Question

Q1.

Which event from below is not expected to improve labor productivity?

A.The acquisition of more education and training by the labor force.

B.Technological advance.

C.The realization of economies of scale.

D.An increase in the size of the labor force.

Q2.

Say, you know that the labor productivity is increasing by 2 percent every year due to technology improvements. Knowing this and keeping everything else equal, estimate the number of years for the standards of living to double

A.35 years.

B.23 years.

C.30 years.

D.17 years.

Q3.

Which one from the list below is a true statement?

A. Mainstream economists disagree as to whether the rate of productivity growth was higher between 1995 and 2012 or between 1973 and 1995.

B. Most economists believe that increases in real GDP actually produce decreases in overall economic well-being because of spillover costs.

C. Economists who support economic growth say that it is the most practical route to the higher standards of living that the vast majority of people desire.

D. Most economists believe that the recent rise in the average rate of productivity growth implies an end to the existence of business cycles.

Q4.

Why production of durable goods is being affected more by recessions compared to the production of nondurable goods?

A.Producers of durables are highly competitive.

B.Durables purchases are postponable.

C.Durables purchases are nonpostponable.

D.The producers of nondurables have monopoly power.

Q5.What phase of the business cycle is associated with a reduction of real output and an increased rate of unemployment?

A.Expansion.

B.Recession.

C.Peak.

D.Trough.

Answer 1

1) An increase in the size of labor force simply increases the number of labor persons and if the increase in output is lower than the increase in labor then productivity may fall. An increase in the size of the labor force is not expected to improve labor productivity.

2) 2=(1+0.02)^n. Solving for n we get n=35. Thus the number of years for the standards of living to double is 35

3) The true statement is  : Economists who support economic growth say that it is the most practical route to the higher standards of living that the vast majority of people desire.

4)  production of durable goods is being affected more by recessions compared to the production of nondurable goods because Durables purchases are postponable.

5) Trough phase of the business cycle is associated with a reduction of real output and an increased rate of unemployment