Question 1

If there is an adverse supply shock,

Accepted Answer

A)  the labour demand curve would shift leftward and, for any real wage, firms would demand more labour. 
B)  the labour demand curve would shift leftward and, for any real wage, firms would demand less labour. 
C)  the labour demand curve would shift rightward and, for any real wage, firms would demand more labour. 
D)  the labour demand curve would shift rightward and, for any real wage, firms would demand less labour. 
A)  the labour demand curve would shift leftward and, for any real wage, firms would demand more labour. 
B)  the labour demand curve would shift leftward and, for any real wage, firms would demand less labour. 
C)  the labour demand curve would shift rightward and, for any real wage, firms would demand more labour. 
D)  the labour demand curve would shift rightward and, for any real wage, firms would demand less labour.

Question 2

The country of Timbuktoo is introducing a minimum wage for the first time in its history. It is above the market-clearing wage rate for unskilled workers. The effect of the minimum wage would be to

Accepted Answer

A)  reduce the equilibrium real wage rate. 
B)  reduce the level of output. 
C)  shift the labour demand curve to the right. 
D)  shift the labour supply curve to the left. 
A)  reduce the equilibrium real wage rate. 
B)  reduce the level of output. 
C)  shift the labour demand curve to the right. 
D)  shift the labour supply curve to the left.

Question 3

Parliament has just passed a law eliminating all mandatory retirement in Canada. How would you expect this to affect the nation's labour supply curve?

Accepted Answer

A)  The labour supply curve would shift to the right. 
B)  The labour supply curve would shift to the left. 
C)  The labour supply curve would be unaffected. 
D)  The labour demand curve would shift to the right. 
A)  The labour supply curve would shift to the right. 
B)  The labour supply curve would shift to the left. 
C)  The labour supply curve would be unaffected. 
D)  The labour demand curve would shift to the right.

Question 4

In the production function Y = AF(K,N), A is ________, K is ________, and N is ________.

Accepted Answer

A)  total factor productivity; the capital stock; the number of workers employed 
B)  total factor productivity; investment; the number of workers employed 
C)  the productivity of labour; the capital stock; the size of the labour force 
D)  the productivity of labour; investment; the size of the labour force 
A)  total factor productivity; the capital stock; the number of workers employed 
B)  total factor productivity; investment; the number of workers employed 
C)  the productivity of labour; the capital stock; the size of the labour force 
D)  the productivity of labour; investment; the size of the labour force

Question 5

The Grungo Company has the following production function: $$\begin{array} { c c } 
\begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { Grungos Produced }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 19 \
3 & 26 \
4 & 31 \
5 & 34
\end{array}$$ If the real wage rate is 6, how many workers will the company hire?

Accepted Answer

A)  0 
B)  1 
C)  3 
D)  5 
A)  0 
B)  1 
C)  3 
D)  5

Question 6

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. What is the average duration of an unemployment spell?

Accepted Answer

A)  2.15 months 
B)  2.85 months 
C)  3.14 months 
D)  3.43 months 
A)  2.15 months 
B)  2.85 months 
C)  3.14 months 
D)  3.43 months

Question 7

The more permanent an employee perceives an increase in her real wages to be,

Accepted Answer

A)  the larger the income effect is and the more likely it is that the quantity of labour supplied will be increased. 
B)  the larger the income effect is and the more likely it is that the quantity of labour supplied will be reduced. 
C)  the larger the substitution effect is and the more likely it is that the quantity of labour supplied will be increased. 
D)  the larger the substitution effect is and the more likely it is that the quantity of labour supplied will be reduced. 
A)  the larger the income effect is and the more likely it is that the quantity of labour supplied will be increased. 
B)  the larger the income effect is and the more likely it is that the quantity of labour supplied will be reduced. 
C)  the larger the substitution effect is and the more likely it is that the quantity of labour supplied will be increased. 
D)  the larger the substitution effect is and the more likely it is that the quantity of labour supplied will be reduced.

Question 8

A technological breakthrough in using photons for computers will increase the productivity of those working with computers a hundredfold. You would expect this breakthrough to shift the

Accepted Answer

A)  marginal product of labour curve up and to the right, raising the quantity of labour demanded at any given real wage. 
B)  marginal product of labour curve down and to the left, reducing the quantity of labour demanded at any given real wage. 
C)  labour supply curve up, reducing the quantity of labour demanded at any given real wage. 
D)  labour supply curve down, raising the quantity of labour demanded at any given real wage. 
A)  marginal product of labour curve up and to the right, raising the quantity of labour demanded at any given real wage. 
B)  marginal product of labour curve down and to the left, reducing the quantity of labour demanded at any given real wage. 
C)  labour supply curve up, reducing the quantity of labour demanded at any given real wage. 
D)  labour supply curve down, raising the quantity of labour demanded at any given real wage.

Question 9

Empirical evidence for Canada and other countries suggests that permanent increases in the real wage cause workers to

Accepted Answer

A)  work longer hours. 
B)  take less vacation time. 
C)  supply more labour. 
D)  supply less labour. 
A)  work longer hours. 
B)  take less vacation time. 
C)  supply more labour. 
D)  supply less labour.

Question 10

Suppose the country of Prescott has the production function Y = AK0.25N0.75. The following table shows Prescott's macroeconomic data for 2002 and 2003: $$\begin{array} { c c c c } 
\text { Year } & Y & K & N \
\hline 2002 & 2000 & 1700 & 70 \
2003 & 2100 & 1785 & 75
\end{array}$$ a. By how much did productivity grow between 2002 and 2003?
b. If productivity remains constant from 2003 to 2004 and the labour force increases from 75 to 80, how large will the capital stock need to be to produce output of 2200 in 2004?

Accepted Answer

a. Calculate a in each year as A = Y/K^0.25 N

Question 11

The principle of diminishing marginal productivity implies that

Accepted Answer

A)  if we increase labour and capital, the output will eventually decrease. 
B)  if we decrease labour and capital, the output will decrease. 
C)  if we increase one input while keeping other inputs constant, the productivity of variable input will decrease. 
D)  if we increase one input while keeping other inputs constant, the output will decrease. 
A)  if we increase labour and capital, the output will eventually decrease. 
B)  if we decrease labour and capital, the output will decrease. 
C)  if we increase one input while keeping other inputs constant, the productivity of variable input will decrease. 
D)  if we increase one input while keeping other inputs constant, the output will decrease.

Question 12

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. What is the unemployment rate in any given month?

Accepted Answer

A)  2% 
B)  3% 
C)  5% 
D)  7% 
A)  2% 
B)  3% 
C)  5% 
D)  7%

Question 13

The two main characteristics of the production function are

Accepted Answer

A)  it slopes downward from left to right, and the slope becomes flatter as the input increases. 
B)  it slopes upward from left to right, and the slope becomes steeper as the input increases. 
C)  it slopes upward from left to right, and the slope becomes flatter as the input increases. 
D)  it slopes downward from left to right, and the slope becomes steeper as the input increases. 
A)  it slopes downward from left to right, and the slope becomes flatter as the input increases. 
B)  it slopes upward from left to right, and the slope becomes steeper as the input increases. 
C)  it slopes upward from left to right, and the slope becomes flatter as the input increases. 
D)  it slopes downward from left to right, and the slope becomes steeper as the input increases.

Question 14

What is the unemployment rate if there are 170 million people employed, 25 million people unemployed, and 35 million not in the labour force?

Accepted Answer

A)  14.7% 
B)  13.7% 
C)  12.8% 
D)  10.9% 
A)  14.7% 
B)  13.7% 
C)  12.8% 
D)  10.9%

If there is an adverse supply shock,

The country of Timbuktoo is introducing a minimum wage for the first time in its history. It is above the market-clearing wage rate for unskilled workers. The effect of the minimum wage would be to

Parliament has just passed a law eliminating all mandatory retirement in Canada. How would you expect this to affect the nation's labour supply curve?

In the production function Y = AF(K,N), A is , K is , and N is .

The Grungo Company has the following production function: Number of Workers Number of Grungos Produced 0 0 1 10 2 19 3 26 4 31 5 34 If the real wage rate is 6, how many workers will the company hire?

The more permanent an employee perceives an increase in her real wages to be,

A technological breakthrough in using photons for computers will increase the productivity of those working with computers a hundredfold. You would expect this breakthrough to shift the

Empirical evidence for Canada and other countries suggests that permanent increases in the real wage cause workers to

The principle of diminishing marginal productivity implies that

The two main characteristics of the production function are

What is the unemployment rate if there are 170 million people employed, 25 million people unemployed, and 35 million not in the labour force?

Introduction to Macroeconomics

The Measurement and Structure of the Canadian 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: A General Framework for Macroeconomic Analysis

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

Classical Business Cycle Analysis: Market-Clearing Macroeconomics

Keynesian Business Cycle Analysis: Non-Market-Clearing Macroeconomics

Unemployment and Inflation

Monetary Policy and the Bank of Canada

Government Spending and Its Financing

Filters

Exam 3: Productivity, Output, and Employment

If there is an adverse supply shock,

The country of Timbuktoo is introducing a minimum wage for the first time in its history. It is above the market-clearing wage rate for unskilled workers. The effect of the minimum wage would be to

Parliament has just passed a law eliminating all mandatory retirement in Canada. How would you expect this to affect the nation's labour supply curve?

In the production function Y = AF(K,N), A is ________, K is ________, and N is ________.

The Grungo Company has the following production function: Number of Workers Number of Grungos Produced 0 0 1 10 2 19 3 26 4 31 5 34 If the real wage rate is 6, how many workers will the company hire?

The more permanent an employee perceives an increase in her real wages to be,

A technological breakthrough in using photons for computers will increase the productivity of those working with computers a hundredfold. You would expect this breakthrough to shift the

Empirical evidence for Canada and other countries suggests that permanent increases in the real wage cause workers to

The principle of diminishing marginal productivity implies that

The two main characteristics of the production function are

What is the unemployment rate if there are 170 million people employed, 25 million people unemployed, and 35 million not in the labour force?

Introduction to Macroeconomics

The Measurement and Structure of the Canadian 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: A General Framework for Macroeconomic Analysis

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

Classical Business Cycle Analysis: Market-Clearing Macroeconomics

Keynesian Business Cycle Analysis: Non-Market-Clearing Macroeconomics

Unemployment and Inflation

Monetary Policy and the Bank of Canada

Government Spending and Its Financing

Filters

In the production function Y = AF(K,N), A is , K is , and N is .