Question 1

Consider an economy where the only consumption good is ice cream. Firms in this economy must:

Accepted Answer

A)  hire all workers and rent all machines available 
B)  choose how many workers to hire and ice cream machines to rent 
C)  choose how many workers to hire and rent all machines available 
D)  hire all workers and choose how many machines to rent 
E)  None of these answers are correct. 
A)  hire all workers and rent all machines available 
B)  choose how many workers to hire and ice cream machines to rent 
C)  choose how many workers to hire and rent all machines available 
D)  hire all workers and choose how many machines to rent 
E)  None of these answers are correct.

Question 2

The production function $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ describes:

Accepted Answer

A)  how any amount of capital and labor can be combined to generate output 
B)  how particular amounts of capital and labor can be combined to generate output 
C)  how any amount of capital and a particular amount of labor can be combined to generate output 
D)  how any amount of labor and a particular amount of capital can be combined to generate output 
E)  None of these answers are correct. 
A)  how any amount of capital and labor can be combined to generate output 
B)  how particular amounts of capital and labor can be combined to generate output 
C)  how any amount of capital and a particular amount of labor can be combined to generate output 
D)  how any amount of labor and a particular amount of capital can be combined to generate output 
E)  None of these answers are correct.

Question 3

If the production function is $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ 
, then in per worker terms, it can be written as $y = K ^ { 1 / 3 } / L$ 
.

Accepted Answer

A) True 
 B)False

Question 4

What are the three sources of total factor productivity discussed in the text? Can you name other possible sources? Explain your answer.

Accepted Answer

@#LAT-DLM&Human capital: Simply defined, this is s

Question 5

A firm's profit is simply defined as:

Accepted Answer

A)  zero 
B)  revenues plus costs 
C)  revenues minus costs 
D)  the price of output minus labor costs 
E)  the price of output minus labor costs minus capital costs 
A)  zero 
B)  revenues plus costs 
C)  revenues minus costs 
D)  the price of output minus labor costs 
E)  the price of output minus labor costs minus capital costs

Question 6

The equation $Y = K ^ { a } L ^ { 1 - a }$ is called:

Accepted Answer

A)  the Lucas production function 
B)  the Keynesian production function 
C)  the Friedman-Schwartz production function 
D)  the Cobb-Douglas production function 
E)  the Glass-Steagall production function 
A)  the Lucas production function 
B)  the Keynesian production function 
C)  the Friedman-Schwartz production function 
D)  the Cobb-Douglas production function 
E)  the Glass-Steagall production function

Question 7

If the production function is given by $Y = K ^ { 1 / 4 } L ^ { 3 / 4 }$ and K = 81 and L = 2.5, total output equals about:

Accepted Answer

A)  Y = 1 
B)  Y = 0.3 
C)  Y = 22.1 
D)  Y = 6.0 
E)  Y = 82.4 
A)  Y = 1 
B)  Y = 0.3 
C)  Y = 22.1 
D)  Y = 6.0 
E)  Y = 82.4

Question 8

In the United States, the average number of years of education for adults over the age of 25 is 18 years.

Accepted Answer

A) True 
 B)False

Question 9

As an economist working at the International Monetary Fund, you are given the following data for Burundi: observed per capita GDP, relative to the United States, is 0.01; predicted per capita GDP, given by $y = k ^ { 1 / 3 }$ , is 0.18. What is total factor productivity?

Accepted Answer

A)  0.44 
B)  0.98 
C)  0.06 
D)  0.00 
E)  18.0 
A)  0.44 
B)  0.98 
C)  0.06 
D)  0.00 
E)  18.0

Question 10

State whether the following production functions exhibit increasing, constant, or decreasing returns to scale in K and L.
(a) $Y = K ^ { 1 / 3 } L ^ { 1 / 2 }$ 
(b) $Y = K ^ { 2 / 3 } L$ 
(c) $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$

Accepted Answer

The answer to this lies in multiplying e

Question 11

In the poorest countries in the world, the average number of years of education for adults over the age of 25 is about:

Accepted Answer

A)  4 
B)  1 
C)  6 
D)  12 
E)  9 
A)  4 
B)  1 
C)  6 
D)  12 
E)  9

Question 12

The solution to the firm's profit maximization is:

Accepted Answer

A)  MPL = w 
B)  MPL = w and MPK = r 
C)  MPL  w and MPK = r 
A)  MPL = w 
B)  MPL = w and MPK = r 
C)  MPL  w and MPK = r

Question 13

If the marginal product of capital equals the rental rate of capital, firms should not hire any more capital.

Accepted Answer

A) True 
 B)False

Question 14

You are an economist working for the International Monetary Fund. Your boss wants to know what the total factor productivity of China is, but all you have is data on per capita GDP, y, and the per capita capital stock, k. If you assume that capital's share of GDP is one-third, what would you use to find total factor productivity?

Accepted Answer

A)  $\bar { A } = \frac { ( 1 / 3 ) k } { y }$ 
B)  $\bar { A } = y \times k ^ { 1 / 3 }$ 
C)  $\bar { A } = \frac { k ^ { 1 / 3 } } { y }$ 
D)  $\bar { A } = \frac { y } { k ^ { 1 / 3 } }$ 
E)  None of these answers are correct. 
A)  $\bar { A } = \frac { ( 1 / 3 ) k } { y }$ 
B)  $\bar { A } = y \times k ^ { 1 / 3 }$ 
C)  $\bar { A } = \frac { k ^ { 1 / 3 } } { y }$ 
D)  $\bar { A } = \frac { y } { k ^ { 1 / 3 } }$ 
E)  None of these answers are correct.

Question 15

One of the key characteristics of the Cobb-Douglas production function is:

Accepted Answer

A)  increasing returns to scale 
B)  decreasing returns to scale 
C)  constant returns to scale 
D)  that it compacts all inputs into a single equation 
E)  that it is an exact replication of a firm's production function 
A)  increasing returns to scale 
B)  decreasing returns to scale 
C)  constant returns to scale 
D)  that it compacts all inputs into a single equation 
E)  that it is an exact replication of a firm's production function

Question 16

The text uses this analogy of the economic model: "As the model-builder, ________ what actions the robots can take and ________ the raw materials that fill the robot world. After constructing the world, you switch on the power source and ________."

Accepted Answer

A)  you determine; you provide; you know what happens 
B)  reality determines; reality provides; watch what happens 
C)  reality determines; reality provides; you know what happens 
D)  you determine; you provide; watch what happens 
E)  None of these answers are correct. 
A)  you determine; you provide; you know what happens 
B)  reality determines; reality provides; watch what happens 
C)  reality determines; reality provides; you know what happens 
D)  you determine; you provide; watch what happens 
E)  None of these answers are correct.

Question 17

Which of the following explain(s) differences in total factor productivity?

Accepted Answer

A)  institutions 
B)  human capital 
C)  natural resources 
D)  technology 
E)  All of these answers are correct. 
A)  institutions 
B)  human capital 
C)  natural resources 
D)  technology 
E)  All of these answers are correct.

Question 18

Suppose the payments to capital and labor are (w*L*)/Y* = 2/3 and (r*L*)/Y* = 1/3, respectively. One implication of this result is that ________ and profits are ________.

Accepted Answer

A)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }$ ; positive 
B)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }$ ; equal to zero 
C)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }$ ; negative 
D)  $\left( w ^ { * } L ^ { * } - r ^ { * } K ^ { * } \right) = Y ^ { * }$ ; equal to zero 
E)  $\left( w ^ { * } L ^ { * } / Y ^ { * } \right) \left( r ^ { * } K ^ { * } / Y ^ { * } \right) = 0$ ; negative 
A)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }$ ; positive 
B)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }$ ; equal to zero 
C)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }$ ; negative 
D)  $\left( w ^ { * } L ^ { * } - r ^ { * } K ^ { * } \right) = Y ^ { * }$ ; equal to zero 
E)  $\left( w ^ { * } L ^ { * } / Y ^ { * } \right) \left( r ^ { * } K ^ { * } / Y ^ { * } \right) = 0$ ; negative

Question 19

For efficient allocation of resources ________ and ________ must be equal across firms.

Accepted Answer

A)  the marginal product of capital; the marginal product of labor 
B)  nominal wages; real wages 
C)  the capital stock; the labor stock 
D)  unemployment must be equal to its natural rate; wages 
E)  net exports should be zero; the marginal product of capital 
A)  the marginal product of capital; the marginal product of labor 
B)  nominal wages; real wages 
C)  the capital stock; the labor stock 
D)  unemployment must be equal to its natural rate; wages 
E)  net exports should be zero; the marginal product of capital

Question 20

Figure 4.4: Labor Market  
-In Figure 4.4, MPL represents the ________, $\bar { L }$ represents the ________, and the intersection of the two yields ________.

Accepted Answer

A)  labor supply; labor demand; the equilibrium wage 
B)  labor demand; labor supply; the equilibrium wage 
C)  labor supply; labor demand; the equilibrium rental rate of capital 
D)  labor demand; labor supply; the amount of capital hired 
E)  None of these answers are correct. 
A)  labor supply; labor demand; the equilibrium wage 
B)  labor demand; labor supply; the equilibrium wage 
C)  labor supply; labor demand; the equilibrium rental rate of capital 
D)  labor demand; labor supply; the amount of capital hired 
E)  None of these answers are correct.

Consider an economy where the only consumption good is ice cream. Firms in this economy must:

The production function $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ describes:

If the production function is $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , then in per worker terms, it can be written as $y = K ^ { 1 / 3 } / L$ .

What are the three sources of total factor productivity discussed in the text? Can you name other possible sources? Explain your answer.

A firm's profit is simply defined as:

The equation $Y = K ^ { a } L ^ { 1 - a }$ is called:

If the production function is given by $Y = K ^ { 1 / 4 } L ^ { 3 / 4 }$ and K = 81 and L = 2.5, total output equals about:

In the United States, the average number of years of education for adults over the age of 25 is 18 years.

As an economist working at the International Monetary Fund, you are given the following data for Burundi: observed per capita GDP, relative to the United States, is 0.01; predicted per capita GDP, given by $y = k ^ { 1 / 3 }$ , is 0.18. What is total factor productivity?

State whether the following production functions exhibit increasing, constant, or decreasing returns to scale in K and L. (a) $Y = K ^ { 1 / 3 } L ^ { 1 / 2 }$ (b) $Y = K ^ { 2 / 3 } L$ (c) $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$

In the poorest countries in the world, the average number of years of education for adults over the age of 25 is about:

The solution to the firm's profit maximization is:

If the marginal product of capital equals the rental rate of capital, firms should not hire any more capital.

One of the key characteristics of the Cobb-Douglas production function is:

The text uses this analogy of the economic model: "As the model-builder, what actions the robots can take and the raw materials that fill the robot world. After constructing the world, you switch on the power source and ."

Which of the following explain(s) differences in total factor productivity?

Suppose the payments to capital and labor are (wL)/Y* = 2/3 and (rL)/Y* = 1/3, respectively. One implication of this result is that and profits are .

For efficient allocation of resources and must be equal across firms.

Figure 4.4: Labor Market $Figure 4.4: Labor Market -In Figure 4.4, MPL represents the , \bar { L } represents the , and the intersection of the two yields .$ -In Figure 4.4, MPL represents the , $\bar { L }$ represents the , and the intersection of the two yields .

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 4: A Model of Production

Consider an economy where the only consumption good is ice cream. Firms in this economy must:

The production function Y=K1/3L2/3Y = K ^ { 1 / 3 } L ^ { 2 / 3 }Y=K1/3L2/3 describes:

If the production function is Y=K1/3L2/3Y = K ^ { 1 / 3 } L ^ { 2 / 3 }Y=K1/3L2/3 , then in per worker terms, it can be written as y=K1/3/Ly = K ^ { 1 / 3 } / Ly=K1/3/L .

What are the three sources of total factor productivity discussed in the text? Can you name other possible sources? Explain your answer.

A firm's profit is simply defined as:

The equation Y=KaL1−aY = K ^ { a } L ^ { 1 - a }Y=KaL1−a is called:

If the production function is given by Y=K1/4L3/4Y = K ^ { 1 / 4 } L ^ { 3 / 4 }Y=K1/4L3/4 and K = 81 and L = 2.5, total output equals about:

In the United States, the average number of years of education for adults over the age of 25 is 18 years.

As an economist working at the International Monetary Fund, you are given the following data for Burundi: observed per capita GDP, relative to the United States, is 0.01; predicted per capita GDP, given by y=k1/3y = k ^ { 1 / 3 }y=k1/3 , is 0.18. What is total factor productivity?

State whether the following production functions exhibit increasing, constant, or decreasing returns to scale in K and L. (a) Y=K1/3L1/2Y = K ^ { 1 / 3 } L ^ { 1 / 2 }Y=K1/3L1/2 (b) Y=K2/3LY = K ^ { 2 / 3 } LY=K2/3L (c) Y=K1/2L1/2Y = K ^ { 1 / 2 } L ^ { 1 / 2 }Y=K1/2L1/2

In the poorest countries in the world, the average number of years of education for adults over the age of 25 is about:

The solution to the firm's profit maximization is:

If the marginal product of capital equals the rental rate of capital, firms should not hire any more capital.

One of the key characteristics of the Cobb-Douglas production function is:

The text uses this analogy of the economic model: "As the model-builder, ________ what actions the robots can take and ________ the raw materials that fill the robot world. After constructing the world, you switch on the power source and ________."

Which of the following explain(s) differences in total factor productivity?

Suppose the payments to capital and labor are (w*L*)/Y* = 2/3 and (r*L*)/Y* = 1/3, respectively. One implication of this result is that ________ and profits are ________.

For efficient allocation of resources ________ and ________ must be equal across firms.

Figure 4.4: Labor Market -In Figure 4.4, MPL represents the ________, Lˉ\bar { L }Lˉ represents the ________, and the intersection of the two yields ________.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

The production function $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ describes:

If the production function is $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , then in per worker terms, it can be written as $y = K ^ { 1 / 3 } / L$ .

The equation $Y = K ^ { a } L ^ { 1 - a }$ is called:

If the production function is given by $Y = K ^ { 1 / 4 } L ^ { 3 / 4 }$ and K = 81 and L = 2.5, total output equals about:

As an economist working at the International Monetary Fund, you are given the following data for Burundi: observed per capita GDP, relative to the United States, is 0.01; predicted per capita GDP, given by $y = k ^ { 1 / 3 }$ , is 0.18. What is total factor productivity?

State whether the following production functions exhibit increasing, constant, or decreasing returns to scale in K and L. (a) $Y = K ^ { 1 / 3 } L ^ { 1 / 2 }$ (b) $Y = K ^ { 2 / 3 } L$ (c) $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$

The text uses this analogy of the economic model: "As the model-builder, what actions the robots can take and the raw materials that fill the robot world. After constructing the world, you switch on the power source and ."

Suppose the payments to capital and labor are (wL)/Y* = 2/3 and (rL)/Y* = 1/3, respectively. One implication of this result is that and profits are .

For efficient allocation of resources and must be equal across firms.

Figure 4.4: Labor Market $Figure 4.4: Labor Market -In Figure 4.4, MPL represents the , \bar { L } represents the , and the intersection of the two yields .$ -In Figure 4.4, MPL represents the , $\bar { L }$ represents the , and the intersection of the two yields .