Macro Chapter 7 Questions

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 60 chicken breasts per hour by hand, while Tom's experience allows him to debone 120 chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain maximum average hourly productivity, ________ is assigned to use the machine and their combined average hourly productivity as a team is ________ chicken breasts.

Mike; 110

Real GDP per person in Northland is $30,000, while real GDP in Southland is $10,000, However, Northland's real GDP per person is growing at 1 percent per year, and Southland's real GDP per person is growing at 3 percent per year. If these growth rates persist indefinitely, then:

Southland's real GDP per person will eventually be greater than Northland's.

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ________ increases average labor productivity.

a manager

The costs of economic growth include all of the following except consumption sacrificed for:

additional hours of leisure.

Developing new products and services as well as introducing new production methods are among the ways that ________ increases average labor productivity.

an entrepreneur

The establishment of well-defined property rights increases:

average labor productivity

The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs) is based on the:

cost-benefit principle.

When new technologies are applied to the production and distribution of goods and services:

diminishing returns to capital still hold.

More economic growth is not necessarily better unless the benefits of growth:

exceed the costs of growth.

The growth of real GDP per person in the United States between 1960 and 2016 was the result of:

growth in both average labor productivity and the share of population employed

The rise in average living standards experienced by most industrialized countries:

has been more rapid since 1950 than before 1950

Real GDP per person can increase

if the share of population employed and/or average labor productivity increases.

In order to promote growth, the poorest countries—in contrast to the middle-level and rich countries—need most to:

improve their legal and political environments.

The biggest barrier to growth for many of the poorest countries in the world is the need for:

improved legal and political frameworks.

The benefits of economic growth are ________, while the costs of economic growth are ________.

increased output per person; the consumption sacrificed in exchange for capital formation

Three workers run a house painting business and always work the same number of hours together. The paint they use requires applying two coats. Each worker paints 200 square feet per hour using a roller or 80 square feet per hour using a brush. If a technological advance provides a paint that only requires one coat, their average labor productivity per hour as a team:

increases

A government policy of providing job training for unskilled youths is an example of a policy to promote economic growth by:

increasing human capital.

A government policy that allows retirement savings to accumulate tax-free is an example of a policy to promote economic growth by:

increasing physical capital.

Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will increase output ________ in Alpha compared to Beta, holding other factors constant.

less

Gamma has $30,000 of capital per worker, while Omega has $7,500 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will increase output ________ in Gamma compared to Omega, holding other factors constant.

less

An example of a government policy to provide a framework within which the private sector can operate productively is

maintaining a well-functioning legal system

Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is $10,000. However, Richland's real GDP per person is growing at 1 percent per year, and Poorland's real GDP per person is growing at 3 percent per year. After 50 years, real GDP per person in Richland minus real GDP in Poorland is:

negative.

Research confirms that government provision of infrastructure:

promotes economic growth.

The key indicator of a country's living standard and economic well-being is:

real GDP per person.

Arguments that economic growth must be constrained by environmental problems and limits of natural resources ignore the fact that economic growth can:

take the form of improved quality as well as increased quantity.

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:

the less an additional unit of capital adds to production.

If average labor productivity in two countries is the same, average living standards will be lower in the country with:

the lower share of population employed

An example of a government policy to increase human capital formation is:

the provision of publicly-funded education.

Average labor productivity is determined by:

the quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment.

Real GDP per person equals average labor productivity:

times the share of population employed

Suppose that average labor productivity in Country C is $6,000, and that Countries C and A have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country A?

$5,000

Suppose that average labor productivity in Country C is $5,000, and that Countries C and E have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country E?

$6,250

Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual compound interest, and you do not withdraw from the account until your retirement at the age of 65, 44 years later. How much more will be in your account if the interest rate is 6 percent rather than 4 percent?

$7,369

The population of Omega totals one million people, 30 percent of whom are employed. Average output per worker in Alpha is $30,000. Real GDP per person in Alpha totals:

$9,000.

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

15,000

Over the period from 1870 to 2010, the growth of real GDP per capita tended to be more rapid between ________, particularly for ________

1950-2010; Japan

Suppose that the share of population employed in Country B is 50 percent, and that Countries B and C have the same real GDP per capita. Based on the information in the table, what share of Country C's population must be employed?

20.0 percent

Betty and Wilma are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week. By manually entering the price of each product purchased into the cash register, Betty can check out 20 customers and Wilma can check out 30 customers per hour. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Betty and Wilma can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ________ customers per hour and ________ customers per hour after the new machines were installed.

25; 60

Jim and Fred are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week and each can check out 30 customers per hour by manually entering the price of each product purchased into the cash register. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Jim and Fred can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ________ customers per hour and ________ customers per hour after the new machines were installed.

30; 60

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 30 chicken breasts per hour, while Tom's experience allows him to debone 60 chicken breasts per hour. Both Mike and Tom work 40 hours per week. Their average hourly productivity as a team is ________ chicken breasts.

45