Question 1

Suppose workers' and firms' expectations of the price level and productivity are accurate.In this case,an increase in productivity will cause which of the following?

Accepted Answer

An increase in productivity means that workers can produce more output per hour, which typically leads to higher real wages as firms can afford to pay more without raising prices. The natural rate of unemployment, which is determined by factors such as the market structure and policies, does not change simply because of an increase in productivity.

Question 2

Assume an economy experiences,for a given period,a 1% increase in output and a 5% increase in productivity.Given this information,we know that which of the following occurred for this economy during this period?

Accepted Answer

If productivity increases by 5% but output only increases by 1%, it suggests that less labor is needed to produce the same amount of goods, potentially leading to higher unemployment.

Question 3

The evidence suggests that recent technological change

Accepted Answer

The evidence suggests that recent technological change has increased the wage gap between skilled and unskilled workers. This is because new technologies tend to replace low-skill jobs, while creating new jobs and more demand for high-skill jobs. As a result, skilled workers have seen their wages rise while unskilled workers are left with fewer job opportunities and stagnant wages.

Question 4

An increase in productivity will cause which of the following according to the price-setting behavior of firms?

Accepted Answer

An increase in productivity allows firms to produce more with the same amount of inputs, which can lead to a reduction in prices as costs per unit decrease. This can also result in an increase in the real wage paid by firms, as the value of what each worker produces goes up. Additionally, firms might reduce their markup (the difference between the cost to produce goods and the selling price) to reflect the lower production costs or to increase their competitiveness, thus all of the options A, B, and C are correct outcomes of increased productivity.

Question 5

Because of labor hoarding,an increase in output may signal

Accepted Answer

Labor hoarding refers to the practice of keeping excess employees even during periods of low demand. In this case, an increase in output may not necessarily lead to an increase in employment as the firm may have already been employing more workers than required. Therefore, there may not be any change in employment even with an increase in output.

Question 6

When the production function is represented by Y = NA,labor productivity is represented by which of the following expressions?

Accepted Answer

Labor productivity is typically represented by the output per unit of labor, which in this case would be Y/N, where Y is the output and N is the number of labor units. None of the provided options correctly represents this.

Question 7

Which of the following statements about the United States during the twentieth century is correct?

Accepted Answer

Throughout the twentieth century, output growth in the United States has generally been faster than employment growth. This is largely due to technological advancements and increased productivity in various industries. Monetary and fiscal policy may have played a role in shaping the economic landscape, but they are not the primary drivers of output growth.

Question 8

Some believe that technological progress leads to higher unemployment in the medium run.This claim that technological progress results in an increase in unemployment in the medium is supported by

Accepted Answer

Economic theory generally suggests that technological progress can lead to job displacement in the short term but tends to create new jobs and increase productivity in the medium to long term. Empirical evidence often shows that while specific sectors may experience job losses, overall employment levels tend to recover or even increase due to new opportunities created by technological advancements.

Question 9

Suppose an economy experiences an increase in technological progress.This increase in technological progress will

Accepted Answer

In an economy, an increase in technological progress can lead to all of the above outcomes. With new and more advanced technology, firms can produce more output without necessarily having to hire more workers. Alternatively, they can produce the same amount of output with fewer workers. Moreover, an increase in technological progress can also lead to changes in the types of goods produced, as new and innovative products can be designed and manufactured. Thus, all three outcomes - increased output per worker, fewer workers needed, and changes in goods produced - are possible as a result of technological progress.

Question 10

For this question,assume productivity has been increasing by 5% per year.Also assume that workers' expectations of productivity growth adjust slowly over time.For this economy,a reduction in productivity growth from 5% to 2% will most likely cause which of the following to occur?

Accepted Answer

The answer of For this question,assume productivity has been increasing...

Question 11

The empirical evidence suggests that periods of high productivity growth will cause which of the following in the short run?

Accepted Answer

High productivity growth typically leads to increased demand for labor, which can lead to lower unemployment in the short run. However, it is not necessarily associated with higher markups, constant real wages, or greater equality in wages.

Question 12

For this question,assume that firms' of productivity are accurate while workers' expectations of productivity adjust slowly over time.In this case,an increase in productivity will cause which of the following?

Accepted Answer

If firms' productivity is accurate and there is an increase in productivity, they will be able to produce more output with the same amount of labor input. This leads to an increase in the demand for labor, and as a result, the real wage increases. However, workers' expectations of productivity adjust slowly, so they may not realize the full extent of the increase in productivity initially. As a result, there may be a reduction in the natural rate of unemployment, as more workers are willing to supply their labor at the higher real wage. Therefore, option C is the correct answer.

Question 13

The number of workers employed will not change as a result of an increase in productivity when which of the following occurs?

Accepted Answer

When productivity growth is equal to output growth, the firm can increase production without increasing the number of workers employed. This is because productivity is measured as output per worker, and if output per worker is increasing at the same rate as total output, then the firm can increase output without hiring more workers. Therefore, an increase in productivity without a corresponding increase in output growth will result in no change in the number of workers employed. Choices A, B, and D all involve changes in output levels, which could result in changes in the number of workers employed.

Question 14

When the unemployment rate is on the horizontal axis and the real wage is on the vertical axis,an increase in productivity will cause which of the following to occur?

Accepted Answer

An increase in productivity typically leads to higher wages as firms can afford to pay more due to increased output per worker. This results in both the wage-setting (which reflects the wage workers negotiate based on productivity and other factors) and price-setting (which reflects the wage firms are willing to pay based on productivity and the price at which they can sell goods) curves shifting upward. Higher productivity makes labor more valuable, leading to upward shifts in these curves.

Question 15

A major explanation for the decline in employment projected in textiles is

Accepted Answer

Shifts in production towards low-wage countries is the major explanation for the decline in employment projected in textiles. This is due to the fact that low-wage countries have cheaper labor costs and can produce goods at a lower cost than in countries with higher labor costs. As a result, textile companies have been moving their production facilities to countries with lower labor costs, causing a decline in employment in the textile industry in countries with higher labor costs.

Question 16

Assume an economy experiences,for a given period,a 4% increase in output and a 4% increase in productivity.Given this information,we know that which of the following occurred for this economy during this period?

Accepted Answer

An increase in output and productivity indicates that the economy is producing more goods and services with the same amount of resources. This suggests that there may be an increase in demand for labor, which could result in a decrease in unemployment. However, we cannot be certain of the exact effect on the unemployment rate without additional information. Therefore, the most accurate answer is that the unemployment rate did not change during this period.

Question 17

Based on price setting behavior,which of the following will cause an increase in the price level?

Accepted Answer

A reduction in productivity would cause an increase in production costs, leading to an increase in prices. An increase in the nominal wage would also increase production costs, leading firms to increase prices to maintain profit margins. Finally, an increase in the markup (the difference between the price of a good or service and its production cost) would directly result in an increase in prices. Therefore, all three factors would cause an increase in the price level.

Question 18

Assume an economy experiences,for a given period,a 4% increase in output and a 2% increase in productivity.Given this information,we know that which of the following occurred for this economy during this period?

Accepted Answer

A 2% increase in productivity implies that less labor is needed for the same output, but since output increased by 4%, it suggests that more labor was employed, leading to a decrease in the unemployment rate.

Question 19

Based on our understanding of the wage setting equation,which of the following will not cause a reduction in the nominal wage?

Accepted Answer

None of the above choices would directly cause a reduction in the nominal wage. An increase in unemployment (A) or a reduction in expected productivity (C) may indirectly lead to a reduction in nominal wages as workers become more willing to accept lower wage offers due to a weaker bargaining position. However, these factors alone would not directly cause a reduction in nominal wages. A reduction in the expected price level (B) may lead to a reduction in the real wage (nominal wage adjusted for inflation) but would not necessarily result in a reduction in the nominal wage. Therefore, none of the above directly causes a reduction in nominal wage.

Question 20

Technological unemployment is a macroeconomic phenomenon that occurs when

Accepted Answer

Technological unemployment refers to the unemployment that arises from technological innovation, which often results in the displacement of workers. So, option E "unemployment changes as a result of technological change" is the best answer. The other options are not related to the phenomenon of technological unemployment.

Quiz 13: Technological Progress: the Short, the Medium, and the Long Run