Question 1

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 2

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 3

A ten percent increase in total factor productivity A will increase ________.

Accepted Answer

A) the marginal product of capital (MPK)by ten percent 
B) the marginal product of labor (MPL)by ten percent 
C) output by ten percent 
D) all of the above 
E) none of the above 
A) the marginal product of capital (MPK)by ten percent 
B) the marginal product of labor (MPL)by ten percent 
C) output by ten percent 
D) all of the above 
E) none of the above

Question 4

Since the 1980s,China's output per person has increased tremendously.Which of these possible contributors to economic growth in China is a good example of a positive supply shock?

Accepted Answer

A) high levels of saving and investment 
B) declining rate of population growth 
C) rising consumption of energy 
D) all of the above 
E) none of the above 
A) high levels of saving and investment 
B) declining rate of population growth 
C) rising consumption of energy 
D) all of the above 
E) none of the above

Question 5

Constant returns to scale (CRS)implies ________.

Accepted Answer

A) constant returns to labor 
B) constant returns to capital 
C) increasing marginal products 
D) variable total factor productivity 
E) diminishing marginal products 
A) constant returns to labor 
B) constant returns to capital 
C) increasing marginal products 
D) variable total factor productivity 
E) diminishing marginal products

Question 6

When a particular firm is fully utilizing its capital,its output is given by Y = 10 ×   .The cost of labor is $1 per unit.To maximize profit,how many units of labor should this firm use?

Accepted Answer

A) 25 
B) 5 
C) 3.16 
D) 100 
E) 50 
A) 25 
B) 5 
C) 3.16 
D) 100 
E) 50

Question 7

A decrease in the growth rate of labor productivity is likely to cause a decrease in ________.

Accepted Answer

A) the growth rate of the real wage 
B) the growth rate of the marginal product of capital 
C) the growth rate of the labor supply 
D) the share of labor income in national income 
E) none of the above 
A) the growth rate of the real wage 
B) the growth rate of the marginal product of capital 
C) the growth rate of the labor supply 
D) the share of labor income in national income 
E) none of the above

Question 8

An economy's total labor income is $2 trillion,and total capital income is $1 trillion.In the Cobb-Douglas production function,the exponent on capital is ________.

Accepted Answer

A) two-thirds 
B) one-half 
C) one-third 
D) 0.3 
E) none of the above 
A) two-thirds 
B) one-half 
C) one-third 
D) 0.3 
E) none of the above

Question 9

The marginal product of labor (MPL)can be calculated from the following ________.

Accepted Answer

A) the labor share of income and the average output per unit of labor 
B) the labor share of income and average labor per worker 
C) output and labor 
D) the labor share of income and output 
E) none of the above 
A) the labor share of income and the average output per unit of labor 
B) the labor share of income and average labor per worker 
C) output and labor 
D) the labor share of income and output 
E) none of the above

Question 10

Which of the following is an example of an adverse supply shock?

Accepted Answer

A) OPEC cuts oil production 
B) a large oil spill in the Gulf of Mexico 
C) a devastating hurricane off the Louisiana coast 
D) all of the above 
E) none of the above 
A) OPEC cuts oil production 
B) a large oil spill in the Gulf of Mexico 
C) a devastating hurricane off the Louisiana coast 
D) all of the above 
E) none of the above

Question 11

Which of the following is true about labor productivity?

Accepted Answer

A) it is the amount of total factor productivity (TFP)per unit of labor 
B) it is more difficult to measure than TFP 
C) it is a more general and better measure of productivity than TFP 
D) all of the above 
E) none of the above 
A) it is the amount of total factor productivity (TFP)per unit of labor 
B) it is more difficult to measure than TFP 
C) it is a more general and better measure of productivity than TFP 
D) all of the above 
E) none of the above

Question 12

An example of a supply shock could be ________.

Accepted Answer

A) a technological innovation 
B) a natural disaster 
C) an oil price increase 
D) all of the above 
E) none of the above 
A) a technological innovation 
B) a natural disaster 
C) an oil price increase 
D) all of the above 
E) none of the above

Question 13

To get the first order conditions in a profit maximization problem,we must ________.

Accepted Answer

A) set the profit function equal to zero and solve for the production function 
B) set the partial derivatives of the production function equal to zero and solve for the price 
C) set the partial derivative of the profit function equal to zero and solve for the marginal products 
D) set the production function equal to zero and solve for the marginal products 
E) none of the above 
A) set the profit function equal to zero and solve for the production function 
B) set the partial derivatives of the production function equal to zero and solve for the price 
C) set the partial derivative of the profit function equal to zero and solve for the marginal products 
D) set the production function equal to zero and solve for the marginal products 
E) none of the above

Question 14

If country X has a higher capital per person than country Y,then ________.

Accepted Answer

A) country X is richer than country Y 
B) the only way for country X to be richer than country Y is if X is just as productive (has the same TFP)as Y 
C) the only way for country Y to be richer than country X is if Y is more productive (has a higher TFP)than X 
D) the only way for country X to be richer than country Y is if X is less productive (has a lower TFP)than Y 
E) none of the above 
A) country X is richer than country Y 
B) the only way for country X to be richer than country Y is if X is just as productive (has the same TFP)as Y 
C) the only way for country Y to be richer than country X is if Y is more productive (has a higher TFP)than X 
D) the only way for country X to be richer than country Y is if X is less productive (has a lower TFP)than Y 
E) none of the above

Question 15

As the amount of labor input increases ________.This means that the marginal product of labor (MPL)________.

Accepted Answer

A) the slope of the production function increases;goes up 
B) the slope of the production function falls;declines 
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 increases;goes up 
B) the slope of the production function falls;declines 
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 16

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

Question 17

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 18

Capital per person in India is about six percent and per capita income is about eight percent of the U.S.level.Given that per capita income y = A   ,calculate the level of total factor productivity (A),relative to the U.S.level,that would be needed for India to match the U.S.level of per capita income.(   = 0.43)

Accepted Answer

1 = A × 0.

Question 19

The marginal product of labor (MPL)measures ________.

Accepted Answer

A) by how much labor increases for each additional unit of output 
B) by how much labor increases for each additional unit of capital 
C) by how much total factor productivity increases for each additional unit of labor 
D) by how much labor increases for each additional unit of productivity 
E) by how much output increases for each additional unit of labor 
A) by how much labor increases for each additional unit of output 
B) by how much labor increases for each additional unit of capital 
C) by how much total factor productivity increases for each additional unit of labor 
D) by how much labor increases for each additional unit of productivity 
E) by how much output increases for each additional unit of labor

Question 20

Consider an economy in which 350 = 3 ×     .Calculate the long-run equilibrium values of factor prices and incomes.

Accepted Answer

Capital's share of income is 30%,so the

Exam 3: Aggregate Production and Productivity

Real labor income is given by ________.

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

A ten percent increase in total factor productivity A will increase ________.

Since the 1980s,China's output per person has increased tremendously.Which of these possible contributors to economic growth in China is a good example of a positive supply shock?

Constant returns to scale (CRS)implies ________.

When a particular firm is fully utilizing its capital,its output is given by Y = 10 × .The cost of labor is $1 per unit.To maximize profit,how many units of labor should this firm use?

A decrease in the growth rate of labor productivity is likely to cause a decrease in ________.

An economy's total labor income is $2 trillion,and total capital income is $1 trillion.In the Cobb-Douglas production function,the exponent on capital is ________.

The marginal product of labor (MPL)can be calculated from the following ________.

Which of the following is an example of an adverse supply shock?

Which of the following is true about labor productivity?

An example of a supply shock could be ________.

To get the first order conditions in a profit maximization problem,we must ________.

If country X has a higher capital per person than country Y,then ________.

As the amount of labor input increases ________.This means that the marginal product of labor (MPL)________.

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

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

The marginal product of labor (MPL)measures ________.

Consider an economy in which 350 = 3 × .Calculate the long-run equilibrium values of factor prices and incomes.

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

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As the amount of labor input increases .This means that the marginal product of labor (MPL).