production function

47) An increase in total factor productivity

48) In response to an increase in total factor productivity

52) The Solow residual attempts to measure changes in

54) The Laffer Curve illustrates the relationship between

55) According to the Laffer Curve

O morall Senec, true finde I thy saying,

All this full true I Percy finde by proofe,

As for my kinne their noblenesse is knowen,

A brother I had was earle of Worcester,

Wee three triumphed in king Richard’s time,

Let men beware how they true folke defame,

Neither did wee this onely[571] for this cause,

But when sir Henry had attaynde his place,

My nephue also Edmund Mortimer,

This foule despite did cause vs to conspire,

But when king Henry heard of this deuise,

The one was tane and kild, the other slayne,

These strayt assented to doe what they could,

The bloudy tyrant brought them all to end

And with the helpe of George my very frend,

And thence conueyed vs to the towne of Yorke,

Wherefore, good Baldwine, will the peeres take heede,

Haste maketh waste, hath commonly ben sayd,

For I lord Richard, heyre Plantagenet,

Because my brother Edmund Mortimer,

Because the right of realme and crowne was ours,

But sith the death of most part of my kin

Wherefore while Henry, of that name the fifte,

Then were wee straight as traytours apprehended,

When wee had thus confest so foule a treason,

What fooles bee we to trust vnto our strength,

A goodly thing it is, surely, good report,[606]

This rule obserued, how many shall wee finde