Exam 7: The Standard of Living Over Time and Across Countries

In the aggregate production function,Y represents real GDP,K represents the capital stock,L represents the quantity of labour,and A represents an index of efficiency.Which of the following equations represents the aggregate production function?

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Question 1

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Explain why the differences in GDP per capita actually understate the true difference in living standards between countries.

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Question 2

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GDP per capita only measures the quantity of goods and services available to the average person in a country.It does not reflect other indicators of living standards such as life expectancy,level of education,corruption,and disease,which also tend to be more favourable in countries with a high GDP per capita.As a result,the difference in GDP per capita will tend to underestimate the true difference in living standards across countries.

Explain how a well-functioning financial system can increase total factor productivity and promote economic growth.

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Question 3

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The financial system can influence the efficiency of the economy,which means it can influence total factor productivity.Financial systems match borrowers with lenders and therefore help allocate resources in an economy.By allocating funds to the individuals who are willing to pay the most to obtain the funds,which generally means their investment projects have the best likelihood for success,a good financial system ensures that resources flow to their most productive uses,which increases total factor productivity.This results in increased labour productivity and a higher standard of living.

All else equal,if the demand for labour increases and the supply of labour does not change,the equilibrium real wage will and the equilibrium quantity of labour will .

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Question 4

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the firm's

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Question 5

Suppose that the production function for an economy is Y = AK¹/³ᴸ²/³.On one graph,show the production function undergoing two equal increases in workers,holding capital and total factor productivity constant,and on a second graph show the production function undergoing two equal increases in total factor productivity,holding capital and labour constant.Explain what happens to real GDP in each situation.

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Question 6

Suppose that the production function for the economy is Y = AK⁰.²ᴸ⁰.⁸.If the capital stock = 40 000,the quantity of labour = 10 000,and the efficiency index = 1,the marginal product of capital is

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Question 7

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that A = 1000,the capital stock is $32 000 billion,and the current labour force is 120 million (or 0.120 billion)workers.All else equal,if the labour force increases by 20 million workers,the value of the marginal product of capital will be

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Question 8

Suppose that the production function is Y = AK⁰.⁷ᴸ⁰.³,the number of workers equals 800,the capital stock is $150 000,and total factor productivity is 3.What is the value of real GDP? What will happen to real GDP if total factor productivity doubles?

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Question 9

Explain how firms choose the amount of capital goods to purchase and the amount of labour to hire.

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Question 10

Suppose y = Ak¹/⁴,the capital-labour ratio is $40 000 per worker,the level of total factor productivity is 800,70% of the population works,and there are 70 million workers.Real GDP per worker is

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Question 11

The per worker production function shows the relationship between

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Question 12

Diminishing marginal returns do not exist for increases in

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Question 13

The aggregate production function is an equation that shows the relationship between and .

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Question 14

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that A = 1000,the current capital stock is $32 000 billion,and the labour force is 120 million (or 0.120 billion)workers.All else equal,if the capital stock increases by $8000,the value of the marginal product of labour will be

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Question 15

Suppose that the production function for the economy is Y = AK⁰.²⁵ᴸ⁰.⁷⁵,A = 2,?K = 100 000,and L = 60 000.What are the values of real GDP,the real wage,and the real rental cost of capital? Show this data using graphs of the aggregate production function,the aggregate capital market,and the aggregate labour market.

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Question 16

Suppose that the production function for the economy is Y = AK⁰.⁵ᴸ⁰.⁵.If the capital stock ?= 40 000,the quantity of labour = 10 000,and the efficiency index = 3,the equilibrium real wage is

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Question 17

Figure 7.1 -Refer to Figure 7.1.All else equal,an increase in total factor productivity will cause a

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Question 18

Which of the following equations best represents a Cobb-Douglas production function?

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Question 19

Suppose that the production function is Y = AK²/⁵ᴸ³/⁵.Assume that real GDP is $5000 billion,capital stock is $15 000 billion,and the labour supply is 75 million workers.What are the values for the marginal product of labour and the marginal product of capital? Show this data graphically.

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Question 20

Showing 1 - 20 of 74

In the aggregate production function,Y represents real GDP,K represents the capital stock,L represents the quantity of labour,and A represents an index of efficiency.Which of the following equations represents the aggregate production function?

Explain why the differences in GDP per capita actually understate the true difference in living standards between countries.

Explain how a well-functioning financial system can increase total factor productivity and promote economic growth.

All else equal,if the demand for labour increases and the supply of labour does not change,the equilibrium real wage will and the equilibrium quantity of labour will .

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the firm's

Suppose that the production function for the economy is Y = AK⁰.²ᴸ⁰.⁸.If the capital stock = 40 000,the quantity of labour = 10 000,and the efficiency index = 1,the marginal product of capital is

Suppose that the production function is Y = AK⁰.⁷ᴸ⁰.³,the number of workers equals 800,the capital stock is $150 000,and total factor productivity is 3.What is the value of real GDP? What will happen to real GDP if total factor productivity doubles?

Explain how firms choose the amount of capital goods to purchase and the amount of labour to hire.

Suppose y = Ak¹/⁴,the capital-labour ratio is $40 000 per worker,the level of total factor productivity is 800,70% of the population works,and there are 70 million workers.Real GDP per worker is

The per worker production function shows the relationship between

Diminishing marginal returns do not exist for increases in

The aggregate production function is an equation that shows the relationship between and .

Suppose that the production function for the economy is Y = AK⁰.⁵ᴸ⁰.⁵.If the capital stock ?= 40 000,the quantity of labour = 10 000,and the efficiency index = 3,the equilibrium real wage is

Figure 7.1 -Refer to Figure 7.1.All else equal,an increase in total factor productivity will cause a

Which of the following equations best represents a Cobb-Douglas production function?

Suppose that the production function is Y = AK²/⁵ᴸ³/⁵.Assume that real GDP is $5000 billion,capital stock is $15 000 billion,and the labour supply is 75 million workers.What are the values for the marginal product of labour and the marginal product of capital? Show this data graphically.

Introduction to Macroeconomics and the Great Recession

Measuring the Macroeconomy

The Canadian Financial System

Money and Inflation

The Global Financial System and Exchange Rates

The Labour Market

Long-Run Economic Growth

Business Cycles

Explaining Aggregate Demand: the Is-Mp Model

The Is-Mp Model: Adding Inflation and the Open Economy

Monetary Policy in the Short Run

Fiscal Policy in the Short Run

Aggregate Demand, aggregate Supply, and Monetary Policy

Fiscal Policy and the Government Budget in the Long Run

Consumption and Investment

Filters

Exam 7: The Standard of Living Over Time and Across Countries

In the aggregate production function,Y represents real GDP,K represents the capital stock,L represents the quantity of labour,and A represents an index of efficiency.Which of the following equations represents the aggregate production function?

Explain why the differences in GDP per capita actually understate the true difference in living standards between countries.

Explain how a well-functioning financial system can increase total factor productivity and promote economic growth.

All else equal,if the demand for labour increases and the supply of labour does not change,the equilibrium real wage will ________ and the equilibrium quantity of labour will ________.

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the firm's

Suppose that the production function for the economy is Y = AK⁰.²ᴸ⁰.⁸.If the capital stock = 40 000,the quantity of labour = 10 000,and the efficiency index = 1,the marginal product of capital is

Suppose that the production function is Y = AK⁰.⁷ᴸ⁰.³,the number of workers equals 800,the capital stock is $150 000,and total factor productivity is 3.What is the value of real GDP? What will happen to real GDP if total factor productivity doubles?

Explain how firms choose the amount of capital goods to purchase and the amount of labour to hire.

Suppose y = Ak¹/⁴,the capital-labour ratio is $40 000 per worker,the level of total factor productivity is 800,70% of the population works,and there are 70 million workers.Real GDP per worker is

The per worker production function shows the relationship between

Diminishing marginal returns do not exist for increases in

The aggregate production function is an equation that shows the relationship between ________ and ________.

Suppose that the production function for the economy is Y = AK⁰.⁵ᴸ⁰.⁵.If the capital stock ?= 40 000,the quantity of labour = 10 000,and the efficiency index = 3,the equilibrium real wage is

Figure 7.1 -Refer to Figure 7.1.All else equal,an increase in total factor productivity will cause a

Which of the following equations best represents a Cobb-Douglas production function?

Suppose that the production function is Y = AK²/⁵ᴸ³/⁵.Assume that real GDP is $5000 billion,capital stock is $15 000 billion,and the labour supply is 75 million workers.What are the values for the marginal product of labour and the marginal product of capital? Show this data graphically.

Introduction to Macroeconomics and the Great Recession

Measuring the Macroeconomy

The Canadian Financial System

Money and Inflation

The Global Financial System and Exchange Rates

The Labour Market

Long-Run Economic Growth

Business Cycles

Explaining Aggregate Demand: the Is-Mp Model

The Is-Mp Model: Adding Inflation and the Open Economy

Monetary Policy in the Short Run

Fiscal Policy in the Short Run

Aggregate Demand, aggregate Supply, and Monetary Policy

Fiscal Policy and the Government Budget in the Long Run

Consumption and Investment

Filters

All else equal,if the demand for labour increases and the supply of labour does not change,the equilibrium real wage will and the equilibrium quantity of labour will .

The aggregate production function is an equation that shows the relationship between and .