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

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 of one worker will increase real GDP by

Countries with a low standard of living have low levels of total factor productivity.List five reasons that account for the low levels of total factor productivity.

All else equal,as the capital stock increases,the marginal product of capital will

What two factors determine output per worker? Explain which of the two is more important.

What is human capital? How do workers acquire human capital?

In the aggregate production function,the symbol "A " represents an index of how efficiently the economy transforms capital and labour into real GDP."A" measures the influence

When graphing the per worker production function,________ is on the horizontal axis and ________ is on the vertical axis.

Figure 7.1 -Refer to Figure 7.1.All else equal,an increase in the capital stock will cause a

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 capita is

An increase in foreign investment in Brazil's mining industry will increase the capital stock in Brazil.Holding labour and total factor productivity constant,continued increases in the capital stock will lead to

A firm that wishes to maximize profits will continue to purchase capital goods until the

Figure 7.1 -Refer to Figure 7.1.All else equal,an increase in the number of workers will cause a

The two basic ways for workers to acquire human capital are

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 labour is