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Exam 3: Productivity, output, and Employment

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Question 1

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As a result of the superb economics essay that you wrote during this quarter,you won the Adam Smith prize of $100.The receipt of these funds would be an example of

A) the substitution effect being stronger than the income effect.
B) the income effect being stronger than the substitution effect.
C) a pure income effect.
D) a pure substitution effect.

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Question 2

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A sharp increase in stock prices makes people much wealthier.If the main effect of this increased wealth is felt on labor supply,what happens to current employment and the real wage rate?

A) Both employment and the real wage rate would increase.
B) Both employment and the real wage rate would decrease.
C) Employment would increase and the real wage would decrease.
D) Employment would decrease and the real wage would increase.

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Question 3

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In the production function Y = AF(K,N) ,total factor productivity is

What is the unemployment rate if there are 150 million people employed,25 million people unemployed,and 25 million not in the labor force?

The city of Hope has a labor force of 1000.Twenty people lose their jobs each month and remain unemployed for exactly one month before finding jobs.On January 1,May 1,and September 1 of each year,50 people lose their jobs for a period of four months before finding new jobs.What is the average duration of an unemployment spell?

A bird flu epidemic causes many people to flee the country,but does not affect labor demand significantly because almost all the goods produced within the country are exported.What happens to current employment and the real wage rate?

Suppose the marginal product of labor is MPN = 200 - 0.5N Where N is aggregate employment.The aggregate quantity of labor supplied is 300 + 8w,where w is the real wage.What is the equilibrium real wage?

How many people are employed if the labor force participation rate is 60%,there are 3 million people unemployed,and there are 30 million people not in the labor force?

A winter ice storm has paralyzed the entire east coast,reducing productivity sharply.This supply shock shifts the marginal product of labor curve

Suppose the production function is Y = AK^0.3N0.7. Suppose in 2000,K = 1000,N = 100,and Y = 199.5.In 2010,capital,labor,and output have doubled,so K = 2000,N = 200,and Y = 399. (a)By what percentage did productivity grow from 2000 to 2010? (b)If output had risen to 798 instead of 399,and capital and labor doubled,by what percentage would productivity have grown from 2000 to 2010?

Discouraged workers are discouraged because

How would each of the following events affect Cheryl Shirker's supply of labor? (a)Cheryl's firm announces a reorganization plan,in which she will get a big promotion and raise in six months. (b)Cheryl's speculative investment in plutonium futures pays off big,netting her a profit of $300 thousand. (c)Cheryl's father,who had planned to leave her a large bequest,must spend all his wealth on medical bills after a prolonged illness.

Economists often treat the economy's capital stock as fixed because

If a country's working-age population declines and its wealth increases,then the labor supply curve

Marginally attached workers

The marginal product of labor (measured in units of output) for Expando Corp.is given by MPN = A(400 - N) Where A measures productivity and N is the number of labor hours used in production.Suppose the price of output is $3 per unit and A = 2.0.What will be the demand for labor if the nominal wage is $18?

The type of unemployment for which the net economic costs are most likely to be small is

The marginal product of labor (measured in units of output) for Relient Corp.is given by MPN = A(200 - N) Where A measures productivity and N is the number of labor hours used in production.Suppose the price of output is $3 per unit and A = 2.0.What will be the demand for labor if the nominal wage is $30?

The tendency of workers to supply more labor in response to a larger reward for working is called the ________ of a higher real wage on the quantity of labor supplied.

A tremendous flood along the Mississippi River destroys thousands of factories,reducing the nation's capital stock by 5%.What happens to current employment and the real wage rate?