Question 1

In Canada,economists estimate capital's share and labour's share of total income have been about ________,respectively.

Accepted Answer

A)  1/2 and 1/2 
B)  4/5 and 1/5 
C)  1/3 and 2/3 
D)  3/4 and 1/4 
A)  1/2 and 1/2 
B)  4/5 and 1/5 
C)  1/3 and 2/3 
D)  3/4 and 1/4

Question 2

All else equal,if the demand for capital decreases and the supply of capital does not change,the equilibrium real rental cost of capital will ________ and the equilibrium quantity of capital will ________.

Accepted Answer

A)  increase; increase 
B)  decrease; not change 
C)  decrease; decrease 
D)  not change; decrease 
A)  increase; increase 
B)  decrease; not change 
C)  decrease; decrease 
D)  not change; decrease

Question 3

If the marginal product of labour is less than the nominal wage divided by the price of output,a firm that wishes to maximize profits will

Accepted Answer

A)  hire more labour. 
B)  lay off workers. 
C)  maintain its current level of workers. 
D)  raise the real wage. 
A)  hire more labour. 
B)  lay off workers. 
C)  maintain its current level of workers. 
D)  raise the real wage.

Question 4

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 labour force is 120 million (or 0.120 billion)workers.The value of the marginal product of labour is

Accepted Answer

A)  $14 290.17. 
B)  $17 043.29. 
C)  $20 451.95. 
D)  $22 724.33. 
A)  $14 290.17. 
B)  $17 043.29. 
C)  $20 451.95. 
D)  $22 724.33.

Question 5

The marginal product of capital is always ________ and it ________ as the capital stock increases.

Accepted Answer

A)  positive; increases 
B)  positive; decreases 
C)  negative; increases 
D)  negative; decreases 
A)  positive; increases 
B)  positive; decreases 
C)  negative; increases 
D)  negative; decreases

Question 6

Which of the following is a way to measure of real GDP per capita?

Accepted Answer

A)  (Labour productivity) × (Fraction of the population working) 
B)  (Nominal GDP) / (Real GDP) 
C)  (Total factor productivity) / (Capital stock) 
D)  (Real GDP) × (Population) 
A)  (Labour productivity) × (Fraction of the population working) 
B)  (Nominal GDP) / (Real GDP) 
C)  (Total factor productivity) / (Capital stock) 
D)  (Real GDP) × (Population)

Question 7

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that real GDP is $8000 billion,capital stock is $32 000 billion,and the labour supply is 120 million (or 0.120 billion)workers.An increase in the capital stock of $1 billion will increase real GDP by

Accepted Answer

A)  $0.03125 billion. 
B)  $0.0625 billion. 
C)  $0.25 billion. 
D)  $1 billion. 
A)  $0.03125 billion. 
B)  $0.0625 billion. 
C)  $0.25 billion. 
D)  $1 billion.

Question 8

In the Cobb-Douglas production function,the index of the overall level of efficiency of transforming capital and labour into real GDP is called

Accepted Answer

A)  total factor productivity. 
B)  allocative efficiency. 
C)  the marginal efficiency index. 
D)  the transformation allocation of inputs. 
A)  total factor productivity. 
B)  allocative efficiency. 
C)  the marginal efficiency index. 
D)  the transformation allocation of inputs.

Question 9

Along the per worker production function,as the capital-labour ratio ________,increases in output per worker become progressively ________.

Accepted Answer

A)  increases; larger 
B)  increases; smaller 
C)  decreases; larger 
D)  decreases; smaller 
A)  increases; larger 
B)  increases; smaller 
C)  decreases; larger 
D)  decreases; smaller

Question 10

If the nominal rental price of capital divided by the price of output is less than the marginal product of capital,a firm that wishes to maximize profits will

Accepted Answer

A)  purchase more capital goods. 
B)  purchase fewer capital goods. 
C)  maintain the current level of capital goods. 
D)  allow capital goods to wear out without purchasing additional capital goods. 
A)  purchase more capital goods. 
B)  purchase fewer capital goods. 
C)  maintain the current level of capital goods. 
D)  allow capital goods to wear out without purchasing additional capital goods.

Question 11

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,real GDP is

Accepted Answer

A)  $60 000. 
B)  $75 000. 
C)  $150 000. 
D)  $300 000. 
A)  $60 000. 
B)  $75 000. 
C)  $150 000. 
D)  $300 000.

Question 12

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 labour force is 120 million (or 0.120 billion)workers.The value of the marginal product of capital is

Accepted Answer

A)  $0.0147. 
B)  $0.0213. 
C)  $0.0597. 
D)  $0.25. 
A)  $0.0147. 
B)  $0.0213. 
C)  $0.0597. 
D)  $0.25.

Question 13

All else equal,in an economy with an upward-sloping production function,as an economy accumulates more capital goods,

Accepted Answer

A)  the labour supply must increase. 
B)  real GDP increases. 
C)  the labour supply must decrease. 
D)  the marginal product of capital will increase. 
A)  the labour supply must increase. 
B)  real GDP increases. 
C)  the labour supply must decrease. 
D)  the marginal product of capital will increase.

Question 14

The marginal product of labour is always ________ and it ________ as the labour stock increases.

Accepted Answer

A)  positive; increases 
B)  positive; decreases 
C)  negative; increases 
D)  negative; decreases 
A)  positive; increases 
B)  positive; decreases 
C)  negative; increases 
D)  negative; decreases

Question 15

The Chinese economic reforms of 1978 opened China to international trade and investment.These reforms gave China access to new capital and technology,which

Accepted Answer

A)  allowed China to decrease its capital-labour ratio and increase labour productivity. 
B)  increased China's total factor productivity and standard of living. 
C)  accelerated Chinese productivity to a level where Chinese real GDP per capita is now on par with that in Canada. 
D)  rapidly increased productivity in China and convinced Chinese officials to expand the reforms to include complete privatization of its financial system. 
A)  allowed China to decrease its capital-labour ratio and increase labour productivity. 
B)  increased China's total factor productivity and standard of living. 
C)  accelerated Chinese productivity to a level where Chinese real GDP per capita is now on par with that in Canada. 
D)  rapidly increased productivity in China and convinced Chinese officials to expand the reforms to include complete privatization of its financial system.

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 rental price of capital is

Accepted Answer

A)  $0.33. 
B)  $0.75. 
C)  $1.00. 
D)  $2.22. 
A)  $0.33. 
B)  $0.75. 
C)  $1.00. 
D)  $2.22.

Question 17

The supply curves for labour and capital are ________ and the demand curves for labour and capital are ________.

Accepted Answer

A)  upward sloping; downward sloping 
B)  vertical; horizontal 
C)  vertical; downward sloping 
D)  upward sloping; vertical 
A)  upward sloping; downward sloping 
B)  vertical; horizontal 
C)  vertical; downward sloping 
D)  upward sloping; vertical

Question 18

Suppose y = Ak¹/³,the capital-labour ratio is $30 000 per worker,the level of total factor productivity is 400,50% of the population works,and there are 50 million workers.Real GDP per worker is

Accepted Answer

A)  $9861.69. 
B)  $12 424.66. 
C)  $15 530.82. 
D)  $18 067.92. 
A)  $9861.69. 
B)  $12 424.66. 
C)  $15 530.82. 
D)  $18 067.92.

Question 19

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that real GDP is $8000 billion,capital stock is $32 000 billion,and the labour supply is 120 million (or 0.120 billion)workers.The value of the marginal product of capital is ________ per dollar of capital.

Accepted Answer

A)  $0.0625 
B)  $0.133 
C)  $0.16 
D)  $1.00 
A)  $0.0625 
B)  $0.133 
C)  $0.16 
D)  $1.00

Question 20

In the Cobb-Douglas production function Y = AK³/⁴ᴸ¹/⁴,

Accepted Answer

A)  capital is a more expensive input than labour. 
B)  capital is more plentiful than labour. 
C)  diminishing returns to capital are three times greater than are diminishing returns to labour. 
D)  capital has a larger share in national income than does labour. 
A)  capital is a more expensive input than labour. 
B)  capital is more plentiful than labour. 
C)  diminishing returns to capital are three times greater than are diminishing returns to labour. 
D)  capital has a larger share in national income than does labour.

In Canada,economists estimate capital's share and labour's share of total income have been about ________,respectively.

All else equal,if the demand for capital decreases and the supply of capital does not change,the equilibrium real rental cost of capital will and the equilibrium quantity of capital will .

If the marginal product of labour is less than the nominal wage divided by the price of output,a firm that wishes to maximize profits will

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 labour force is 120 million (or 0.120 billion)workers.The value of the marginal product of labour is

The marginal product of capital is always and it as the capital stock increases.

Which of the following is a way to measure of real GDP per capita?

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that real GDP is $8000 billion,capital stock is $32 000 billion,and the labour supply is 120 million (or 0.120 billion)workers.An increase in the capital stock of $1 billion will increase real GDP by

In the Cobb-Douglas production function,the index of the overall level of efficiency of transforming capital and labour into real GDP is called

Along the per worker production function,as the capital-labour ratio ,increases in output per worker become progressively .

If the nominal rental price of capital divided by the price of output is less than the marginal product of capital,a firm that wishes to maximize profits will

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,real GDP is

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 labour force is 120 million (or 0.120 billion)workers.The value of the marginal product of capital is

All else equal,in an economy with an upward-sloping production function,as an economy accumulates more capital goods,

The marginal product of labour is always and it as the labour stock increases.

The Chinese economic reforms of 1978 opened China to international trade and investment.These reforms gave China access to new capital and technology,which

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 rental price of capital is

The supply curves for labour and capital are and the demand curves for labour and capital are .

Suppose y = Ak¹/³,the capital-labour ratio is $30 000 per worker,the level of total factor productivity is 400,50% of the population works,and there are 50 million workers.Real GDP per worker is

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that real GDP is $8000 billion,capital stock is $32 000 billion,and the labour supply is 120 million (or 0.120 billion)workers.The value of the marginal product of capital is ________ per dollar of capital.

In the Cobb-Douglas production function Y = AK³/⁴ᴸ¹/⁴,

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

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

In Canada,economists estimate capital's share and labour's share of total income have been about ________,respectively.

All else equal,if the demand for capital decreases and the supply of capital does not change,the equilibrium real rental cost of capital will ________ and the equilibrium quantity of capital will ________.

If the marginal product of labour is less than the nominal wage divided by the price of output,a firm that wishes to maximize profits will

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 labour force is 120 million (or 0.120 billion)workers.The value of the marginal product of labour is

The marginal product of capital is always ________ and it ________ as the capital stock increases.

Which of the following is a way to measure of real GDP per capita?

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that real GDP is $8000 billion,capital stock is $32 000 billion,and the labour supply is 120 million (or 0.120 billion)workers.An increase in the capital stock of $1 billion will increase real GDP by

In the Cobb-Douglas production function,the index of the overall level of efficiency of transforming capital and labour into real GDP is called

Along the per worker production function,as the capital-labour ratio ________,increases in output per worker become progressively ________.

If the nominal rental price of capital divided by the price of output is less than the marginal product of capital,a firm that wishes to maximize profits will

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,real GDP is

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 labour force is 120 million (or 0.120 billion)workers.The value of the marginal product of capital is

All else equal,in an economy with an upward-sloping production function,as an economy accumulates more capital goods,

The marginal product of labour is always ________ and it ________ as the labour stock increases.

The Chinese economic reforms of 1978 opened China to international trade and investment.These reforms gave China access to new capital and technology,which

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 rental price of capital is

The supply curves for labour and capital are ________ and the demand curves for labour and capital are ________.

Suppose y = Ak¹/³,the capital-labour ratio is $30 000 per worker,the level of total factor productivity is 400,50% of the population works,and there are 50 million workers.Real GDP per worker is

Suppose that the production function for the economy is: Y = AK¹/⁴ᴸ³/⁴.Assume that real GDP is $8000 billion,capital stock is $32 000 billion,and the labour supply is 120 million (or 0.120 billion)workers.The value of the marginal product of capital is ________ per dollar of capital.

In the Cobb-Douglas production function Y = AK³/⁴ᴸ¹/⁴,

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 capital decreases and the supply of capital does not change,the equilibrium real rental cost of capital will and the equilibrium quantity of capital will .

The marginal product of capital is always and it as the capital stock increases.

Along the per worker production function,as the capital-labour ratio ,increases in output per worker become progressively .

The marginal product of labour is always and it as the labour stock increases.

The supply curves for labour and capital are and the demand curves for labour and capital are .