Exam 3: Productivity, Output, and Employment

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?

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

A tremendous flood along the Mississippi River destroys thousands of factories,reducing the nation's capital stock by 5%.What happens to current employment and the real wage rate?

The government announces a tax increase on workers' wages to take effect in the future.What happens to current employment and the real wage rate?

A decrease in the real wage would result in a

An invention that speeds up the Internet is an example of

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

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

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

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

The table below represents Freedonia's macroeconomic data for Year 1 and Year 2. Suppose that the production function is given by Y = A Between Year 1 and Year 2,total factor productivity of Freedonia's economy increased by

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?

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 announces that tax rates will rise 30% in the future. (c)A nuclear mishap contaminates all auto plants in the Detroit area,destroying their capital. (d)Medical science cures the common cold,causing fewer work days lost due to illness,thus greatly increasing labor productivity.

How would each of the following events affect Cheryl Shirker's supply of labor? (a)Cheryl's firm announces a reorganization plan,in which she will get a big promotion and raise in six months. (b)Cheryl's speculative investment in plutonium futures pays off big,netting her a profit of $300 thousand. (c)Cheryl's father,who had planned to leave her a large bequest,must spend all his wealth on medical bills after a prolonged illness.

The marginal product of capital is the increase in

Suppose the marginal product of labor is MPN = 200 - 0.5N Where N is aggregate employment.The aggregate quantity of labor supplied is 300 + 8w,where w is the real wage.If a supply shock increases the marginal product of labor by 10 (to MPN = 210 - 0.5 N),by how much does employment increase?

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

Over the past 100 years,what has happened to the average workweek in the U.S.manufacturing industry? Why has this occurred? What are the implications for the size of the income and substitution effects?

According to Okun's Law,if the natural rate of unemployment is 5% and the actual unemployment rate is 4%,what is the level of full employment output if output equals $10,125 billion?

An adverse supply shock would