Module 6
Unit labor costs are equal to the
Wage rate divided by the average product of labor and therefore is a nominal series.
The average product of labor divided by the wage rate and therefore is a nominal series
Wage rate divided by the average product of labor and therefore is a real series
The average product of labor divided by the wage rate and therefore is a real series
The components of the Wilshire 5000 account for
Nearly all of the total value of all equities in the United States.
About 25% of the total value of all equities in the United States.
About 80% of the total value of all equities in the United States.
About 20% of the total value of all equities in the United States.
How did the growth rate of labor productivity in the business sector from 1960 to 1973 compare with the growth rate of labor productivity in manufacturing from 1990 to 1996?
The two growth rates were about the same.
The growth rate of labor productivity in manufacturing from 1990 to 1996 was higher.
The growth rate of labor productivity in the business sector from 1960 to 1973 was higher.
Oddly enough, both declined, but productivity in the business sector during 1960-73 declined less.
The definition of economic growth used in empirical work is
An increase in per capita output, such as per capita real GDP.
An increase in total output, such as an increase in real GDP.
An increase in what we call the full-employment level of real GDP, or potential output.
An increase in full-employment real GDP per capita.
How does an increase in potential output affect aggregate expenditure?
It causes an increase in aggregate expenditure.
It has no effect.
It causes a decrease in aggregate expenditure.
The effect varies with the cause of the increase in potential output.
Expressed in 2010 dollars, per capita real GDP in the United States was about $48,000 in 2007. About what would its value have been if the US economy had continued to grow at the same rate after 1973 as it did between 1960 and 1973?
$73,000
$61,000
$85,000
$101,000
The growth rate of per capita real GDP in the United States
Was lower during 1973-1989 than it was during 1960-1973.
Was higher during 1973-1989 than it was during 1960-1973.
Was higher from 1989-1997 than from 1997 to 2000.
Has not changed by an important amount since 1960.
Suppose labor productivity increases by 3%, but nominal compensation increases by 4%, what has happened to unit labor costs?
It increased by 1%.
It decreased by 1%.
It increased by 4%.
It decreased by 3%.
Which of the following will not tend to increase potential output?
Reserving precious natural resources for future use
Better allocation of resources
Larger stock of physical capital
Larger stock of human capital
Suppose per capita income in Ruritania is $4,000 and its rate of growth is 4% per year. About how many years would it take for its income to increase to $16,000 per person?
35
70
82
18
Recall that we defined Ŷ to be aggregate output as a share of potential output. What does it mean if (Ŷ – 1) is positive?
It means current output is above potential output
It means that the output gap is negative
It means current output is below potential output
It means that an increase in government spending is necessary
Consider the above Figure. If the current location of the aggregate expenditure curve is E0, then...
An increase in potential output from Y0* to Y1* will cause an upward shift in aggregate expenditure from E0 to E1.
An increase in potential output from Y0* to Y1* will cause unemployment.
An increase in potential output from Y0* to Y1* will cause inflation.
An increase in potential output from Y0* to Y1* will cause aggregate expenditure to increase.
According to the permanent income hypothesis, what happens to permanent income if someone thinks his future incomes are going to be 5% higher?
It means that households will act like their permanent incomes will be higher.
There is no way to know what the meaning will be.
It means that investment spending will increase.
It means that wealth has an effect on spending.
Which of the following statements concerning the performance of the S&P 500 is true?
From 1963 to 1983 it did not increase on average, but grew steadily from 1983 to 2000.
From 1963 to 1998 it increased steadily.
From 1963 to 1983 it did not increase on average, but grew steadily from 1983 to 2012.
It has never decreased before a recession began.
During recessions the rate of growth of labor productivity
Typically decreases shortly before or at the beginning of the recession.
Typically increases at first as less productive workers are laid off.
Usually does not change very much.
Typically does not decrease until near the end of the recession.
The components of the Dow Jones Industrial Average account for
About 25% of the total value of all equities in the United States.
About 80% of the total value of all equities in the United States.
About 50% of the total value of all equities in the United States.
About 98% of the total value of all equities in the United States.
Because firms will hire labor until the pay corresponds to its marginal product
The growth rate of real hourly compensation declined during the productivity slowdown.
The productivity slowdown resulted in a higher level or real hourly compensation.
The growth rate of real hourly compensation bears no relationship to labor productivity.
Unit labor costs are proportional to real hourly compensation.
Recall that we defined Ŷ to be aggregate output as a share of potential output. What does it mean if (Ŷ – 1) is negative?
It means current output is below potential output
It means that the output gap is close
It means current output is above potential output
It means that an increase in government spending is necessary
The rule of 70 is the notion that
If you divide 70 by a growth rate, you get the number of years it takes per capita income to double.
Capacity utilization must be above 70 for the economy to be in an expansion.
It usually takes 70 years for per capita income to double.
If you multiply a growth rate by 70 you get the number of years it takes your money to double.
From 1997 to 2004 real hourly compensation
Increased by about 20%
Increased by less than 10%
Increased somewhere between 10% and 15%.
Did not increase at all because of the lingering effects of NAFTA
Between 1987 and 2005 output per hour of all persons in the manufacturing sector of the United States economy
Approximately doubled.
Increased by less than 30%
Increased by 50%
Hardly grew at all because of NAFTA
In the above figure Ŷ and Ê are respectively defined as output and aggregate expenditure as a share of potential output. According to the lecture on this model an increase in potential output
Causes no change in Ŷ*.
Causes Ŷ > Ŷ*.
Causes Ŷ* to decrease but the line E does not shift
Causes Ŷ < Ŷ*.
Labor productivity is defined as
The average product of labor
The marginal product of labor
The number of workers per machine
The value of output divided by how much workers are paid
Suppose output per hour (labor productivity) doubles in 23 years. Is it possible to sort out its growth rate?
Yes, and it grew at 3% per year.
Yes, and it grew at 4% per year.
No
No, but we know from class it doubled in 18 instead of 23 years
Which of the following statements is true?
A recession causes a decrease in permanent income which in turn causes consumer spending to decrease, which in turn makes the recession worse.
A decrease in permanent income will cause a decrease in spending, but usually does not cause a recession because there will be no resulting unemployment.
An increase in potential output increases permanent income, but does not affect spending.
A recession does not cause a decrease in permanent income.
What was the “productivity crisis”?
The productivity crisis was about a slowdown in the rate of economic growth.
A decline in the productivity of American labor.
An increase in the productivity of foreigners relative to Americans.
An increase in the real compensation of labor.
Suppose per capita income in Ruritania is $4,000 and its rate of growth is 2.5% per year. In 69 years its per capita income will be about
$22,600.
$16,000
$32,000
$22,600
The components of the S&P 500 account for
About 80% of the total value of all equities in the United States.
About 25% of the total value of all equities in the United States.
About 25% of the total value of all equities in the United States.
About 98% of the total value of all equities in the United States.
Suppose output increases by 10% and population increases by 5%. This would cause per capital output to
Increase by 5%
Increase by 10%
Decrease by 5%
Increase by 7.5%
If we define economic growth as an increase in per capita potential output, empirically we can tell that this has happened if
Per capita real GDP increases to a value higher than its previous “peak” value.
Per capita real GDP increases without the unemployment rate declining
Real GDP grows without employment increasing
Real GDP increases 3 quarters in a row
The North American Free Trade Agreement (NAFTA) which took effect in 1994
Took effect in the middle of a period during which real hourly compensation was not increasing, but real hourly compensation began to grow rapidly three years later in 1997.
Took effect in the middle of a period during which real hourly compensation was not increasing, and as a result of the treaty, real hourly compensation did not increase.
Clearly caused a decrease in real hourly compensation in the United States.
Clearly caused real hourly compensation immediately to begin increasing.
{"name":"Module 6", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"Unit labor costs are equal to the, The components of the Wilshire 5000 account for, How did the growth rate of labor productivity in the business sector from 1960 to 1973 compare with the growth rate of labor productivity in manufacturing from 1990 to 1996?","img":"https://cdn.poll-maker.com/12-525280/mod6-13.png?sz=1200-00000000001001707856"}