Exam 6: Aggregate Incomes

Scenario: Two economies, A and B, have identical aggregate production functions with diminishing returns. In both economies, capital and labor are equally important for production. Economy A has twice as many efficiency units of labor as economy B. Economy B has twice as much physical capital stock as economy A. -Refer to the scenario above.If you were to draw the aggregate production functions for economies A and B,holding physical capital stock constant at each county's given level,you would draw ________.

Explain why there is nothing predetermined about the relationship between time and progress in technology that would make Moore's Law into an actual law.

The following table shows economic data for two countries. -Refer to the table above.Income per worker in Country B is equal to ________.

Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries. -Refer to the scenario above.Suppose Country A passes a law that requires all workers to complete repeated safety workshops.One year after the law was passed,workers are on average 5 percent less productive.Workers in Country B continue to produce at the same rate as the year before.During the same year,the population in Country A and in Country B increases by 2 percent.Consequently,1 year after Country A passed the new law,________.

The value of Japan's income per capita in dollars will increase if ________.

Scenario: Assume the following aggregate production functions for two countries, A and B, respectively. YA=A KA¹/² ᴴA¹/² ʸB=A KB²/³ ᴴB¹/³ -Refer to the scenario above.Assume Country A and Country B have equal technology and human capital stock,but Country A's capital stock is 10 percent bigger than Country B's capital stock.What can you say about output in the two countries?

Suppose the number of people employed in a country increases.Everything else remaining unchanged,this will lead to a fall in the country's ________.

In a graph that measures output in the y-axis and the efficiency units of labor in the x-axis,which of the following causes an upward movement along the aggregate production function?

In a certain year,the income per capita in Country 1 was 1,800 in its domestic currency,while that of Country 2 was 32,000 in its domestic currency. a)If 1 unit of Country 1's currency is worth 6.5 units of Country 2's currency,which country has a higher income per capita? b)Which country is likely to have a higher Human Development Index and why?

Refer to the scenario above.Assume Industry Country relies more heavily on the use of capital and Farm Country relies more heavily on the use of labor in production.Holding labor constant,which country's output would be more negatively affected by a big storm that destroys large parts of the existing infrastructure?

Scenario: Tree Country has a population of 18,000 people, of whom two-thirds are part of the workforce. The country's only asset is wood, where K = 18,000. The country only produces wooden furniture. In the figure below, Y stands for GDP, and H equals efficiency units of labor. -Refer to the scenario above.Increased rainfall has led to 10 percent faster tree growth than usual.At the same time,10 percent of Tree Country's population has decided to leave the country.How do these changes affect aggregate production?

Scenario: Farm Country and Industry Country are two neighboring countries. Both countries produce only one good: good X. Production in both countries is a function of total efficiency units of labor and physical capital stock. -Refer to the scenario above.How will an increase in the physical capital stock affect output growth in these countries?

Scenario: Red Country and Purple Country have identical aggregate production functions. The amount of physical capital stock available to each country is equal. Labor supply in Red Country is HR, while the labor supply in Purple Country is HP. -Refer to the scenario above.Relative to Purple Country's total efficiency units of labor,in Red Country,________.

The following figure shows two aggregate production functions. -Refer to the figure above.Which of the following statements holds true regarding aggregate production function 2?

What is a key shortcoming of the Big Mac index?

An economy with better technology is likely to ________.

Scenario: Country X has 1,000 workers. The country's aggregate production function is YX = 1.5 KX²/³ HX¹/³, where KX = 1,000,000 and HX = 2,500,000. -Refer to the scenario above.What was the country's GDP per capita?

If a foreign company operating in a country changes work rules,resulting in a more flexible allocation of resources in the various sectors of the domestic economy,________.

Scenario: In Riverland, life expectancy is rising and has just surpassed life expectancy in its neighbor country, Lakeland. -Refer to the scenario above.This implies that ________.

Scenario: The price of a given basket of goods in Country 1 is 10 karls. The price of the same basket of goods in Country 2 is 25 ritz and is $2 in the United States. Country 1 has an income per capita of 3,200 karls, and Country 2 has an income per capita of 5,500 ritz. -Refer to the scenario above.The price of a basket of goods worth $1 in the United States is ________ in Country 1.