Deck 2: Sensation and Perception

Question 1

The table below represents Freedonia's macroeconomic data for 2002 and 2003.

Suppose that the production function is given by Y = AK^0.25 N^0.75. Between 2002 and 2003, total factor productivity of Freedonia's economy increased by

A) -1.5%.
B) 5.0%.
C) 5.5%.
D) 12.7%.

Answer 1

-1.5%.

Question 2

The Grungo Company has the following
If the real wage rate is 6, how many workers will the company hire?

A) 0
B)1
C)3
D)5

Answer 2

3

Question 3

The Widget Company has the following production function:

If widgets sell for $6 each and the wage rate is $33, how many workers will the company hire?

A) 0
B)1
C)2
D)4

Answer 3

4

Question 4

Zowie! Surfboards has the following production function:

If surfboards sold for $30 and the nominal wage rate was $200, how many workers would the firm employ?

A) 2
B)3
C)4
D)5

Question 5

Suppose the country of Prescott has the production function Y = AK^0.25N^0.75. The following table shows Prescott's macroeconomic data for 2002 and 2003:
?
a. By how much did productivity grow between 2002 and 2003?
b. If productivity remains constant from 2003 to 2004 and the labour force increases from 75 to 80, how large will the capital stock need to be to produce output of 2200 in 2004?
a. By how much did productivity grow between 2002 and 2003?
b. If productivity remains constant from 2003 to 2004 and the labour force increases from 75 to 80, how large will the capital stock need to be to produce output of 2200 in 2004?

Question 6

Take an economy where in 2001 real GDP is 4861.4, the capital stock is 13,806.2 and employment is 118.4 (in millions of workers). In 2002 the numbers were: real GDP 4986.3, capital stock 14,040.8, employment 119.2. Suppose the production function in both years is Y = AK^0.25N^0.75.
a. Calculate total factor productivity for 2001 and 2002.
b. How much did total factor productivity grow from 2001 to 2002?
c. Calculate the percent increase in real output between 2001 and 2002.
d. Suppose tax incentives had raised the capital stock in 2002, making it 10% higher, at 15,444.9. If employment didn't change, what would have been the percent increase in real output between 2001 and 2002?
e. Instead of the increase in the capital stock in part d, suppose employment was 10% higher in 2002, making it 131.1. With the capital stock fixed at 14,040.8, what would have been the increase in real output between 2001 and 2002?

Question 7

In December 2002, Kwaki had a labour force of 14,757,000, employment of 13,097,000, and there were 7,994,000 people not in the labour force (all numbers rounded to the nearest 1000).
a. Calculate the unemployment rate.
b. Calculate the participation rate.
c. Calculate the employment ratio.

Question 8

How would each of the following affect the current level of full-employment output?
-The new government changes immigration policy to restrict the number of immigrants entering the country each year.

Question 9

How would each of the following affect the current level of full-employment output?
-New technology allows massive production of oil and gas through fracking.

Question 10

How would each of the following affect the current level of full-employment output?
-A hurricane of unprecedented strength hits the country leaving huge damages to residential and business properties and infrastructure.

Question 11

How would each of the following affect the current level of full-employment output?
-Robots equipped with artificial intelligence are widely used in production.