Question 1

Full-employment output is the level of output that firms in the economy supply when

Accepted Answer

A) taxes are zero. 
B) wages and prices have fully adjusted. 
C) the unemployment rate is zero. 
D) all capital is fully utilized. 
A) taxes are zero. 
B) wages and prices have fully adjusted. 
C) the unemployment rate is zero. 
D) all capital is fully utilized.

Question 2

Your boss wants to know if you should lay off any workers.You answer that you should lay off workers if the

Accepted Answer

A) marginal revenue product of labor is greater than the nominal wage rate. 
B) marginal product of labor is greater than or equal to the real wage rate. 
C) marginal revenue product of labor is equal to the nominal wage rate. 
D) marginal product of labor is less than the real wage rate. 
A) marginal revenue product of labor is greater than the nominal wage rate. 
B) marginal product of labor is greater than or equal to the real wage rate. 
C) marginal revenue product of labor is equal to the nominal wage rate. 
D) marginal product of labor is less than the real wage rate.

Question 3

If Jeff's wage rate rises,he decides to work more hours.From this,we can infer that

Accepted Answer

A) for Jeff, the substitution effect is greater than the income effect. 
B) for Jeff, the substitution effect is equal to the income effect. 
C) for Jeff, the substitution effect is less than the income effect. 
D) Jeff is confused. 
A) for Jeff, the substitution effect is greater than the income effect. 
B) for Jeff, the substitution effect is equal to the income effect. 
C) for Jeff, the substitution effect is less than the income effect. 
D) Jeff is confused.

Question 4

In each of the following scenarios,state whether the labor supply curve would shift to the left,to the right,not shift at all,or if the shift is ambiguous because there is more than one effect and they would move the curve in opposite directions.
(a)The stock market rises sharply.
(b)Fewer teenagers work while in school than before.
(c)A large fraction of the population flees the country because of a bird flu epidemic.
(d)The expected future wage declines and the stock market crashes.
(e)The current real wage rate rises.

Accepted Answer

(a)Higher wealth shifts the labor supply

Question 5

Suppose the economy's production function is Y = AK0.3N0.7.Suppose K = 200,N = 2000,and A = 1.
Calculate the marginal products of labor and capital.

Accepted Answer

Using calculus,the marginal product of c

Question 6

The ________ is the number of unemployed divided by the labor force and the ________ is the labor force divided by the adult population.

Accepted Answer

A) unemployment rate; employment rate 
B) unemployment rate; employment ratio 
C) unemployment ratio; participation rate 
D) discouraged worker ratio; employment rate 
A) unemployment rate; employment rate 
B) unemployment rate; employment ratio 
C) unemployment ratio; participation rate 
D) discouraged worker ratio; employment rate

Question 7

Okun's law relates ________ to ________.

Accepted Answer

A) inflation; unemployment 
B) inflation; output 
C) output; unemployment 
D) output; employment 
A) inflation; unemployment 
B) inflation; output 
C) output; unemployment 
D) output; employment

Question 8

Cyclical unemployment is caused by

Accepted Answer

A) people entering the labor force to search for jobs. 
B) technological progress, which causes some industries to expand employment and others to reduce employment. 
C) reducing international trade barriers, which causes some industries to expand employment and others to reduce employment. 
D) business cycle fluctuations. 
A) people entering the labor force to search for jobs. 
B) technological progress, which causes some industries to expand employment and others to reduce employment. 
C) reducing international trade barriers, which causes some industries to expand employment and others to reduce employment. 
D) business cycle fluctuations.

Question 9

State the growth rate form of Okun's Law and define the variables in the equation.

Accepted Answer

The growth rate form of Okun's

Question 10

The ________ is the number of unemployed divided by the labor force and the ________ is the number of employed divided by the adult population.

Accepted Answer

A) unemployment rate; employment rate 
B) unemployment rate; employment ratio 
C) unemployment ratio; participation rate 
D) discouraged worker ratio; employment rate 
A) unemployment rate; employment rate 
B) unemployment rate; employment ratio 
C) unemployment ratio; participation rate 
D) discouraged worker ratio; employment rate

Question 11

Suppose the economy's production function is Y = AK0.3N0.7.If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?

Accepted Answer

A) 5% 
B) 10% 
C) 15% 
D) 20% 
A) 5% 
B) 10% 
C) 15% 
D) 20%

Question 12

The fact that the production function relating output to labor becomes flatter as we move from left to right means that

Accepted Answer

A) the marginal product of labor is positive. 
B) the marginal product of capital is positive. 
C) there is diminishing marginal productivity of labor. 
D) there is diminishing marginal productivity of capital. 
A) the marginal product of labor is positive. 
B) the marginal product of capital is positive. 
C) there is diminishing marginal productivity of labor. 
D) there is diminishing marginal productivity of capital.

Question 13

Suppose the natural rate of unemployment is 5%,with full-employment output of $7000 billion.Use Okun's Law to calculate the level of national output if the unemployment rate is 7%.

Accepted Answer

The output-level form of Okun's law tell

Question 14

Frictional unemployment arises when

Accepted Answer

A) unskilled or low-skilled workers find it difficult to obtain desirable, long-term jobs. 
B) labor must be reallocated from industries that are shrinking to areas that are growing. 
C) workers must search for suitable jobs and firms must search for suitable workers. 
D) output and employment are below full-employment levels. 
A) unskilled or low-skilled workers find it difficult to obtain desirable, long-term jobs. 
B) labor must be reallocated from industries that are shrinking to areas that are growing. 
C) workers must search for suitable jobs and firms must search for suitable workers. 
D) output and employment are below full-employment levels.

Question 15

Suppose oil prices fall temporarily,as oil becomes more plentiful.What impact is this likely to have on the production function,the marginal products of labor and capital,labor demand,employment,and the real wage?

Accepted Answer

More output can now be produced by the s

Question 16

The marginal product of capital is the increase in

Accepted Answer

A) capital needed to produce one more unit of output. 
B) output from a one-unit increase in capital. 
C) labor needed to accompany a one-unit increase in capital. 
D) output from a one-dollar increase in capital. 
A) capital needed to produce one more unit of output. 
B) output from a one-unit increase in capital. 
C) labor needed to accompany a one-unit increase in capital. 
D) output from a one-dollar increase in capital.

Question 17

The equilibrium level of employment,achieved after the complete adjustment of wages and prices,is known as the

Accepted Answer

A) zero-unemployment level of employment. 
B) natural state. 
C) invisible handshake. 
D) full-employment level of employment. 
A) zero-unemployment level of employment. 
B) natural state. 
C) invisible handshake. 
D) full-employment level of employment.

Question 18

An increase in the real wage rate will cause

Accepted Answer

A) the labor demand curve to shift to the right. 
B) the labor demand curve to shift to the left. 
C) the quantity of labor demanded to rise. 
D) a movement along the labor demand curve. 
A) the labor demand curve to shift to the right. 
B) the labor demand curve to shift to the left. 
C) the quantity of labor demanded to rise. 
D) a movement along the labor demand curve.

Question 19

Suppose the Okun's law coefficient is 2,the full-employment level of output is $5000 billion,and the natural rate of unemployment is 6%.
(a)What is the current level of output if the current unemployment rate is 8%?
(b)Suppose the unemployment rate falls to 5%; what is the current level of output?
(c)Suppose structural changes in the economy raise the natural rate of unemployment to 7%,and lower the full-employment level of output to $4800 billion.If the current unemployment rate is 8%,what is the current level of output?

Accepted Answer

(a)From the Okun's law relationship ( @#LAT-DLM& -

Question 20

One reason that firms hire labor at the point where w = MPN is

Accepted Answer

A) if w  MPN, the cost (w)of hiring additional workers is less than the benefits (MPN)of hiring them, so they should hire more workers. 
C) if w  MPN, the cost (w)of hiring additional workers exceeds the benefits (MPN)of hiring them, so they should hire fewer workers. 
A) if w  MPN, the cost (w)of hiring additional workers is less than the benefits (MPN)of hiring them, so they should hire more workers. 
C) if w  MPN, the cost (w)of hiring additional workers exceeds the benefits (MPN)of hiring them, so they should hire fewer workers.

Full-employment output is the level of output that firms in the economy supply when

Your boss wants to know if you should lay off any workers.You answer that you should lay off workers if the

If Jeff's wage rate rises,he decides to work more hours.From this,we can infer that

Suppose the economy's production function is Y = AK^0.3^N^0.7^.Suppose K = 200,N = 2000,and A = 1. Calculate the marginal products of labor and capital.

The is the number of unemployed divided by the labor force and the is the labor force divided by the adult population.

Okun's law relates to .

Cyclical unemployment is caused by

State the growth rate form of Okun's Law and define the variables in the equation.

The is the number of unemployed divided by the labor force and the is the number of employed divided by the adult population.

Suppose the economy's production function is Y = AK^0.3^N^0.7^.If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?

The fact that the production function relating output to labor becomes flatter as we move from left to right means that

Suppose the natural rate of unemployment is 5%,with full-employment output of $7000 billion.Use Okun's Law to calculate the level of national output if the unemployment rate is 7%.

Frictional unemployment arises when

Suppose oil prices fall temporarily,as oil becomes more plentiful.What impact is this likely to have on the production function,the marginal products of labor and capital,labor demand,employment,and the real wage?

The marginal product of capital is the increase in

The equilibrium level of employment,achieved after the complete adjustment of wages and prices,is known as the

An increase in the real wage rate will cause

One reason that firms hire labor at the point where w = MPN is

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 3: Productivity, output, and Employment

Full-employment output is the level of output that firms in the economy supply when

Your boss wants to know if you should lay off any workers.You answer that you should lay off workers if the

If Jeff's wage rate rises,he decides to work more hours.From this,we can infer that

Suppose the economy's production function is Y = AK0.3N0.7.Suppose K = 200,N = 2000,and A = 1. Calculate the marginal products of labor and capital.

The ________ is the number of unemployed divided by the labor force and the ________ is the labor force divided by the adult population.

Okun's law relates ________ to ________.

Cyclical unemployment is caused by

State the growth rate form of Okun's Law and define the variables in the equation.

The ________ is the number of unemployed divided by the labor force and the ________ is the number of employed divided by the adult population.

Suppose the economy's production function is Y = AK0.3N0.7.If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?

The fact that the production function relating output to labor becomes flatter as we move from left to right means that

Suppose the natural rate of unemployment is 5%,with full-employment output of $7000 billion.Use Okun's Law to calculate the level of national output if the unemployment rate is 7%.

Frictional unemployment arises when

Suppose oil prices fall temporarily,as oil becomes more plentiful.What impact is this likely to have on the production function,the marginal products of labor and capital,labor demand,employment,and the real wage?

The marginal product of capital is the increase in

The equilibrium level of employment,achieved after the complete adjustment of wages and prices,is known as the

An increase in the real wage rate will cause

One reason that firms hire labor at the point where w = MPN is

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Suppose the economy's production function is Y = AK^0.3^N^0.7^.Suppose K = 200,N = 2000,and A = 1. Calculate the marginal products of labor and capital.

The is the number of unemployed divided by the labor force and the is the labor force divided by the adult population.

Okun's law relates to .

The is the number of unemployed divided by the labor force and the is the number of employed divided by the adult population.

Suppose the economy's production function is Y = AK^0.3^N^0.7^.If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?