PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 7, Problem 2RQ
To determine
Determine the role of growth in average labor productivity in determining the long-run living standards.
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Identify the following variables as procyclical, countercyclical,
or acyclical:
(1) consumption, (2) real wage, (3) employment, and (4) total factor productivity.
Suppose y = k^1/2, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, the capital−labor ratio is ________ of capital per worker.
A. $2
B. $4
C. $8
D. $16
Suppose you are given data on the rate of growth of GDP, capital, and labour, and the share of these two factors in GDP. How would you calculate the contribution of Total Factor Productivity to growth? Explain it verbally and formally.
Chapter 7 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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- Which of the following would you say is the more important determinant of strong economic growth – high levels of human capital or rich endowments of natural resources? Explain your answer.arrow_forwardSuppose k = y^1/2, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, investment per worker is ________. A.$0.80 B.$1.60 C.$3.20 D.6.40arrow_forwardSuppose y = k1/2, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, real GDP per worker is ________. A. $2 B. $4 C. $8 D. $16arrow_forward
- Capital deepening refers to Group of answer choices The quantity of physical capital with better technology available in the economy The increase in quantity and quality of capital per worker The improvements in the education system A larger infrastructure and communication networkarrow_forwardIn his 2020 state of Nation address (SoNA) president of South Africa humbly noted that... '' Even if we (the government) were to Marshall every single resource at our disposal, and engage on a huge expenditure of public funds, we would not alone be able to guarantee employment to the millions of people who are out of work ''. and that '' Without growth there will be no jobs, and without jobs there will be no meaningful improvement in the lives of our people ".arrow_forwardJanet, a mother of two, decides to reduce her working hours to spend more time with her children. By itself, assuming everything else being the same, this development has necessarily resulted in a lower quality of life for Janet due to a fall in income (and resultant fall in economic activity as measured by GDP).arrow_forward
- Suppose you are given the aggregate production function for an economy and the amount of available technology increases for this economy. If labor and capital constant are held constant, increase in technology will causes labor productivity to decrease. True Falsearrow_forwardWhich of the following is an appropriate solution to the problem of slow real income growth among the unskilled workers in the United States? increasing society’s investment in education restricting exports of jobs restricting access toarrow_forwardRelative to productivity growth in the United States, which of the following countries experienced the largest decline in productivity growth from 1990 to 2019? Canada Japan Germany the United Kingdomarrow_forward
- if output is measured as growing at 5 percent during a given business cycle, and input grew at 2 percent over that same time period, then overall labor productivity growth is said to be ?arrow_forwardCountry A and country B both have the production function Y = F(K, L) = K^0,5L^0,5 A. Does this production function have constant returns to scale? Explain. B. What is the per-worker production function, y = f(k)? C. Assume that neither country experiences population growth or technological progress and that 5 percent of capital depreciates each year. Assume further that country A saves 10 percent of output each year and country B saves 20 percent of output each year. Using your answer from part (b) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker for each country. Theen find the steady-state levels of income per worker and consumption per worker. D. Suppose that both countries start off with a capital stock per worker of 2. What are the levels of income per worker and consumption per worker? Remembering that the change in the capital stock is investment less depreciation, use a calculator or a computer spreadsheet…arrow_forwardIf real income per person was $47,210 in the U.S. in 2010, and $55,860 in 2014, what was the annual growth rate over this time period?arrow_forward
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