Econ 102 chapter 6 practice test

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

$123 per hour.

Which of the following directly creates growth in labor productivity?

C) I and II; Growth in capital per hour of labor. Technological change

If the price level increases, but workers' money wage rates remain constant,which of the following is TRUE?

I and II; The quantity of labor demanded will increase. The real wage rate will decrease.

Which of the following ideas apply to the neoclassical growth theory?

I, II and III; The rate of technological change influences the rate of economic growth. Technological change promotes saving and investment. . Convergence of economic growth rates across countries

If the nation's capital stock increases so that workers become more productive, the

demand for labor will increase.

An increase in labor productivity shifts the labor ________ curve ________.

demand; rightward

On-the-job-training is an example of

investment in human capital.

Activities that encourage faster growth are

investment in new capital and human capital.

The demand for labor curve

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

According to the new growth theory

knowledge is not subject to diminishing returns.

Which of the following policies improves prospects for more rapid economic growth?

policies to increase the educational attainment of the labor force

If the labor market is in equilibrium and then the labor supply curve shifts rightward

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

An advance in technology increases the productivity of labor. As a result, the nation's production function shifts ________ and the ________ labor curve shifts rightward.

upward; demand for

In the above figure, if the real wage is $20 per hour, a labor

surplus will occur and the real wage will fall.

An assumption of the neoclassical theory of growth is that

all technological advances are the result of chance.

If capital per hour of labor increases, real GDP per hour of labor

increases for a given level of technology.

Labor productivity increases with

increases in capital.

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 ________.

increases to $18 trillion

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 ________.

increases; increases

The more education that workers have, the ________ is their human capital and the ________ is their productivity.

larger; higher

A higher savings rate that leads to an increase in the capital stock

leads to increases in labor productivity.

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

movement from point W to point Z.

An increase in labor productivity ________ the real wage rate and an increase in population ________ the real wage rate.

raises; lowers

The aggregate production function describes the relationship between

real GDP and the quantity of labor employed.

Labor productivity is

real GDP per hour of labor.

The quantity of labor supplied depends on the

real wage rate not the money wage rate.

People base their labor supply on the ________ because they care about ________.

real wage; what their earnings will buy

Which of the following has NOT been one of the primary sources of economic growth over the last 200 years?

resource conservation

An advance in technology that results in increased productivity results in a

rightward shift of the labor demand curve.

Human capital is the

skill and knowledge accumulated by humans.