Exam 3: Aggregate Production and Productivity

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?

Which of the following is true about per capita income?

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

Suppose an economy has an increase in labor input of 60 percent,while output has increased by 100 percent.Assuming no change in total factor productivity,calculate the percentage increase in the capital input.(Use the Cobb-Douglas production function Y = A . )

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

What do we learn from the shape of the Cobb-Douglas production function?

The three oil shocks the U.S.experienced in 1973-1974,1979-1980 and 2007-2008 had a consistent result ________.

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?

Suppose that reduced barriers to international financial transactions cause an increase in the economy's supply of capital.Explain,step-by-step,how the economy adjusts to arrive at a new long-run equilibrium.

Given the production function Y = A ,if the rental price of capital is 0.133,Y = 690,and K = 1,728,what is the value of the exponent α? If A = 1,and the real wage is 1.15,is this economy in a long-run equilibrium?

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

Suppose that labor productivity in one economy is higher than it is in some other economy.Does that mean that the first economy is using its productive resources better than the second economy? Explain.

To analyze aggregate productivity,economists typically assume ________.

The output an economy can produce with one unit of capital and one unit of labor is ________.

What does the Cobb-Douglas production function assume about the input shares in the economy?

Use the Cobb-Douglas production function to show that a one-unit increase in the labor input will reduce the marginal product of labor and increase the marginal product of capital.Explain each of these results.

If the quantities of labor and capital in an economy each increase by the same x percent,which of the following will increase by x percent?

What do we learn from the shape of the Cobb-Douglas production function?

As firms use more and more of an input,________.

The marginal product of capital indicates ________.Therefore the MPK curve is also ________.