Question 1

The law of diminishing marginal product to capital means that as we add additional units of capital:

Accepted Answer

A)  and labor, output will increase but at a constant rate 
B)  and labor, output will increase but at a decreasing rate 
C)  but hold labor constant, output will increase but at an increasing rate 
D)  but hold labor constant, output will increase but at a constant rate 
E)  but hold labor constant, output will increase but at a decreasing rate 
A)  and labor, output will increase but at a constant rate 
B)  and labor, output will increase but at a decreasing rate 
C)  but hold labor constant, output will increase but at an increasing rate 
D)  but hold labor constant, output will increase but at a constant rate 
E)  but hold labor constant, output will increase but at a decreasing rate

Question 2

Consider two countries, labeled 1 and 2. Each has the production function $Y = \bar { A } _ { i } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , i = 1, 2. If the only difference between the two countries is that A1 > A2,

Accepted Answer

A)  Country 2 will not produce anything, ceteris paribus. 
B)  Country 2 will produce more than Country 1, ceteris paribus. 
C)  Country 1 will produce more than Country 2, ceteris paribus. 
D)  Each will produce the same amount, ceteris paribus. 
E)  Not enough information is given. 
A)  Country 2 will not produce anything, ceteris paribus. 
B)  Country 2 will produce more than Country 1, ceteris paribus. 
C)  Country 1 will produce more than Country 2, ceteris paribus. 
D)  Each will produce the same amount, ceteris paribus. 
E)  Not enough information is given.

Question 3

With a Cobb-Douglas production function $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , the marginal product of capital is ________ and the marginal product of labor is ________.

Accepted Answer

A)  MPK = (1/3)(Y/K   ); MPL = (2/3)(Y/L) 
B)  MPK = (2/3)(Y/K   ); MPL = (1/3)(Y/L) 
C)  MPK = (2/3)(Y/K   ); MPL = (2/3)(Y/L) 
D)  MPK = (1/3)(Y/K   ); MPL = (1/3)(Y/L) 
E)  None of these answers are correct. 
A)  MPK = (1/3)(Y/K   ); MPL = (2/3)(Y/L) 
B)  MPK = (2/3)(Y/K   ); MPL = (1/3)(Y/L) 
C)  MPK = (2/3)(Y/K   ); MPL = (2/3)(Y/L) 
D)  MPK = (1/3)(Y/K   ); MPL = (1/3)(Y/L) 
E)  None of these answers are correct.

Question 4

The production function of the form $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$ 
exhibits constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following do(es) NOT explain differences in total factor productivity?

Accepted Answer

A)  institutions 
B)  the labor stock 
C)  human capital 
D)  natural resources 
E)  technology 
A)  institutions 
B)  the labor stock 
C)  human capital 
D)  natural resources 
E)  technology

Question 6

In the Cobb-Douglas production function $Y = K ^ { a } L ^ { 1 - a }$ , if a = 1/3, then:

Accepted Answer

A)  labor's share of GDP is two-thirds 
B)  labor's share of GDP is one-third 
C)  capital's share of GDP is two-thirds 
D)  capital's share of income is one 
E)  labor's share of income is three 
A)  labor's share of GDP is two-thirds 
B)  labor's share of GDP is one-third 
C)  capital's share of GDP is two-thirds 
D)  capital's share of income is one 
E)  labor's share of income is three

Question 7

The two main inputs we consider in our production function model are labor and land.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following production functions exhibits increasing returns to scale?

Accepted Answer

A)  $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$ 
B)  $Y = K ^ { a } L ^ { 1 - a }$ 
C)  $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ 
D)  $Y = K ^ { 1 / 2 } L ^ { 3 / 4 }$ 
E)  All of these answers are correct. 
A)  $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$ 
B)  $Y = K ^ { a } L ^ { 1 - a }$ 
C)  $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ 
D)  $Y = K ^ { 1 / 2 } L ^ { 3 / 4 }$ 
E)  All of these answers are correct.

Question 9

If the U.S. total factor productivity is 1.00 and China's is 0.33, then the U.S. capital per worker is 67 percentage points more productive than China's.

Accepted Answer

A) True 
 B)False

Question 10

One explanation of differences in total factor productivity is differences in labor's share of GDP.

Accepted Answer

A) True 
 B)False

Question 11

As an economist working at the International Monetary Fund, you are given the following data for Italy: observed per capita GDP, relative to the United States, is 0.69; predicted per capita GDP, given by $y = k ^ { 1 / 3 }$ , is 0.98. What is total factor productivity?

Accepted Answer

A)  0.75 
B)  0.68 
C)  0.99 
D)  0.81 
E)  0.70 
A)  0.75 
B)  0.68 
C)  0.99 
D)  0.81 
E)  0.70

Question 12

Which of the following inputs do we generally consider in a simple production function?

Accepted Answer

A)  capital 
B)  consumption 
C)  natural resources 
D)  utilities 
E)  distance 
A)  capital 
B)  consumption 
C)  natural resources 
D)  utilities 
E)  distance

Question 13

A model is a ________ representation of ________ world that we use to study economic phenomena.

Accepted Answer

A)  false; a toy 
B)  mathematical; a toy 
C)  accurate; the real 
D)  mathematical; the real 
E)  accurate; a toy 
A)  false; a toy 
B)  mathematical; a toy 
C)  accurate; the real 
D)  mathematical; the real 
E)  accurate; a toy

Question 14

The firm's profit maximization problem is:

Accepted Answer

A)  max $\angle$ = F(r, w) - rK - wL
{r, w} 
B)  max $\angle$ = rK + wL - F(K, L)
{K, L} 
C)  max $\angle$ = F(K, L) - rK - wL
{r, w} 
D)  max $\angle$ = F(K, L) - rK - wL
{K, L} 
E)  All of these answers are correct. 
A)  max $\angle$ = F(r, w) - rK - wL
{r, w} 
B)  max $\angle$ = rK + wL - F(K, L)
{K, L} 
C)  max $\angle$ = F(K, L) - rK - wL
{r, w} 
D)  max $\angle$ = F(K, L) - rK - wL
{K, L} 
E)  All of these answers are correct.

Question 15

If the production function is given by $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ 
, then labor's share of GDP is one-third.

Accepted Answer

A) True 
 B)False

Question 16

In the production function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , $\bar { A }$
Represents:

Accepted Answer

A)  an unknown 
B)  the amount of capital in an economy 
C)  the amount of labor in an economy 
D)  a productivity parameter 
E)  an error term 
A)  an unknown 
B)  the amount of capital in an economy 
C)  the amount of labor in an economy 
D)  a productivity parameter 
E)  an error term

Question 17

The influences of institutions on economic performance can be easily contrasted using:

Accepted Answer

A)  North and South Korea 
B)  France and Germany 
C)  Iowa and Illinois 
D)  Uzbekistan and the U.K. 
E)  Earth and Mars 
A)  North and South Korea 
B)  France and Germany 
C)  Iowa and Illinois 
D)  Uzbekistan and the U.K. 
E)  Earth and Mars

Question 18

Refer to the following table when answering  
Table 4.1: Production Model's Prediction for Per Capita GDP (US = 1)
 $\begin{array}{lll}
&\text {Fredicted output }&\text {Observed }\
&\text {per capita, }y = \bar { k } ^ { 1 / 3 }&\text {per capita GDP } \
\hline \text { Switzerl and } & 0.966 & 1.083 \
\text { United Kingdom } & 0.828 & 0.876 \
\text { Japan } & 0.760 & 1.056 \
\text { Italy } & 0.686 & 0.975 \
\text { Spain } & 0.661 & 0.944 \
\text { Brazil } & 0.201 & 0.559 \
\text { South Africa } & 0.182 & 0.546 \
\text { China } & 0.172 & 0.528 \
\text { India } & 0.084 & 0.394 \
\text { Burundi } & 0.010 & 0.180 \
\hline
\end{array}$
-One explanation for the difference between the predicted output per person and the observed per capita GDP in Table 4.1 is differences in:

Accepted Answer

A)  per capita capital 
B)  the labor supply 
C)  factor productivity 
D)  labor's share of GDP 
E)  None of these answers are correct. 
A)  per capita capital 
B)  the labor supply 
C)  factor productivity 
D)  labor's share of GDP 
E)  None of these answers are correct.

Question 19

As a measure for total factor productivity, we can use the quantity of ________ in an economy.

Accepted Answer

A)  computers 
B)  factories 
C)  machines 
D)  kilowatt hours used 
E)  None of these answers are correct. 
A)  computers 
B)  factories 
C)  machines 
D)  kilowatt hours used 
E)  None of these answers are correct.

Question 20

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

Accepted Answer

A)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * }  Y ^ { * }$ 
D)  $\left( w ^ { * } L ^ { * } / r ^ { * } K ^ { * } \right) = Y ^ { * }$ 
E)  $\left( w ^ { * } L ^ { * } / Y ^ { * } \right) \left( r ^ { * } K ^ { * } / Y ^ { * } \right) = 1$ 
A)  $w ^ { * } L ^ { * } + r ^ { * } K ^ { * }  Y ^ { * }$ 
D)  $\left( w ^ { * } L ^ { * } / r ^ { * } K ^ { * } \right) = Y ^ { * }$ 
E)  $\left( w ^ { * } L ^ { * } / Y ^ { * } \right) \left( r ^ { * } K ^ { * } / Y ^ { * } \right) = 1$

The law of diminishing marginal product to capital means that as we add additional units of capital:

Consider two countries, labeled 1 and 2. Each has the production function $Y = \bar { A } _ { i } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , i = 1, 2. If the only difference between the two countries is that A₁ > A₂,

With a Cobb-Douglas production function $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , the marginal product of capital is and the marginal product of labor is .

The production function of the form $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$ exhibits constant returns to scale.

Which of the following do(es) NOT explain differences in total factor productivity?

In the Cobb-Douglas production function $Y = K ^ { a } L ^ { 1 - a }$ , if a = 1/3, then:

The two main inputs we consider in our production function model are labor and land.

Which of the following production functions exhibits increasing returns to scale?

If the U.S. total factor productivity is 1.00 and China's is 0.33, then the U.S. capital per worker is 67 percentage points more productive than China's.

One explanation of differences in total factor productivity is differences in labor's share of GDP.

As an economist working at the International Monetary Fund, you are given the following data for Italy: observed per capita GDP, relative to the United States, is 0.69; predicted per capita GDP, given by $y = k ^ { 1 / 3 }$ , is 0.98. What is total factor productivity?

Which of the following inputs do we generally consider in a simple production function?

A model is a representation of world that we use to study economic phenomena.

The firm's profit maximization problem is:

If the production function is given by $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , then labor's share of GDP is one-third.

In the production function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , $\bar { A }$ Represents:

The influences of institutions on economic performance can be easily contrasted using:

As a measure for total factor productivity, we can use the quantity of ________ in an economy.

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

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

The law of diminishing marginal product to capital means that as we add additional units of capital:

Consider two countries, labeled 1 and 2. Each has the production function Y=AˉiKˉ1/3L2/3Y = \bar { A } _ { i } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }Y=Aˉi​Kˉ1/3L2/3 , i = 1, 2. If the only difference between the two countries is that A1 > A2,

With a Cobb-Douglas production function Y=K1/3L2/3Y = K ^ { 1 / 3 } L ^ { 2 / 3 }Y=K1/3L2/3 , the marginal product of capital is ________ and the marginal product of labor is ________.

The production function of the form Y=K1/2L1/2Y = K ^ { 1 / 2 } L ^ { 1 / 2 }Y=K1/2L1/2 exhibits constant returns to scale.

Which of the following do(es) NOT explain differences in total factor productivity?

In the Cobb-Douglas production function Y=KaL1−aY = K ^ { a } L ^ { 1 - a }Y=KaL1−a , if a = 1/3, then:

The two main inputs we consider in our production function model are labor and land.

Which of the following production functions exhibits increasing returns to scale?

If the U.S. total factor productivity is 1.00 and China's is 0.33, then the U.S. capital per worker is 67 percentage points more productive than China's.

One explanation of differences in total factor productivity is differences in labor's share of GDP.

As an economist working at the International Monetary Fund, you are given the following data for Italy: observed per capita GDP, relative to the United States, is 0.69; predicted per capita GDP, given by y=k1/3y = k ^ { 1 / 3 }y=k1/3 , is 0.98. What is total factor productivity?

Which of the following inputs do we generally consider in a simple production function?

A model is a ________ representation of ________ world that we use to study economic phenomena.

The firm's profit maximization problem is:

If the production function is given by Y=K1/3L2/3Y = K ^ { 1 / 3 } L ^ { 2 / 3 }Y=K1/3L2/3 , then labor's share of GDP is one-third.

In the production function Y=F(K,L)=AˉKˉ1/3L2/3Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }Y=F(K,L)=AˉKˉ1/3L2/3 , Aˉ\bar { A }Aˉ Represents:

The influences of institutions on economic performance can be easily contrasted using:

As a measure for total factor productivity, we can use the quantity of ________ in an economy.

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

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

Consider two countries, labeled 1 and 2. Each has the production function $Y = \bar { A } _ { i } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , i = 1, 2. If the only difference between the two countries is that A₁ > A₂,

With a Cobb-Douglas production function $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , the marginal product of capital is and the marginal product of labor is .

The production function of the form $Y = K ^ { 1 / 2 } L ^ { 1 / 2 }$ exhibits constant returns to scale.

In the Cobb-Douglas production function $Y = K ^ { a } L ^ { 1 - a }$ , if a = 1/3, then:

As an economist working at the International Monetary Fund, you are given the following data for Italy: observed per capita GDP, relative to the United States, is 0.69; predicted per capita GDP, given by $y = k ^ { 1 / 3 }$ , is 0.98. What is total factor productivity?

A model is a representation of world that we use to study economic phenomena.

If the production function is given by $Y = K ^ { 1 / 3 } L ^ { 2 / 3 }$ , then labor's share of GDP is one-third.

In the production function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , $\bar { A }$ Represents:

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