Question 1

Which of the following is believed to cause recent increases in wage inequality?

Accepted Answer

A)  Skill- biased technological progress. 
B)  International trade. 
C)  The weakening of trade unions. 
D)  Both A and C. 
E)  Both B and C. 
A)  Skill- biased technological progress. 
B)  International trade. 
C)  The weakening of trade unions. 
D)  Both A and C. 
E)  Both B and C. D

Question 2

Suppose the aggregate production function is represented by Y = AN. Which of the following expressions represents the number of additional workers required to increase production by one unit?

Accepted Answer

A)  1/A. 
B)  1/N. 
C)  1/Y. 
D)  A. 
E)  Y/N. 
A)  1/A. 
B)  1/N. 
C)  1/Y. 
D)  A. 
E)  Y/N. A

Question 3

Assume that expectations of productivity growth adjust slowly over time. For this economy, a decrease in productivity will most likely cause which of the following to occur?

Accepted Answer

A)  An increase in the natural rate of unemployment. 
B)  A decrease in the markup over labour costs. 
C)  An increase in the markup over labour costs. 
D)  A decrease in the natural rate of unemployment. 
E)  A decrease in the real wage. 
A)  An increase in the natural rate of unemployment. 
B)  A decrease in the markup over labour costs. 
C)  An increase in the markup over labour costs. 
D)  A decrease in the natural rate of unemployment. 
E)  A decrease in the real wage. A

Question 4

Suppose workers expectations of prices and productivity are accurate. For this economy, an increase in productivity will cause which of the following?

Accepted Answer

A)  An increase in both the real wage and the natural rate of unemployment. 
B)  A decrease in both the real wage and the natural rate of unemployment. 
C)  An increase in the real wage and no change to the natural rate of unemployment. 
D)  An increase in the real wage and a decrease in the natural rate of unemployment. 
E)  A decrease in the real wage and an increase in the natural rate of unemployment. 
A)  An increase in both the real wage and the natural rate of unemployment. 
B)  A decrease in both the real wage and the natural rate of unemployment. 
C)  An increase in the real wage and no change to the natural rate of unemployment. 
D)  An increase in the real wage and a decrease in the natural rate of unemployment. 
E)  A decrease in the real wage and an increase in the natural rate of unemployment.

Question 5

A major explanation for the decline in employment in the textiles industry in Australia is:

Accepted Answer

A)  shifts in production toward low- wage countries. 
B)  inaccurate expectations about the price level. 
C)  increases in income. 
D)  inaccurate expectations about productivity growth. 
E)  social problems in Australia. 
A)  shifts in production toward low- wage countries. 
B)  inaccurate expectations about the price level. 
C)  increases in income. 
D)  inaccurate expectations about productivity growth. 
E)  social problems in Australia.

Question 6

What are the three explanations researchers have offered for why China's transition from a planned economy to a market- oriented one is smoother than central and eastern European countries.

Accepted Answer

The first is the cultural explanation. O

Question 7

In recent years in Australia, relative wages of the least educated workers:

Accepted Answer

A)  have decreased, but by less than the relative wages of university- educated workers. 
B)  have increased faster than the relative wages of university- educated workers. 
C)  have decreased at about the same rate as the relative wages of university- educated workers. 
D)  have decreased, while the relative wages of university- educated workers also decreased. 
E)  have increased, but by less than the relative wages of university- educated workers. 
A)  have decreased, but by less than the relative wages of university- educated workers. 
B)  have increased faster than the relative wages of university- educated workers. 
C)  have decreased at about the same rate as the relative wages of university- educated workers. 
D)  have decreased, while the relative wages of university- educated workers also decreased. 
E)  have increased, but by less than the relative wages of university- educated workers.

Question 8

Employment growth will increase as a result of an increase in productivity when which of the following occurs?

Accepted Answer

A)  The AS curve shifts downward. 
B)  The AS curve shifts downward and the AD curve shifts to the right. 
C)  Output growth exceeds productivity growth. 
D)  The AD curve shifts to the right. 
E)  Productivity growth exceeds output growth. 
A)  The AS curve shifts downward. 
B)  The AS curve shifts downward and the AD curve shifts to the right. 
C)  Output growth exceeds productivity growth. 
D)  The AD curve shifts to the right. 
E)  Productivity growth exceeds output growth.

Question 9

Employment will remain constant as a result of an increase in productivity when which of the following occurs?

Accepted Answer

A)  Productivity growth exceeds output growth. 
B)  Productivity growth is equal to output growth. 
C)  Output growth exceeds productivity growth. 
D)  The AS curve shifts downward. 
E)  The AD curve shifts to the right. 
A)  Productivity growth exceeds output growth. 
B)  Productivity growth is equal to output growth. 
C)  Output growth exceeds productivity growth. 
D)  The AS curve shifts downward. 
E)  The AD curve shifts to the right.

Question 10

Assume that expectations of P and A are correct. Now suppose that there is a 4% increase in A. Given this
Information, which of the following will occur?

Accepted Answer

A)  The PS relation will shift up by 4%. 
B)  The PS relation will shift up by less than 4%. 
C)  The WS relation will shift down by 4%. 
D)  The PS relation will shift down by 4%. 
E)  The WS relation will shift up by less than 4%. 
A)  The PS relation will shift up by 4%. 
B)  The PS relation will shift up by less than 4%. 
C)  The WS relation will shift down by 4%. 
D)  The PS relation will shift down by 4%. 
E)  The WS relation will shift up by less than 4%.

Question 11

An increase in productivity will cause which of the following according to the price- setting behaviour of firms?

Accepted Answer

A)  An increase in the markup set by firms. 
B)  An increase in the level of employment protection set by the government. 
C)  An increase in the prices set by firms. 
D)  An increase in the minimum wage paid by firms. 
E)  An increase in the real wage paid by firms. 
A)  An increase in the markup set by firms. 
B)  An increase in the level of employment protection set by the government. 
C)  An increase in the prices set by firms. 
D)  An increase in the minimum wage paid by firms. 
E)  An increase in the real wage paid by firms.

Question 12

Assume that expectations of productivity growth adjust slowly. Now, suppose that there is a 4% increase in productivity. Explain how this 4% increase in productivity can cause changes in the unemployment rate.

Accepted Answer

The PS curve shifts up as productivity g

Question 13

Assume that the aggregate production function is represented by Y = AN. Which of the following represents the marginal cost of producing an additional unit of output?

Accepted Answer

A)  (1 + 
A) W. 
B)  W/A. 
C)  A/W. 
D)  1/W. 
E)  W. 
A)  (1 + 
A) W. 
B)  W/A. 
C)  A/W. 
D)  1/W. 
E)  W.

Question 14

Assume that the aggregate production function is represented by Y = AN. Which of the following represents the price- setting relation for this economy?

Accepted Answer

A)  W/P. 
B)  (1 + m)W. 
C)  W/A. 
D)  (1 + m)(W/
A) . 
E)  (1 + m)(A/W). 
A)  W/P. 
B)  (1 + m)W. 
C)  W/A. 
D)  (1 + m)(W/
A) . 
E)  (1 + m)(A/W).

Question 15

Assume an economy experiences, for a given period, a 4% increase in output and a 2% increase in productivity. Given this information, we know that which of the following occurred for this economy during this economy?

Accepted Answer

A)  The employment growth rate is negative during this period. 
B)  The effects on employment are ambiguous. 
C)  Employment has increased during this period. 
D)  Employment has decreased during this period. 
E)  Employment has not changed during this period. 
A)  The employment growth rate is negative during this period. 
B)  The effects on employment are ambiguous. 
C)  Employment has increased during this period. 
D)  Employment has decreased during this period. 
E)  Employment has not changed during this period.

Question 16

A decrease in productivity will cause which of the following to occur in the labour market model?

Accepted Answer

A)  Both the wage- setting and price- setting curves to shift upward. 
B)  The wage- setting curve to shift downward, and the price- setting curve to shift upward. 
C)  Both the wage- setting and price- setting curves to shift downward. 
D)  The wage- setting curve to shift upward, and the price- setting curve to shift downward. 
E)  The price- setting curve to shift downward, and no shift in the wage- setting curve. 
A)  Both the wage- setting and price- setting curves to shift upward. 
B)  The wage- setting curve to shift downward, and the price- setting curve to shift upward. 
C)  Both the wage- setting and price- setting curves to shift downward. 
D)  The wage- setting curve to shift upward, and the price- setting curve to shift downward. 
E)  The price- setting curve to shift downward, and no shift in the wage- setting curve.

Question 17

In recent years, the increasing relative wage of skilled labour has been mostly due to:

Accepted Answer

A)  government laws promoting the hiring of skilled labour. 
B)  government subsidies provided to college students. 
C)  a decrease in the supply of, and increase in the demand for, skilled labour. 
D)  an increase in the demand for skilled labour that exceeds the increase in supply. 
E)  a decrease in the supply of skilled labour that exceeds the decrease in demand. 
A)  government laws promoting the hiring of skilled labour. 
B)  government subsidies provided to college students. 
C)  a decrease in the supply of, and increase in the demand for, skilled labour. 
D)  an increase in the demand for skilled labour that exceeds the increase in supply. 
E)  a decrease in the supply of skilled labour that exceeds the decrease in demand.

Question 18

Suppose an economy experiences a decrease in productivity. Explain both the short- run and medium- run effects of this productivity decrease on output, employment, and the unemployment rate.

Accepted Answer

In the short run, the fall in productivi

Question 19

Explain how technological change can cause changes in wage inequality.

Accepted Answer

If the technological progress favours sk

Question 20

Since the early 1980s in Australia, which group of workers has experienced decreasing relative wage?

Accepted Answer

A)  Workers that completed high school. 
B)  Workers with trade qualification or diploma. 
C)  Workers with university degrees. 
D)  Workers with incomplete high school qualification. 
E)  Foreign migrant workers. 
A)  Workers that completed high school. 
B)  Workers with trade qualification or diploma. 
C)  Workers with university degrees. 
D)  Workers with incomplete high school qualification. 
E)  Foreign migrant workers.

Exam 13: Technological Progress: the Short, the Medium and the Long Run

Which of the following is believed to cause recent increases in wage inequality?

Suppose the aggregate production function is represented by Y = AN. Which of the following expressions represents the number of additional workers required to increase production by one unit?

Assume that expectations of productivity growth adjust slowly over time. For this economy, a decrease in productivity will most likely cause which of the following to occur?

Suppose workers expectations of prices and productivity are accurate. For this economy, an increase in productivity will cause which of the following?

A major explanation for the decline in employment in the textiles industry in Australia is:

What are the three explanations researchers have offered for why China's transition from a planned economy to a market- oriented one is smoother than central and eastern European countries.

In recent years in Australia, relative wages of the least educated workers:

Employment growth will increase as a result of an increase in productivity when which of the following occurs?

Employment will remain constant as a result of an increase in productivity when which of the following occurs?

Assume that expectations of P and A are correct. Now suppose that there is a 4% increase in A. Given this Information, which of the following will occur?

An increase in productivity will cause which of the following according to the price- setting behaviour of firms?

Assume that expectations of productivity growth adjust slowly. Now, suppose that there is a 4% increase in productivity. Explain how this 4% increase in productivity can cause changes in the unemployment rate.

Assume that the aggregate production function is represented by Y = AN. Which of the following represents the marginal cost of producing an additional unit of output?

Assume that the aggregate production function is represented by Y = AN. Which of the following represents the price- setting relation for this economy?

Assume an economy experiences, for a given period, a 4% increase in output and a 2% increase in productivity. Given this information, we know that which of the following occurred for this economy during this economy?

A decrease in productivity will cause which of the following to occur in the labour market model?

In recent years, the increasing relative wage of skilled labour has been mostly due to:

Suppose an economy experiences a decrease in productivity. Explain both the short- run and medium- run effects of this productivity decrease on output, employment, and the unemployment rate.

Explain how technological change can cause changes in wage inequality.

Since the early 1980s in Australia, which group of workers has experienced decreasing relative wage?

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Markets: the Islm Model

The Labour Market

Putting All Markets Together: the Asad Model

The Phillips Curve, the Natural Rate of Unemployment and Inflation

The Crisis

The Facts of Growth

Saving, Capital Accumulation and Output

Technological Progress and Growth

Expectations: the Basic Tools

Financial Markets and Expectations

Expectations, Consumption and Investment

Expectations, Output and Policy

Openness in Goods and Financial Markets

The Goods Market

Output, the Interest Rate and the Exchange Rate

Exchange Rate Regimes

Should Policy-Makers Be Restrained

Fiscal Policy: a Summing up

Monetary Policy: a Summing up

Epilogue: the Story of Macroeconomics

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