Economics Chapter 8
What change in the production possibilities frontier PPF illustrates a contraction in economic output?
A leftward shift of the entire PPF shows the economy is in a recession with a significant contraction of total output
Which of the following factors does not account for the higher labor productivity of workers in the United States?
American workers typically work much harder and are more dedicated to their task than workers in lower income countries.
Which of the following is correct about how economic growth is illustrated by the PPF?
An outward shift, rightwards shift, of the entire PPF curve indicates economic growth has occurred
Why is the labor most commonly used to measure productivity?
Because labor typically accounts for about 70% of production costs
What resource is most responsible for increasing labor productivity?
Capital
What accounts for higher wage rates in the United States as compared to a very undeveloped country?
Capital deepening
What is capital deepening?
Capital deepening refers to an increase in the quantity of capital available to each worker
Which of the following is not true about productivity?
Countries with lower capital per worker achieve higher labor productivity rates
What is the effect of greater spending on government and private sector research and development on living standards?
Increases in research and development Drive improvements in technology which drive improvement in the quality of capital which increases living standards
Which of the following is not correct about the effects of research and development?
Increases in research and development Drive improvements in technology which drives improvements in the quality of capital which results in higher productivity, how are real GDP, per capita and higher living standards
This term refers to government picking and choosing the emerging industry's of the future and nurturing them with special taxes and subsidies, to give these specially selected industries an advantage over similar foreign corporations.
Industrial policy
Which of the following correctly defines and describes industrial policy?
Industrial policy refers to the use of government tools to pick the emerging industry's of the future and nurture them with special taxes and subsidies, so as to give these specially selected industries and advantage over similar foreign corporations.
What effect does an increase in total output of both goods have on the PPF?
It shifts the PPF outward
Which of the following strategies is most likely to boost productivity in an automobile plant?
More advanced robots, equipment, and tools
Which of the following correctly defines the concept of productivity?
Productivity shows output per unit of input, such as output per worker.
Picture 50 Indian Workers with shovels preparing the road bed for a new road. Now picture 50 American Rd. workers driving loaders, graders, rollers and dump trucks. What accounts for the difference in labor productivity and wage rates between these two sets of Road building Workers?
Quality and extend of productive capital
Which of the following is not true about factors that contribute to productivity?
Tax cuts typically increase the quantity of capital, which improves productivity.
Under what conditions can labor productivity increase in the quantity of capital available to each worker is constant?
Technological advances allow labor productivity to increase even when the amount of capital goods available to each worker remains constant.
Which of the following is the best example of industrial policy?
The US Congress passes legislation to provide extensive government loan guarantees to newly Inc. firms producing innovative products in newly emerging industries officially designed as key to US economic growth and national security.
Which of the following is not true about the basis or source of productivity?
The resource most responsible for increasing labor productivity is the attitude and devotion of the average worker.