chapter 6 (part 2)

A movement along the aggregate production function is the result of a change in A) the quantity of labor B) technology C) capital D) interest rates

A) the quantity of labor

In the above figure, what is the full-employment real wage rate and quantity of hours per year? A) $40 and 60 billion hours per year B) $50 and 100 billion hours per year C) $35 and 100 billion hours per year D) $50 and 40 billion hours per year

A) $40 and 60 billion hours per year

If real GDP is $800 million and aggregate labor hours are 20 million, labor productivity is ________. A) $40 per hour B) $16,000 million C) $40 million D) $160 per hour

A) $40 per hour

In the above figure, at the real wage rate of $50 A) there is a surplus of 100 billion hours per year. B) there is a shortage of 100 billion hours per year. C) there is a surplus of 60 billion hours per year. D) there is shortage of 20 billion hours per year

C) there is a surplus of 60 billion hours per year.

If the labor and capital grow more quickly, then real GDP will A) not grow fast enough. B) grow more quickly. C) grow more slowly. D) stay fixed at potential GDP

B) grow more quickly.

The aggregate production function shows how ________ varies with ________. A) leisure time; labor B) labor; leisure time C) real GDP; labor D) labor; capital

C) real GDP; labor

An advance in technology that increases productivity and an increase in the working-age population results in a A) rightward shift of the labor supply curve. B) rightward shift of the labor demand curve. C) rightward shift of the labor supply curve and of the labor demand curve. D) movement along the production function.

C) rightward shift of the labor supply curve and of the labor demand curve.

The supply of labor curve A) has a negative slope. B) is independent of the wage rate. C) shows how much labor workers are willing to supply at various real wage rates. D) is usually vertical.

C) shows how much labor workers are willing to supply at various real wage rates.

An increase in the population and hence the supply of labor causes a A) shortage of labor at the original real wage rate and the real wage rate will fall. B) surplus of labor at the original real wage rate and the real wage rate will rise. C) surplus of labor at the original real wage rate and the real wage rate will fall. D) shortage of labor at the original real wage rate and the real wage rate will rise.

C) surplus of labor at the original real wage rate and the real wage rate will fall.

At the full-employment equilibrium in the labor market, A) there is no unemployment. B) there are no job vacancies. C) there is neither a shortage nor a surplus of labor. D) the money wage rate equals the real wage rate.

C) there is neither a shortage nor a surplus of labor.

The aggregate production function shows that an economy increases its real GDP in the short run by A) developing new technologies. B) increasing its physical capital stock. C) using more labor. D) exploring for new deposits of natural resources.

C) using more labor

Real GDP grows when I. the quantities of the factors of production grow II. persistent advances in technology make factors of production increasingly productive III. human capital grows A) Only I. B) Both I and III. C) Only II. D) I, II, and III.

D) I, II, and III.

A decrease in population shifts the A) labor demand curve rightward. B) labor demand curve leftward. C) labor supply curve rightward. D) labor supply curve leftward

D) labor supply curve leftward

A decrease in the real wage rate A) shifts the labor demand curve rightward. B) shifts the labor demand curve leftward. C) shifts the labor supply curve leftward. D) none of the above because a change in the real wage rate does not shift either the labor demand or labor supply curve.

D) none of the above because a change in the real wage rate does not shift either the labor demand or labor supply curve.

Equilibrium in the labor market A) cannot occur if the production function is shifting upward. B) can happen only when real GDP exceeds potential GDP. C) means that resources are allocated inefficiently D) occurs when actual GDP is equal to potential GDP

D) occurs when actual GDP is equal to potential GDP

If the real wage rate is such that the quantity of labor supplied by workers is less than the quantity of labor demanded by firms, A) the economy is at full employment. B) there is a shortage of labor. C) the real wage rate will decrease. D) real GDP equals potential GDP since firms make the decision on how many workers to hire

B) there is a shortage of labor.

If the population increases, then potential GDP ________ and employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases

A) increases; increases

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals A) $6.75 per hour. B) $104 per hour. C) $123 per hour. D) $675 per hour.

C) $123 per hour.

If real GDP is $11,750 billion and aggregate hours are 175 billion, labor productivity equals A) $23.50 per hour. B) $52 per hour. C) $67 per hour. D) $235 per hour

C) $67 per hour.

Which of the following statements are TRUE regarding the demand for labor? I. The quantity of labor demanded depends on the real wage rate. II. If the money wage rate increases and the price level remains the same, the quantity of labor demanded decreases. A) I only B) II only C) I and II D) neither I nor II

C) I and II

Which of the following is TRUE regarding the labor market? I. The labor supply curve slopes upward because firms maximize profits as they hire more workers. II. If the real wage rate falls, the quantity of labor firms demand increases. III. The demand for labor curve slopes downward because as the real wage rate falls, workers demand to work fewer hours. A) I and II B) I and III C) II only D) I, II and III

C) II only

The demand for labor curve is A) upward sloping at potential GDP and downward sloping elsewhere. B) vertical at potential GDP. C) downward sloping. D) upward sloping because firms demand labor.

C) downward sloping.

In the illustration above, which figure shows an aggregate production function? In the illustration above, which figure shows an aggregate production function? A) Figure A B) Figure B C) Figure C D) Figure D

A) Figure A

In the figure, when the real wage rate is $10 an hour, ________. A) a shortage of labor exists and the real wage rate will rise B) the demand for labor will increase C) the demand for labor will decrease D) a surplus of labor exists and the real wage rate will fall

A) a shortage of labor exists and the real wage rate will rise

) If the nationʹs capital stock increases so that workers become more productive, the A) demand for labor will increase B) supply of labor will increase C) demand for labor will decrease D) supply of labor will decrease

A) demand for labor will increase

An increase in labor productivity shifts the labor ________ curve ________. A) demand; rightward B) demand; leftward C) supply; rightward D) supply; leftward

A) demand; rightward

The decreasing slope of a production function reflects A) diminishing returns. B) rising unemployment. C) decreasing costs. D) increasing aggregate demand

A) diminishing returns.

71) Full employment corresponds to A) equilibrium in the labor market, with real GDP being equal to potential GDP. B) labor demand being greater than labor supply and real GDP being equal to potential GDP. C) being at the point where the marginal product of labor equals zero. D) equilibrium in the labor market, and real GDP exceeding potential GDP

A) equilibrium in the labor market, with real GDP being equal to potential GDP.

As a result of the rightward shift in the demand curve for labor from LD0 to LD1, the equilibrium level of employment ________ and potential GDP ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases

A) increases; increases

Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded A) increases. B) decreases. C) does not change because there is no change in the money wage rate. D) increases only if the price level also decreases.

B) decreases.

An advance in technology that results in increased productivity results in a A) rightward shift of the labor supply curve. B) rightward shift of the labor demand curve. C) rightward shift of both the labor supply and labor demand curves. D) movement along the production function.

B) rightward shift of the labor demand curve.

When labor productivity increases, the demand for labor curve ________ and the supply of labor curve ________. A) shifts rightward; shifts rightward B) shifts rightward; does not shift C) shifts leftward; shifts rightward D) shift s leftward; does not shift

B) shifts rightward; does not shift

The demand for labor curve A) is downward sloping because productivity of labor diminishes as more workers are employed. B) is upward sloping and the supply curve of labor is downward sloping. C) is upward sloping because productivity of labor diminishes as more workers are employed. D) shifts rightward when the real wage rate rises.

A) is downward sloping because productivity of labor diminishes as more workers are employed.

Moving along the aggregate production function, all of the following are held constant EXCEPT A) labor B) capital C) human capital D) technology

A) labor

An increase in labor productivity A) labor demand curve rightward. B) labor demand curve leftward. C) labor supply curve rightward. D) labor supply curve leftward

A) labor demand curve rightward.

An increase in physical capital or a technological advance A) raises the real wage rate. B) decreases the quantity of labor employed. C) shifts the production function downward. D) decreases demand for labor.

A) raises the real wage rate.

In the labor market, an increase in labor productivity ________ the real wage rate and ________ the level of employment. A) raises; increases B) raises; decreases C) lowers; increases D) lowers; decreases

A) raises; increases

If new capital increases labor productivity, the supply of labor ________ and the demand for labor ________. A) stays the same; increases B) increases; increases C) increases; decreases D) decreases; stays the same

A) stays the same; increases

) An advance in technology increases the productivity of labor. As a result, the nationʹs production function shifts ________ and the ________ labor curve shifts rightward. A) upward; demand for B) downward; demand for C) upward; supply of D) downward; supply of

A) upward; demand for

In the above figure, the equilibrium level of labor is A) 100 billion hours. B) 150 billion hours. C) 200 billion hours. D) none of the above

B) 150 billion hours.

The aggregate production function is graphed as A) a downward sloping curve. B) an upward sloping straight line. C) an upward sloping line that becomes flatter as the quantity of labor increases. D) an upward sloping line that becomes steeper as the quantity of labor increases.

C) an upward sloping line that becomes flatter as the quantity of labor increases.

An advance in technology shifts the production function upward and shifts the labor A) demand curve leftward. B) supply curve leftward. C) demand curve rightward. D) supply curve rightward.

C) demand curve rightward.

An increase in the working-age population results in a A) rightward shift of demand for labor curve and an increase in potential GDP. B) rightward shift of the demand for labor curve and no change in potential GDP. C) rightward shift of the supply of labor curve and an increase in potential GDP. D) leftward shift of the supply of labor curve and a decrease in potential GDP.

C) rightward shift of the supply of labor curve and an increase in potential GDP.

The aggregate production function A) measures the productivity of labor as leisure decreases. B) increases only with increases in productivity. C) shows that real GDP can increase because of increased productivity as well as increased labor hours. D) cannot show the impacts of productivity improvements.

C) shows that real GDP can increase because of increased productivity as well as increased labor hours.

Labor productivity is A) the average amount of real GDP produced per worker times the number of workers. B) the average amount of real GDP produced per worker times the number of people. C) the average amount of real GDP produced per hour of labor. D) the rate of change in the amount of real GDP produced per hour of labor

C) the average amount of real GDP produced per hour of labor.

The labor demand curve slopes downward because A) the firm maximizes profits by hiring more labor when the real wage rate rises. B) workers supply more hours of work when the real wage rate rises. C) the firm maximizes profits by hiring more labor when the real wage rate falls. D) workers supply fewer hours of work when the real wage rate rises.

C) the firm maximizes profits by hiring more labor when the real wage rate falls.

Suppose the money wage rate and the price level both fall by 5 percent. As a result, A) the quantity of labor demanded increases. B) the quantity of labor demanded decreases. C) the quantity of labor demanded does not change because there is no change in the real wage. D) people are worse off and there is more unemployment.

C) the quantity of labor demanded does not change because there is no change in the real wage.

If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded, A) there is a shortage of labor. B) the real wage rate will rise to restore equilibrium. C) the real wage rate is greater than the equilibrium real wage rate. D) None of the above answers is correct.

C) the real wage rate is greater than the equilibrium real wage rate.

Greater labor force participation for households at higher real wage rate is one reason that A) the demand for labor curve is upward sloping. B) the demand for labor curve is downward sloping. C) the supply of labor curve is upward sloping. D) the supply of labor curve is downward sloping.

C) the supply of labor curve is upward sloping.

The relationship between the labor employed by a firm and the real wage rate is shown by the A) supply of labor curve. B) supply of jobs curve. C) demand for jobs curve. D) demand for labor curve.

D) demand for labor curve.

The aggregate production function relating real GDP to labor hours A) has a constant slope. B) has a negative slope. C) has a positive slope and becomes steeper as employment increases. D) has a positive slope and becomes less steep as employment increases.

D) has a positive slope and becomes less steep as employment increases.

If the price level rises by 2 percent and workersʹ money wages increase by 2 percent, then the A) quantity of labor supply decreases. B) quantity of labor supply increases. C) quantity of labor supplied does not change because there is no change in the real wage rate. D) More information about the dollar change in the price level and money wage rate are needed to answer the question.

C) quantity of labor supplied does not change because there is no change in the real wage rate.

Labor productivity is A) real GDP per hour of labor times the hours of work. B) real GDP per hour of labor times the number of people. C) real GDP per hour of labor. D) the rate of change in real GDP per hour of labor.

C) real GDP per hour of labor.

if the demand for labor increases I. employment increases. II. the real wage rate increases. A) Only I is correct. B) Only II is correct. C) Both I and II are correct. D) Neither I nor II is correct.

C) Both I and II are correct.

The figure above shows the U.S. production function. From 1986 to 2008 the United States experienced major advances in technology as well as an increase in the working -age population. The combined effect can best be shown by a A) movement from point W to point X. B) movement from point Y to point Z. C) movement from point Y to point X. D) movement from point W to point Z.

D) movement from point W to point Z.

An advance in technology will A) not shift the production function but will lead to a movement down along the production function. B) shift the production function downward. C) not shift the production function but will lead to a movement up along the production function. D) shift the production function upward.

D) shift the production function upward.

In the above figure, if the real wage is $10 per hour, a labor A) shortage will occur and the real wage will rise. B) shortage will occur and the real wage will fall. C) surplus will occur and the real wage will rise. D) surplus will occur and the real wage will fall.

A) shortage will occur and the real wage will rise.

Because the productivity of labor decreases as the quantity of labor employed increases, A) the quantity of labor a firm demands increases as the real wage rate decreases. B) the quantity of labor a firm demands increases as the money wage rate decreases. C) the labor demand curve shifts right as the real wage rate decreases. D) the aggregate production function shifts upward as the real wage rate decreases.

A) the quantity of labor a firm demands increases as the real wage rate decreases.

In the above figure, the equilibrium real wage rate is A) $10 per hour. B) $15 per hour. C) $20 per hour. D) none of the above

B) $15 per hour.

If the price level increases and workersʹ money wage rates remain constant,which of the following will occur? I. The quantity of labor supplied will decrease. II. The real wage rate will decrease. III. The labor supply curve will shift rightward. A) I only B) I and II C) II and III D) I, II and III

B) I and II

If the price level increases, but workersʹ money wage rates remain constant,which of the following is TRUE? I. The quantity of labor demanded will increase. II. The real wage rate will decrease. III. The demand for labor curve shifts rightward. A) I only B) I and II C) II and III D) I, II and III

B) I and II

An increase in labor hours will lead to A) a shift of the aggregate production function but no movement along it. B) a movement along the aggregate production function but no shift in it. C) both a movement along and a shift in the aggregate production function. D) neither a movement along nor a shift in the aggregate production function.

B) a movement along the aggregate production function but no shift in it.

An increase in a nationʹs population results in A) a rightward shift in the labor demand curve. B) a movement along the nationʹs production function. C) a decrease in the full-employment quantity of labor. D) an upward shift of the nationʹs production function.

B) a movement along the nationʹs production function

An increase in a nationʹs population results in A) an upward shift in the production function. B) a movement along the production function. C) a leftward shift in the labor supply curve. D) Both answers A and C are correct.

B) a movement along the production function

If the price level rises relative to the money wage rate, firms ________ the quantity of labor they demand and workers ________ the quantity of labor they supply. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

B) increase; decrease

When the population increases with no change in labor productivity, employment ________ and potential GDP ________. A) decreases; decreases B) increases; increases C) decreases; increases D) increases; decreases

B) increases; increases

Moving along the aggregate production function shows the relationship between ________, holding all else constant. A) capital input and real GDP B) labor input and real GDP C) labor input, capital input and real GDP D) technology and real GDP

B) labor input and real GDP

he supply of labor curve is A) vertical at potential GDP. B) upward sloping. C) downward sloping. D) horizontal at the equilibrium wage rate.

B) upward sloping.

Real wage rate (2005 dollars per hour) Quantity of labor demanded (billions of hours per year) Quantity of labor supplied (billions of hours per year) 15 70 10 20 60 20 25 50 30 30 40 40 35 30 50 Real GDP (trillions of 2005 dollars per year) Quantity of labor (billions of hours per year) 3 20 9 30 14 40 18 50 21 60 72) The tables above show the labor market and the production function schedule for the country of Pickett. Potential GDP is ________. A) $40 trillion B) $6 trillion C) $14 trillion D) $25 trillion

C) $14 trillion

If real GDP is $13,000 billion and aggregate hours are 270 billion, labor productivity equals A) $6.50 per hour. B) $45 per hour. C) $48 per hour. D) $650 per hour

C) $48 per hour.

Real wage rate (2005 dollars per hour) Quantity of labor demanded (billions of hours per year) Quantity of labor supplied (billions of hours per year) 15 70 10 20 60 20 25 50 30 30 40 40 35 30 50 62) The table above shows the labor market for the country of Pickett. When the labor market is in equilibrium, the real wage rate is ________ and ________ of labor a year are employed. A) any value less than $25 an hour; any value greater than 40 billion hours B) any value greater than $30 an hour; any value more than 40 billion hours C) any value greater than or equal to $25 an hour; any value less than 40 billion hours D) $30 an hour; 40 billion hours

D) $30 an hour; 40 billion hours

If the real wage rate is such that the quantity of labor supplied equals the quantity of labor demanded, A) a full-employment equilibrium occurs. B) real GDP equals potential GDP. C) the opportunity cost effect of not working equals the income effect. D) Both answers A and B are correct.

D) Both answers A and B are correct.

Which of the following statements is correct? A) When the real wage increases, the labor supply curve shifts rightward. B) When the real wage increases, the labor supply curve shifts leftward. C) When the real wage decreases, the labor supply curve shifts leftward. D) None of the above statements are correct.

D) None of the above statements are correct.

The tables above show the labor market and the production function schedule for the country of Pickett. An increase in population changes the labor supply by 20 billion hours at each real wage rate. Potential GDP ________. A) does not change B) decreases to $3 trillion C) increases to $50 trillion D) increases to $18 trillion

D) increases to $18 trillion

According to the law of diminishing returns, an additional unit of A) capital produces more output than an additional unit of labor. B) labor decreases output. C) labor produces more output than the previous unit. D) labor produces less output than the previous unit.

D) labor produces less output than the previous unit.

The real wage rate equals A) (money wage rate)/(price level). B) (price level)/(money wage rate). C) (money wage rate) × (price level). D) (money wage) + (number of hours worked)/(price level)

A) (money wage rate)/(price level)

Which of the following statements is correct? A) When workers become more productive, the demand for labor curve shifts rightward. B) When technology decreases, the supply of labor curve shifts leftward. C) When labor force participation increases, the supply of labor curve shifts leftward. D) When human capital increases, the demand for labor curve shifts leftward.

A) When workers become more productive, the demand for labor curve shifts rightward.

Potential GDP per labor hour can increase due to A) increases in labor productivity. B) increases in the quantity of money. C) increases in population. D) decreases in the quantity of capital.

A) increases in labor productivity.

Suppose there is a rise in the price level, but no change in the money wage rate. As a result, the quantity of labor demanded A) increases. B) decreases. C) does not change because there is no change in the real wage rate. D) decreases only if the money wage rate also decreases.

A) increases.

Employment and (total) potential GDP increase if the A) labor supply curve shifts rightward and the labor demand curve does not shift. B) labor demand curve shifts leftward more than the labor supply curve shifts rightward. C) labor demand curve shifts leftward and the labor supply curve does not shift. D) None of the above answers are correct.

A) labor supply curve shifts rightward and the labor demand curve does not shift.

The real wage rate will fall if the A) labor supply curve shifts rightward and the labor demand curve does not shift. B) labor supply curve shifts leftward and the labor demand curve does not shift. C) labor demand curve shifts rightward and the labor supply curve does not shift. D) labor demand curve shifts rightward more than the labor supply curve shifts rightward.

A) labor supply curve shifts rightward and the labor demand curve does not shift.

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.

A) quantity of goods and services that an hour of work will buy.

If the price level falls by 5 percent and workersʹ money wage rates remain constant, firmsʹ A) quantity of labor demanded will decrease. B) quantity of labor demanded will increase. C) supply of jobs will increase. D) None of the above answers are correct.

A) quantity of labor demanded will decrease.

If the price level rises by 3 percent and workersʹ money wage rate increase by 1 percent, then the A) quantity of labor supplied decreases. B) quantity of labor supplied increases. C) quantity of labor supplied does not change because there is no change in the real wage rate. D) real wage rate increases.

A) quantity of labor supplied decreases.

If the price level rises by 4 percent and workersʹ money wage rates increase by 2 percent, then the A) quantity of labor supplied decreases. B) quantity of labor supplied increases. C) quantity of labor supplied does not change because there is no change in the real wage rate. D) the supply curve of labor shifts rightward

A) quantity of labor supplied decreases.

As the real wage rate increases, the A) quantity of labor supplied increases. B) supply of labor curve shifts rightward. C) supply of labor curve shifts leftward. D) quantity of labor supplied increases and the supply of labor shifts rightward.

A) quantity of labor supplied increases.

An increase in labor productivity ________ the real wage rate and an increase in population ________ the real wage rate. A) raises; lowers B) raises; raises C) lowers; lowers D) lowers; raises

A) raises; lowers

The aggregate production function describes the relationship between A) real GDP and the quantity of labor employed. B) real GDP and the price level. C) the rate of growth of real GDP and inflation. D) real GDP and the unemployment rate

A) real GDP and the quantity of labor employed.

People base their labor supply on the ________ because they care about ________. A) real wage; what their earnings will buy B) real wage; the equality of money wages and the price level C) money wage; a surplus of labor D) money wage; the amount of labor firms demand

A) real wage; what their earnings will buy

Along the aggregate production function, as the quantity of labor rises, real GDP A) rises B) falls C) stays the same D) may fall, rise, or stay the same

A) rises

When the quantity of labor demanded exceeds the quantity of labor supplied, the real wage rate A) rises to eliminate the labor-market shortage. B) falls to eliminate the labor-market surplus. C) rises to eliminate the labor-market surplus. D) falls to eliminate the labor-market shortage.

A) rises to eliminate the labor-market shortage

Dividing the value of real GDP by aggregate labor hours gives A) the net domestic product. B) labor productivity. C) the size of the labor force. D) the rate of capital accumulation.

B) labor productivity.

Which of the following is TRUE regarding the real wage rate? The real wage rate I. is always greater than the money wage. II. measures the quantity of goods and services an hourʹs work can buy. A) only I B) only II C) both I and II D) neither I nor II

B) only II

Labor growth depends mainly on ________ and labor productivity growth depends on ________. A) population growth; increases in real GDP B) population growth; technological advances C) growth in real GDP per person; growth rate of capital D) growth in real GDP per person; technological advances

B) population growth; technological advances

If both the supply of labor and the demand for labor increase, then A) potential GDP decreases. B) potential GDP increases. C) full employment decreases. D) the real wage rate increases.

B) potential GDP increases

If the price level rises by 3 percent and workersʹ money wage rates increase by 2 percent, then the A) quantity of labor demanded will decrease. B) quantity of labor demanded will increase. C) quantity of labor demanded does not change because there is no change in the real wage rate. D) real wage rate increases.

B) quantity of labor demanded will increase.

If the price level rises by 5 percent and workersʹ money wage rates remain constant, firmsʹ A) quantity of labor demanded will decrease. B) quantity of labor demanded will increase. C) supply of jobs will decrease. D) None of the above answers are correct

B) quantity of labor demanded will increase.

If workersʹ money wage rates increase by 5 percent and the price level remains constant, workersʹ A) quantity of labor supplied will decrease. B) quantity of labor supplied will increase. C) quantity of labor supplied will not change. D) demand for jobs will decrease.

B) quantity of labor supplied will increase.

An aggregate production function shows the relationship between A) real GDP and leisure. B) real GDP and the quantity of labor employed. C) leisure and unemployment. D) real GDP and unemployment.

B) real GDP and the quantity of labor employed.

If the real wage rate is such that the quantity of labor supplied is greater than the quantity of labor demanded, A) the economy is at full employment. B) real GDP will not equal potential GDP. C) job search decreases. D) labor resources are allocated efficiently.

B) real GDP will not equal potential GDP.

) The quantity of labor supplied depends on the A) money wage rate not the real wage rate. B) real wage rate not the money wage rate. C) price of output not the money wage rate nor the real wage rate. D) level of profits.

B) real wage rate not the money wage rate.

The quantity of labor demanded depends on the A) money wage rate not the real wage rate. B) real wage rate not the money wage rate. C) price of output not the money wage rate nor the real wage rate. D) money wage rate AND the real wage rate.

B) real wage rate not the money wage rate.

The curvature of the production function shows that as employment increases, the productivity of labor A) remains positive and increases. B) remains positive but decreases. C) decreases and becomes negative. D) remains constant.

B) remains positive but decreases.

In the above figure, at a wage rate of $20 per hour, A) there is a shortage of labor. B) there is a surplus of labor. C) the labor supply curve will shift rightward. D) the labor demand curve will shift rightward.

B) there is a surplus of labor.

If the labor market is in equilibrium and then the labor supply curve shifts rightward, A) there will be a shortage of labor at the original equilibrium wage rate. B) there will be a surplus of labor at the original equilibrium wage rate. C) the equilibrium wage rate will rise. D) there will be a surplus of jobs at the new equilibrium.

B) there will be a surplus of labor at the original equilibrium wage rate.

If the money wage rate rises relative to the price level, firms ________ the quantity of labor they demand and workers ________ the quantity of labor they supply. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

C) decrease; increase

The labor force participation rate A) does not change when the real wage rate changes. B) decreases as the real wage rate rises. C) increases as the real wage rate increases. D) has an inverse effect of the supply of labor.

C) increases as the real wage rate increases.

The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will A) move to point such as Y. B) remain at point W. C) move to point such as X. D) move to point such as Z.

C) move to point such as X.

As labor increases, there is a A) shift of the aggregate production function, but no movement along it. B) movement along the aggregate production function, but no shift in it. C) movement along the aggregate production function and real GDP will increase less with each additional increase in labor. D) movement along the aggregate production function and real GDP will decrease less with each additional increase in labor.

C) movement along the aggregate production function and real GDP will increase less with each additional increase in labor.

) An increase in productivity relates to A) working harder over time. B) working longer over time. C) producing the same output with fewer labor hours. D) producing the same output with more labor hours

C) producing the same output with fewer labor hours.

If the price level rises by 3 percent and workersʹ money wages increase by 3 percent, then the A) quantity of labor demand will decrease. B) quantity of labor demand will increase. C) quantity of labor demanded does not change because there is no change in the real wage rate. D) Any of the above could occur depending on the magnitude on the dollar increase in the price level versus the dollar increase in the wage rate.

C) quantity of labor demanded does not change because there is no change in the real wage rate.

The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will A) move to point such as Y. B) remain at point W. C) move to point such as X. D) move to point such as Z.

D) move to point such as Z.

Labor productivity equals A) real GDP divided by the capital stock. B) real GDP divided by the working-age population. C) total wages divided by real GDP. D) real GDP divided by aggregate labor hours.

D) real GDP divided by aggregate labor hours.

Labor productivity is defined as A) total output attributable to labor. B) total real GDP. C) the growth rate of the labor force. D) real GDP per hour of labor.

D) real GDP per hour of labor.

In the above figure, if the real wage is $20 per hour, a labor A) shortage will occur and the real wage will rise. B) shortage will occur and the real wage will fall. C) surplus will occur and the real wage will rise. D) surplus will occur and the real wage will fall.

D) surplus will occur and the real wage will fall.