Question 1

An increase in the population and hence the supply of labor causes a

Accepted Answer

With an increase in population, there will be a surplus of labor at the original real wage rate as there will be more people looking for jobs. This surplus will put downward pressure on wages, causing the real wage rate to fall.

Question 2

Labor productivity is

Accepted Answer

Labor productivity is defined as real GDP per hour of labor. It measures the amount of output produced per unit of labor input. It doesn't depend on the hours of work or the number of people, but rather on the efficiency of production. The rate of change in real GDP per hour of labor is a measure of productivity growth over time, not labor productivity itself.

Question 3

-The tables above show the labor market and the production function schedule for the country of Pickett. Potential GDP is ________.

Accepted Answer

Potential GDP is equal to the level of output that can be produced when all resources are fully employed, which is indicated by the intersection of the labor market and the production function schedule. In this case, that intersection occurs at $14 trillion, making C the correct answer.

Question 4

If the labor and capital grow more quickly, then real GDP will

Accepted Answer

If the factors of production, such as labor and capital, grow more quickly, it means that there are more inputs to produce goods and services. This can lead to an increase in productivity and an increase in real GDP. Thus, real GDP will grow more quickly.

Question 5

-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 ________.

Accepted Answer

According to the production function schedule, potential GDP is maximized at a level of 18 trillion when the labor input is 600 billion hours. With an increase of 20 billion hours of labor supply at each real wage rate, the labor input increases to 620 billion hours, causing potential GDP to increase to 18 trillion. Therefore, the correct answer is (D) increases to $18 trillion.

Question 6

When the population increases with no change in labor productivity, employment ________ and potential GDP ________.

Accepted Answer

When the population increases without a change in labor productivity, more people are available to work, leading to an increase in employment. Since potential GDP is determined by the labor force, capital stock, and technology, an increase in the labor force (employment) would lead to an increase in potential GDP, assuming labor productivity and technology remain constant.

Question 7

Full employment corresponds to

Accepted Answer

Full employment corresponds to equilibrium in the labor market, where there is no cyclical unemployment, and actual GDP is at its potential level, indicating that all available resources are being utilized efficiently. Option A correctly represents this scenario. Option B is incorrect because it suggests a shortage of labor, which would lead to higher wages and inflation, and is not sustainable in the long run. Option C is incorrect because the marginal product of labor equals zero at the point of diminishing returns, where adding more labor leads to a decrease in output. Option D is incorrect because actual GDP exceeding potential GDP indicates inflationary pressures and a potential overheating of the economy, rather than full employment.

Question 8

-In the above figure, if the real wage is $10 per hour, a labor

Accepted Answer

When the real wage is set above the equilibrium wage, it results in a labor surplus, where the quantity of labor supplied exceeds the quantity demanded. However, without seeing the figure mentioned, the correct interpretation based on standard economic principles is that if the real wage is higher than the equilibrium, it typically leads to a surplus of labor (more workers are willing to work than there are jobs available). Employers would then have the leverage to lower wages due to the excess supply of labor, which contradicts the options provided. Therefore, assuming a scenario where the real wage is below the equilibrium (which could lead to a shortage), the only logical outcome given the options and typical economic behavior would be for wages to rise to attract more workers, despite the initial statement potentially suggesting a different context. This highlights the importance of accurately interpreting economic scenarios and the impact of wage levels on labor markets.

Question 9

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

Accepted Answer

The answer of 
-In the above figure, if the real...

Question 10

An increase in a nation's population results in

Accepted Answer

The answer of An increase in a nation's population results...

Question 11

The U.S. employment-to-population ratio peaked in 2000 and in 2012 fell to 58 percent, a level not seen since the early 1980s. This fall in the employment-to-population ratio ________ the equilibrium quantity of labor and ________ potential GDP.

Accepted Answer

A fall in the employment-to-population ratio means there are fewer people working relative to the population size. This implies a decrease in the equilibrium quantity of labor, which in turn decreases potential GDP (as potential GDP depends on the level of labor, capital, and productivity). Therefore, the correct answer is D – a decrease in the employment-to-population ratio decreases both the equilibrium quantity of labor and potential GDP.

Question 12

An increase in a nation's population results in

Accepted Answer

The answer of An increase in a nation's population results...

Question 13

The real wage rate will fall if the

Accepted Answer

When the labor supply curve shifts rightward (indicating an increase in labor supply) without a corresponding shift in the labor demand curve, the increased supply of labor will lead to a decrease in the equilibrium wage rate, assuming demand remains constant. This is because there are more workers available than jobs, putting downward pressure on wages.

Question 14

An increase in the working-age population results in a

Accepted Answer

An increase in the working-age population increases the number of potential workers, which shifts the supply of labor curve to the right, not the demand for labor. This increase in labor supply can lead to an increase in potential GDP, as more labor is available for production.

Question 15

Labor growth depends mainly on ________ and labor productivity growth depends mainly on ________.

Accepted Answer

Labor growth is primarily driven by population growth, as a larger population can provide a larger workforce. Labor productivity growth, on the other hand, is mainly dependent on technological advances, which allow the same number of workers to produce more goods and services.

Question 16

If the population increases, then potential GDP ________ and employment ________.

Accepted Answer

A larger population means there are more people available to work and produce goods and services, which increases potential GDP. It also means there is likely to be an increase in demand for goods and services, which can lead to an increase in employment.

Question 17

Employment and (total)potential GDP increase if the

Accepted Answer

When the labor supply curve shifts rightward, it means that there is an increase in the number of available workers in the labor market. If the labor demand curve does not shift, it means that the demand for labor remains constant. This situation leads to a decrease in the equilibrium wage rate and an increase in the level of employment. As more workers are employed, the potential GDP of the economy increases.

Answer: C
 When the labor demand curve shifts leftward, it means that there is a decrease in the demand for labor. If the labor supply curve does not shift, it means that the number of available workers remains constant. This situation leads to a decrease in the equilibrium wage rate and a decrease in the level of employment. As fewer workers are employed, the potential GDP of the economy decreases.

Question 18

The U.S. employment-to-population ratio peaked in 2000 and in 2014 fell to 59 percent, a level not seen since the early 1980s. This fall in the employment-to-population ratio shifts the ________ curve ________.

Accepted Answer

The answer of The U.S. employment-to-population ratio peaked in 2000...

Question 19

Potential GDP per labor hour can increase due to

Accepted Answer

Potential GDP per labor hour can increase due to increases in labor productivity, as it means that more output can be produced with the same amount of labor. The other choices are not related to labor productivity and would not necessarily result in an increase in potential GDP per labor hour.

Question 20

-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.

Accepted Answer

Real GDP grows when factors of production grow in quantity (I), technology advances and make factors of production more productive (II), and human capital grows (III), therefore, all three options are correct.

Quiz 6: Economic Growth

An increase in the population and hence the supply of labor causes a

Labor productivity is

-The tables above show the labor market and the production function schedule for the country of Pickett. Potential GDP is ________.

If the labor and capital grow more quickly, then real GDP will

-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 ________.

When the population increases with no change in labor productivity, employment and potential GDP .

Full employment corresponds to

-In the above figure, if the real wage is $10 per hour, a labor

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

An increase in a nation's population results in

The U.S. employment-to-population ratio peaked in 2000 and in 2012 fell to 58 percent, a level not seen since the early 1980s. This fall in the employment-to-population ratio the equilibrium quantity of labor and potential GDP.

An increase in a nation's population results in

The real wage rate will fall if the

An increase in the working-age population results in a

Labor growth depends mainly on and labor productivity growth depends mainly on .

If the population increases, then potential GDP and employment .

Employment and (total) potential GDP increase if the

The U.S. employment-to-population ratio peaked in 2000 and in 2014 fell to 59 percent, a level not seen since the early 1980s. This fall in the employment-to-population ratio shifts the curve .

Potential GDP per labor hour can increase due to

-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.