Question 1

As the capital stock increases,________.This means that the marginal product of capital (MPK)________.

Accepted Answer

A) the slope of the production function falls;declines 
B) the slope of the production function increases;goes up 
C) the slope of the production function falls;goes up 
D) the slope of the production function increases;declines 
E) none of the above 
A) the slope of the production function falls;declines 
B) the slope of the production function increases;goes up 
C) the slope of the production function falls;goes up 
D) the slope of the production function increases;declines 
E) none of the above

Question 2

When the rental price of capital is above the equilibrium price ________.

Accepted Answer

A) we have an excess supply of capital and the rental price should fall 
B) we have an excess demand of capital and the rental price should fall 
C) we have an excess supply of capital and the rental price should increase 
D) we have an excess demand of capital and the rental price should increase 
E) none of the above 
A) we have an excess supply of capital and the rental price should fall 
B) we have an excess demand of capital and the rental price should fall 
C) we have an excess supply of capital and the rental price should increase 
D) we have an excess demand of capital and the rental price should increase 
E) none of the above

Question 3

Assume that an economy is in equilibrium when the arrival of immigrants causes an increase in the supply of labor.Once the economy has adjusted to its new equilibrium,and assuming that the supply of capital remains unchanged,which of the following has decreased?

Accepted Answer

A) the share of capital income in national income 
B) the share of labor income in national income 
C) national income 
D) the rental price of capital 
E) none of the above 
A) the share of capital income in national income 
B) the share of labor income in national income 
C) national income 
D) the rental price of capital 
E) none of the above

Question 4

An economy's production function is Y = A  
 
,and the economy's total output in equilibrium is $800 billion.Total capital income in this economy is ________.

Accepted Answer

A) $200 billion 
B) $25 billion 
C) $750 billion 
D) $267 billion 
E) none of the above 
A) $200 billion 
B) $25 billion 
C) $750 billion 
D) $267 billion 
E) none of the above

Question 5

Profit maximization implies that firms will want to ________.

Accepted Answer

A) accumulate labor while the MPL is greater than the real wage 
B) accumulate capital while the MPK is greater than the rental price of capital 
C) not accumulate either input without limit,because of diminishing returns to each factor 
D) all of the above 
E) none of the above 
A) accumulate labor while the MPL is greater than the real wage 
B) accumulate capital while the MPK is greater than the rental price of capital 
C) not accumulate either input without limit,because of diminishing returns to each factor 
D) all of the above 
E) none of the above

Question 6

The marginal product of labor (MPL)is given by the ________.

Accepted Answer

A) labor share of income + average output per unit of labor 
B) labor share of income - average output per unit of labor 
C) labor share of income ÷ average output per unit of labor 
D) labor share of income × average output per unit of labor 
E) none of the above 
A) labor share of income + average output per unit of labor 
B) labor share of income - average output per unit of labor 
C) labor share of income ÷ average output per unit of labor 
D) labor share of income × average output per unit of labor 
E) none of the above

Question 7

Suppose than an economy has output Y = A  
 
,that Y equals $42 trillion,capital K is $64 trillion,and labor L is 125 million workers.Given this information,what is the closest approximation of total factor productivity A?

Accepted Answer

A) less than 0.01 
B) around 0.25 
C) roughly 0.33 
D) close to 0.4 
E) exactly 144 
A) less than 0.01 
B) around 0.25 
C) roughly 0.33 
D) close to 0.4 
E) exactly 144

Question 8

Profit maximization implies that firms will want to ________.

Accepted Answer

A) accumulate capital while the MPK is greater than the real wage 
B) accumulate capital while the MPK is greater than the rental price of capital 
C) accumulate labor while the MPK is greater than the rental price of capital 
D) accumulate labor while the MPK is greater than the real wage 
E) none of the above 
A) accumulate capital while the MPK is greater than the real wage 
B) accumulate capital while the MPK is greater than the rental price of capital 
C) accumulate labor while the MPK is greater than the rental price of capital 
D) accumulate labor while the MPK is greater than the real wage 
E) none of the above

Question 9

An economy's production function is Y = A  
 
,and the economy's total output in equilibrium is $90 billion.Total capital income in this economy is ________.

Accepted Answer

A) $27 billion 
B) $30 billion 
C) $21 billion 
D) $70 billion 
E) none of the above 
A) $27 billion 
B) $30 billion 
C) $21 billion 
D) $70 billion 
E) none of the above

Question 10

Which of the following constitutes an input to the Cobb-Douglas production function?

Accepted Answer

A) capital 
B) labor 
C) total factor productivity 
D) all of the above 
E) none of the above 
A) capital 
B) labor 
C) total factor productivity 
D) all of the above 
E) none of the above

Question 11

Equilibrium market prices for capital and labor are $10 and $8,respectively.Then,the economy experiences one or more supply shocks,so that the marginal product of capital is $12,and the marginal product of labor is $9.Assuming that the available quantities of capital and labor are fixed,which of the following is (are)likely to decrease as the economy approaches its new equilibrium?

Accepted Answer

A) real rental price of capital 
B) total output 
C) economic profits 
D) the quantity of capital in use 
E) none of the above 
A) real rental price of capital 
B) total output 
C) economic profits 
D) the quantity of capital in use 
E) none of the above

Question 12

Capital per person k is higher in Japan than in the United States.As a result ________.

Accepted Answer

A) per capita income is higher in Japan 
B) total factor productivity is higher in Japan 
C) the marginal product of capital is higher in Japan 
D) all of the above 
E) none of the above 
A) per capita income is higher in Japan 
B) total factor productivity is higher in Japan 
C) the marginal product of capital is higher in Japan 
D) all of the above 
E) none of the above

Question 13

Profit maximization implies that firms will want to ________.

Accepted Answer

A) accumulate labor while the MPL is greater than the real wage 
B) accumulate capital while the MPK is lower than the rental price of capital 
C) accumulate labor while the MPK is greater than the rental price of capital 
D) accumulate capital while the MPL is greater than the real wage 
E) none of the above 
A) accumulate labor while the MPL is greater than the real wage 
B) accumulate capital while the MPK is lower than the rental price of capital 
C) accumulate labor while the MPK is greater than the rental price of capital 
D) accumulate capital while the MPL is greater than the real wage 
E) none of the above

Question 14

Real capital income is given by ________.

Accepted Answer

A) MPK × K 
B) capital share of income × output per unit of capital × capital 
C) capital share of income × output 
D) all of the above 
E) none of the above 
A) MPK × K 
B) capital share of income × output per unit of capital × capital 
C) capital share of income × output 
D) all of the above 
E) none of the above

Question 15

Which of the following will cause an increase in the marginal product of capital (MPK)?

Accepted Answer

A) a decrease in the quantity of labor in use 
B) an increase in labor productivity 
C) a decrease in the quantity of capital in use 
D) all of the above 
E) none of the above 
A) a decrease in the quantity of labor in use 
B) an increase in labor productivity 
C) a decrease in the quantity of capital in use 
D) all of the above 
E) none of the above

Question 16

Real labor income is given by ________.

Accepted Answer

A) MPL × L 
B) labor share of income × labor productivity × labor 
C) labor share of income × output 
D) all of the above 
E) none of the above 
A) MPL × L 
B) labor share of income × labor productivity × labor 
C) labor share of income × output 
D) all of the above 
E) none of the above

Question 17

Equilibrium market prices for capital and labor are $10 and $8,respectively.Then,the economy experiences one or more supply shocks,so that the marginal product of capital is $9,and the marginal product of labor is $6.Assuming that the available quantities of capital and labor are fixed,which of the following is (are)likely to decrease as the economy approaches its new equilibrium?

Accepted Answer

A) economic profits 
B) real rental price of capital 
C) total output 
D) the quantity of capital in use 
E) none of the above 
A) economic profits 
B) real rental price of capital 
C) total output 
D) the quantity of capital in use 
E) none of the above

Question 18

As an investor,negative supply shocks are not attractive because ________.

Accepted Answer

A) they tend to lead to lower productivity 
B) the real rental price of capital tends to decline driving rental incomes down 
C) with decreases in expected income,claims on those incomes also tend to fall leading to stock market downturns 
D) all of the above 
E) none of the above 
A) they tend to lead to lower productivity 
B) the real rental price of capital tends to decline driving rental incomes down 
C) with decreases in expected income,claims on those incomes also tend to fall leading to stock market downturns 
D) all of the above 
E) none of the above

Question 19

When the real wage is below the equilibrium price in the labor market ________.

Accepted Answer

A) we have an excess supply of labor and the real wage should fall 
B) we have an excess demand of labor and the real wage should fall 
C) we have an excess demand of labor and the real wage should increase 
D) we have an excess supply of labor and the real wage should increase 
E) none of the above 
A) we have an excess supply of labor and the real wage should fall 
B) we have an excess demand of labor and the real wage should fall 
C) we have an excess demand of labor and the real wage should increase 
D) we have an excess supply of labor and the real wage should increase 
E) none of the above

Question 20

Using the Cobb-Douglas production function,while holding other inputs constant,if the amount of a specific factor is increasing ________.

Accepted Answer

A) the increased amount of output from an extra unit of input declines 
B) the increased amount of output from an extra unit of input increases 
C) that factor's share of output is declining 
D) that factor's share of output is increasing 
E) none of the above 
A) the increased amount of output from an extra unit of input declines 
B) the increased amount of output from an extra unit of input increases 
C) that factor's share of output is declining 
D) that factor's share of output is increasing 
E) none of the above

As the capital stock increases,.This means that the marginal product of capital (MPK).

When the rental price of capital is above the equilibrium price ________.

Assume that an economy is in equilibrium when the arrival of immigrants causes an increase in the supply of labor.Once the economy has adjusted to its new equilibrium,and assuming that the supply of capital remains unchanged,which of the following has decreased?

An economy's production function is Y = A ,and the economy's total output in equilibrium is $800 billion.Total capital income in this economy is ________.

Profit maximization implies that firms will want to ________.

The marginal product of labor (MPL)is given by the ________.

Suppose than an economy has output Y = A ,that Y equals $42 trillion,capital K is $64 trillion,and labor L is 125 million workers.Given this information,what is the closest approximation of total factor productivity A?

Profit maximization implies that firms will want to ________.

An economy's production function is Y = A ,and the economy's total output in equilibrium is $90 billion.Total capital income in this economy is ________.

Which of the following constitutes an input to the Cobb-Douglas production function?

Capital per person k is higher in Japan than in the United States.As a result ________.

Profit maximization implies that firms will want to ________.

Real capital income is given by ________.

Which of the following will cause an increase in the marginal product of capital (MPK)?

Real labor income is given by ________.

As an investor,negative supply shocks are not attractive because ________.

When the real wage is below the equilibrium price in the labor market ________.

Using the Cobb-Douglas production function,while holding other inputs constant,if the amount of a specific factor is increasing ________.

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

The Aggregate Demand and Supply Model

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

Filters

Exam 3: Aggregate Production and Productivity

As the capital stock increases,________.This means that the marginal product of capital (MPK)________.

When the rental price of capital is above the equilibrium price ________.

Assume that an economy is in equilibrium when the arrival of immigrants causes an increase in the supply of labor.Once the economy has adjusted to its new equilibrium,and assuming that the supply of capital remains unchanged,which of the following has decreased?

An economy's production function is Y = A ,and the economy's total output in equilibrium is $800 billion.Total capital income in this economy is ________.

Profit maximization implies that firms will want to ________.

The marginal product of labor (MPL)is given by the ________.

Suppose than an economy has output Y = A ,that Y equals $42 trillion,capital K is $64 trillion,and labor L is 125 million workers.Given this information,what is the closest approximation of total factor productivity A?

Profit maximization implies that firms will want to ________.

An economy's production function is Y = A ,and the economy's total output in equilibrium is $90 billion.Total capital income in this economy is ________.

Which of the following constitutes an input to the Cobb-Douglas production function?

Capital per person k is higher in Japan than in the United States.As a result ________.

Profit maximization implies that firms will want to ________.

Real capital income is given by ________.

Which of the following will cause an increase in the marginal product of capital (MPK)?

Real labor income is given by ________.

As an investor,negative supply shocks are not attractive because ________.

When the real wage is below the equilibrium price in the labor market ________.

Using the Cobb-Douglas production function,while holding other inputs constant,if the amount of a specific factor is increasing ________.

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

The Aggregate Demand and Supply Model

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

Filters

As the capital stock increases,.This means that the marginal product of capital (MPK).