Exam 3: Productivity, Output, and Employment

The marginal product of capital

A beneficial supply shock increases labour demand. What happens to current employment and the real wage rate?

Your boss has told you that you will receive an increase in your salary next year. In response to this news, you would reduce your labour supply because

The female participation rate in Canada has been increasing since the 1960s. This implies that, other things being equal,

In a graph of the production function relating output to capital, it is not true that

What is the unemployment rate if there are 125 million people in the labour force, 100 million people employed, and 25 million not in the labour force?

A favourable supply shock would

How would each of the following events affect the level of employment and the real wage rate? a. A tremendous boom occurs in the stock market, increasing people's wealth by $100 billion overnight. b. A major government loan-guarantee program goes bust, losing $500 billion. To pay off the loss, the government announced that tax rates will rise 30% in the future. c. A nuclear mishap contaminates all auto plants in the Windsor area, destroying their capital. d. Medical science cures the common cold, causing fewer work days lost to illness, thus greatly increasing labour productivity.

The marginal product of labour (measured in units of output) for New Age Nirvana is given by MPN = A(200 - N) where A measures productivity and N is the number of labour hours used in production. Assume that the price of output is $3 per unit and that A = 2.0. What will be the demand for labour if the nominal wage is $30?

Which of the following statements is true?

The city of Hope has a labour force of 1000. Twenty people lose their jobs each month and remain unemployed for exactly one month before finding jobs. On January 1, May 1, and September 1 of each year 50 people lose their jobs for a period of four months before finding new jobs. a. What is the unemployment rate in any given month? b. How many unemployment spells are there in a year? c. What is the average duration of an unemployment spell? d. On any given date, how many people are undergoing short spells, and how many are undergoing long spells?

Economists often treat the economy's capital stock as fixed because

A new productivity breakthrough in computer technology is announced; as a result, the marginal product of labour will double next year. What happens to current employment and the real wage rate?

What two factors should you equate in deciding how many workers to employ?

An increase in the real wage rate will cause

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

A supply shock that reduces total factor productivity directly affects which term in the production function Y = AF(K,N)?

Floods have just ravaged the countryside and cities! You would expect this supply shock to shift the

An increase in labour participation rate will lead to

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