1.________ will increase real GDP in the short run.
A) A decrease in government spending.
B)A fall in the price level.
C) An increase in the natural rate of unemployment.
D) An increase in labor hours.
2.Suppose that in a particular factory, holding other things equal, when employment increased from 100 to 110 workers, output increased from 100 to 200 units. If employment was increased from 110 to 120 workers holding other things equal, then output would.
A)increase by more than 100 because of higher labor force participation.
B) increase by more than 100 because of increasing opportunity cost.
C) increase by less than 100 because of a rising price level.
D) increase by less than 100 because of diminishing returns.
3.An increase in the amount of capital leads to ________ the production function and a technological advance leads to ________ the production function.
A) a movement along; a movement along.
B) a movement along; an upward shift in.
C) an upward shift in; an upward shift in.
D) a downward shift in; an upward shift in.
6. The demand for labor ________ and the accumulated skill and knowledge of human is called ________.
A) is measured by the one-third rule; technology
B) depends on the nominal wage rate; human capital
C) depends on the real wage rate; human capital
D) is independent of technology; the marginal product of labor
7.The real wage rate measures the
A) quantity of goods and services that an hour of work will buy.
B) average weekly earnings in dollars of a worker.
C) dollar value of an hour of work.
D) dollar value of what a worker could earn in another job.
8.The demand for labor curve slopes downwards because
A) as more workers are hired, the marginal product of labor increases.
B) as more workers are hired, the marginal product of labor decreases.
C) output increases as more workers are hired.
D) as more workers are hired, output decreases.
9.An increase in the productivity will ________ potential GDP, ________ employment, and ________ the real wage.
A) decrease; increase; raise
B) increase; increase; raise
C) increase; decrease; lower
D) increase; increase; lower
10.Labor productivity rises
A) if the amount of capital per worker increases.
B) in the absence of technological progress.
C) if firms invest in hiring more workers rather than buying more capital.
D) if the amount of capital per worker decreases.
11.If the economy is at full employment, the
A) entire population is employed.
B) entire labor force is employed.
C) long-run aggregate supply curve is upward sloping.
D) quantity of labor supplied equals the quantity of labor demanded.
12.An increase in the population will ________ potential GDP, ________ employment, and ________ the real wage.
A decrease; increase; raise
B) increase; increase; raise
C) increase; decrease; lower
D) increase; increase; lower
13.The one-third rule
A) reflects the existence of 3 factors of production, each contributing 1/3 to economic growth.
B) can be used to show how capital contributes to an increase in output.
C) measures the Okun gap.
D) reflects the fact that any technological advance on the average is initially adopted by only 1/3 of firms.
14. The one-third rule
A) divides growth of the labor force into growth in employment and growth in the real wage rate.
B) says that a 1 percent increase in capital per hour of labor leads to a 1/3 percent increase in real GDP per hour of labor.
C) asserts that 1/3 of changes in productivity are the result of changes in the labor force.
D) None of the above answers is correct.
15. If productivity constantly increases, then the real wage rate ________ and employment ________.
A) constantly rises; constantly increases
B) does not change; constantly decreases
C) constantly decreases; does not change
D) constantly rises; does not change
16. The return on capital is the ________ interest rate, which is the ________ interest rate adjusted for ________.
A) nominal; real; inflation rate.
B) real; nominal; inflation rate.
C) real; nominal; real GDP.
D) GDP; nominal; unemployment rate.
A) A decrease in government spending.
B)A fall in the price level.
C) An increase in the natural rate of unemployment.
D) An increase in labor hours.
2.Suppose that in a particular factory, holding other things equal, when employment increased from 100 to 110 workers, output increased from 100 to 200 units. If employment was increased from 110 to 120 workers holding other things equal, then output would.
A)increase by more than 100 because of higher labor force participation.
B) increase by more than 100 because of increasing opportunity cost.
C) increase by less than 100 because of a rising price level.
D) increase by less than 100 because of diminishing returns.
3.An increase in the amount of capital leads to ________ the production function and a technological advance leads to ________ the production function.
A) a movement along; a movement along.
B) a movement along; an upward shift in.
C) an upward shift in; an upward shift in.
D) a downward shift in; an upward shift in.
6. The demand for labor ________ and the accumulated skill and knowledge of human is called ________.
A) is measured by the one-third rule; technology
B) depends on the nominal wage rate; human capital
C) depends on the real wage rate; human capital
D) is independent of technology; the marginal product of labor
7.The real wage rate measures the
A) quantity of goods and services that an hour of work will buy.
B) average weekly earnings in dollars of a worker.
C) dollar value of an hour of work.
D) dollar value of what a worker could earn in another job.
8.The demand for labor curve slopes downwards because
A) as more workers are hired, the marginal product of labor increases.
B) as more workers are hired, the marginal product of labor decreases.
C) output increases as more workers are hired.
D) as more workers are hired, output decreases.
9.An increase in the productivity will ________ potential GDP, ________ employment, and ________ the real wage.
A) decrease; increase; raise
B) increase; increase; raise
C) increase; decrease; lower
D) increase; increase; lower
10.Labor productivity rises
A) if the amount of capital per worker increases.
B) in the absence of technological progress.
C) if firms invest in hiring more workers rather than buying more capital.
D) if the amount of capital per worker decreases.
11.If the economy is at full employment, the
A) entire population is employed.
B) entire labor force is employed.
C) long-run aggregate supply curve is upward sloping.
D) quantity of labor supplied equals the quantity of labor demanded.
12.An increase in the population will ________ potential GDP, ________ employment, and ________ the real wage.
A decrease; increase; raise
B) increase; increase; raise
C) increase; decrease; lower
D) increase; increase; lower
13.The one-third rule
A) reflects the existence of 3 factors of production, each contributing 1/3 to economic growth.
B) can be used to show how capital contributes to an increase in output.
C) measures the Okun gap.
D) reflects the fact that any technological advance on the average is initially adopted by only 1/3 of firms.
14. The one-third rule
A) divides growth of the labor force into growth in employment and growth in the real wage rate.
B) says that a 1 percent increase in capital per hour of labor leads to a 1/3 percent increase in real GDP per hour of labor.
C) asserts that 1/3 of changes in productivity are the result of changes in the labor force.
D) None of the above answers is correct.
15. If productivity constantly increases, then the real wage rate ________ and employment ________.
A) constantly rises; constantly increases
B) does not change; constantly decreases
C) constantly decreases; does not change
D) constantly rises; does not change
16. The return on capital is the ________ interest rate, which is the ________ interest rate adjusted for ________.
A) nominal; real; inflation rate.
B) real; nominal; inflation rate.
C) real; nominal; real GDP.
D) GDP; nominal; unemployment rate.