Question 1

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.Which of the following is the best measure of labour productivity in this economy?
A)real GDP per hour worked = $20
B)real GDP per employed worker = $20
C)real GDP per hour worked = $200
D)real GDP per employed worker = $200
E)Not able to determine from the information provided

Accepted Answer

Labour productivity is measured by real GDP per hour worked. Therefore, choice C (real GDP per hour worked = $200) is the best measure of labour productivity in this economy as it calculates the output per unit of input (hour worked) which is a more accurate representation of productivity. The other choices don't take into account the number of hours worked and could be misleading.

Question 2

A change in the Consumer Price Index measures
A)a change in a specific absolute price.
B)a change in quantities of commodities sold.
C)a change in relative prices.
D)a change in a broad average price over some particular time span.
E)the change in gross domestic product.

Accepted Answer

The Consumer Price Index measures the change in a broad average price level of goods and services over a particular time span, typically a month or a year. It is a measure of inflation that reflects the changes in the price level of a basket of goods and services bought by households. It is not related to changes in specific absolute prices or quantities of commodities sold, nor does it measure changes in relative prices or GDP.

Question 3

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%.But suppose the price level rises by 3% over the course of the contract.In this case,
A)the employees' purchasing power will rise.
B)the employees' purchasing power will fall.
C)the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady.
D)both employer and employees will benefit from increased purchasing power.
E)both employer and employees will experience a loss of purchasing power.

Accepted Answer

The wage increase of 2% is lower than the increase in prices of 3%, therefore the employees' purchasing power will decrease as they will not be able to afford as much with their wage increase as they could before the price level rise. The employer may still benefit from increased profits due to the higher prices, but this does not translate to increased purchasing power.

Question 4

If the cyclical unemployment rate is negative,then the
A)economy is operating beyond full employment.
B)economy is operating at less than full employment.
C)frictional unemployment rate is negative.
D)frictional unemployment rate is greater than the structural unemployment rate.
E)real-wage unemployment rate is negative.

Accepted Answer

Cyclical unemployment refers to the unemployment caused by downturns or recessions in the economy. When the cyclical unemployment rate is negative, it means that the actual unemployment rate is lower than the natural or potential rate of unemployment, which is the rate that exists when the economy is operating at full employment. This implies that the economy is operating beyond full employment, with a labor shortage and potentially rising inflation and wages.

Question 5

Most economists believe the single largest cause of rising material living standards over long periods of time is
A)productivity growth.
B)rising employment.
C)growth in the capital stock.
D)real GDP growth.
E)rising real wages.

Accepted Answer

Productivity growth is the most important factor in raising material living standards over time. This is because higher productivity allows for increased output with the same amount of inputs, resulting in higher levels of consumption and more goods and services available for the same amount of effort or resources.

Question 6

Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500.Which of the following is the best measure of labour productivity in this economy?
A)real GDP per hour worked = $200
B)real GDP per employed worker = $200 000
C)real GDP per hour worked = $400
D)real GDP per employed worker = $400 000
E)Not able to determine from the information provided

Accepted Answer

The answer of Consider a small economy with real GDP...

Question 7

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour.Which of the following is the best measure of labour productivity in this economy?
A)real GDP per hour worked = $40
B)real GDP per employed worker = $80 000
C)real GDP per hour worked = $80
D)real GDP per employed worker = $125 000
E)Not able to determine from the information provided

Accepted Answer

The answer of Consider a small economy with 2500 employed...

Question 8

In some macroeconomic analyses,it is common to treat the level of productivity as roughly constant.This is a justifiable assumption in
A)the long run.
B)the short run.
C)both the long run and the short run.
D)neither the long run nor the short run.
E)macroeconomics but not microeconomics.

Accepted Answer

In the short run, it is often reasonable to treat the level of productivity as roughly constant because productivity changes typically occur over longer periods due to factors like technological advancements, changes in workforce skills, and capital investments. In the short run, these factors do not change significantly, making the assumption of constant productivity more justifiable.

Question 9

If nominal national income increased by 10% over a certain period of time while real national income increased by 20%,then
A)everybody in the economy became worse off.
B)inflation has occurred during this time period.
C)the labour force increased by 10%.
D)the price level has declined by about 10%.
E)the price level has increased by approximately 10%.

Accepted Answer

The price level has declined because real national income, which is adjusted for inflation, increased by a greater percentage (20%) than nominal national income (10%). This indicates that the amount of goods and services produced has increased more than the prices, leading to a decrease in the price level.

Question 10

In general,productivity is a measure of
A)the economy's ability to increase real GDP per capita.
B)the amount of output that the economy produces per unit of input.
C)real GDP as a function of total employment.
D)the total amount of output that the economy is capable of producing.
E)potential output.

Accepted Answer

Productivity measures the amount of output (goods and services) that is produced per unit of input (such as labor and capital). It is a measure of how efficiently resources are being used in the production process, and is often used as an indicator of economic growth and prosperity. Real GDP per capita (choice A) is one measurement of economic growth, but productivity is a more direct measure of the efficiency of the production process. Real GDP as a function of total employment (choice C) is not a measure of productivity but rather of labor productivity, which is only one component of overall productivity. The total amount of output that the economy is capable of producing (choice D) is known as potential output, which is not the same as actual productivity. Choice E (potential output) is incorrect for the same reason as choice D.

Question 11

The most common measure of productivity is ________,which can be measured as real GDP divided by ________.
A)indexed productivity; per capita output
B)factor productivity; the total number of factors employed in the economy
C)capital productivity; the number of units of capital employed in the economy
D)potential productivity; the total number of factors that would be employed in the economy at full employment
E)labour productivity; the number of units of work effort

Accepted Answer

The most common measure of productivity is labor productivity, which is measured as real GDP divided by the number of units of work effort.

Question 12

Inflation is the rate of change of average prices in the economy.In general,we can say that inflation
A)benefits creditors if it is unanticipated.
B)has no real effects if it is unanticipated.
C)increases the purchasing power of money.
D)reduces the real value of existing nominal debt.
E)increases the real value of fixed money incomes.

Accepted Answer

Inflation reduces the purchasing power of money and therefore reduces the real value of existing nominal debt, benefiting creditors who receive repayment in dollars that are worth less than when the loan was made.

Question 13

The price level is measured in some time period with an index number,such as the number 118.6.How is such a number of use to us?
A)It allows us to compare it to the value of the same index number from another time period to determine the rate of change of the price level.
B)The index number tells us the rate of inflation.
C)It tells us the dollar value for the average basket of goods and services bought by the typical Canadian household.
D)It tells us the real value for the average basket of goods and services bought by the typical Canadian household.
E)It tells us the percentage change in the price level from the previous time period.

Accepted Answer

The index number allows us to compare the value of the price level from one time period to another, which gives us information about the rate of change (inflation or deflation) in prices.

Question 14

The three main reasons that Canada's real GDP has increased steadily for many years are
A)rising employment,increasing levels of education of the labour force and the increase in the participation rate of women in the labour force.
B)an increasing stock of physical capital,increasing exports and rising employment.
C)the increase in life expectancy,the rise in employment and increasing productivity.
D)rising employment,increasing stock of physical capital and increasing productivity.
E)increasing productivity of labour,increasing productivity of land and increasing productivity of the capital stock.

Accepted Answer

The increase in real GDP is primarily driven by the growth of the factors of production, particularly labour and capital. Rising employment, increasing stock of physical capital and increasing productivity are the three main drivers behind increasing real GDP in Canada. The other options listed may contribute to GDP growth, but are not as significant as these factors.

Question 15

As the banking industry becomes more and more automated,tellers find themselves with unneeded skills and some of them become unemployed.At the same time,software engineers are in increasing demand.These unemployed tellers would be classified as
A)cyclically unemployed.
B)frictionally unemployed.
C)naturally unemployed.
D)structurally unemployed.
E)underemployed.

Accepted Answer

The scenario describes a situation where automation is causing changes in the job market and rendering certain skills obsolete. This is an example of structural unemployment, where workers are unable to find employment due to changes in the structure of the economy.

Question 16

Changes in productivity can be analyzed by looking at how GDP per employed worker changes over time or how GDP per hour worked changes over time.Why might one measure be more preferable than the other?
A)GDP per hour worked is preferable because it eliminates the need to adjust for variations in productivity between employed workers.
B)GDP per employed worker is more accurate because the data available on the number of employed workers is more accurate than the data available on the number of hours worked.
C)GDP per hour worked is more accurate because the average number of hours worked per employed worker has changed over time.
D)GDP per employed worker is preferable because the number of employed workers has risen significantly over time.
E)Both measures are equally good.

Accepted Answer

GDP per hour worked is more accurate because it takes into account changes in the average number of hours worked per employed worker. This allows for a more accurate analysis of changes in productivity over time. GDP per employed worker can be affected by changes in the number of workers, which may not accurately reflect changes in productivity.

Question 17

What is the approximate measure (2017 data)of Canada's productivity in terms of real GDP per hour worked (expressed in 2007 dollars)?
A)$10
B)$920
C)$200
D)$475
E)$58

Accepted Answer

In 2017, Canada's productivity in terms of real GDP per hour worked was approximately $58 when expressed in 2007 dollars.

Question 18

Why is real income for an average Canadian today so much higher than it was for an average Canadian 100 years ago?
A)Because of the increase in the labour force due to rising population,immigration and the increase in female labour-force participation.
B)Primarily because productivity per worker is so much higher today than in the past.
C)Because inflation has been maintained at relatively low levels throughout that time.
D)Because free-trade agreements have vastly increased real incomes.
E)Because the life span of the average worker has increased from about 55 years to about 80 years over that time period.

Accepted Answer

The primary reason for the increase in real income over the past 100 years is the significant increase in productivity per worker. This has resulted in higher wages and increased the standard of living for Canadians. While factors such as population growth, inflation control, and free-trade agreements may have contributed to this increase, they are not the primary driving factor. The increase in life span is not directly related to real income but may have contributed to a larger workforce and increased productivity over time.

Question 19

Suppose the unemployment rate is 8.5% and we know that frictional and structural unemployment together account for 5.5%.The cyclical unemployment rate is then
A)14%.
B)8.5%.
C)5.5%.
D)3.0%.
E)-3.0%.

Accepted Answer

The cyclical unemployment rate can be found by subtracting the sum of frictional and structural unemployment from the overall unemployment rate. 
Cyclical unemployment rate = Unemployment rate - (Frictional unemployment + Structural unemployment) 
Cyclical unemployment rate = 8.5% - 5.5% 
Cyclical unemployment rate = 3.0% 
Therefore, the answer is D) 3.0%.

Question 20

If the cyclical unemployment rate is greater than zero,then the
A)economy is operating beyond full employment.
B)economy is operating at full employment.
C)economy is operating at less than full employment.
D)frictional unemployment rate is greater than the structural unemployment rate.
E)real-wage unemployment rate is negative.

Accepted Answer

Cyclical unemployment refers to the portion of unemployment that is caused by fluctuations in the business cycle, specifically the downturns. If the cyclical unemployment rate is greater than zero, it means that the economy is not operating at full employment but rather at a level below full employment. Therefore, choice C is the best answer.

Quiz 19: What Macroeconomics Is All About

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.Which of the following is the best measure of labour productivity in this economy?

A change in the Consumer Price Index measures

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%.But suppose the price level rises by 3% over the course of the contract.In this case,

If the cyclical unemployment rate is negative,then the

Most economists believe the single largest cause of rising material living standards over long periods of time is

Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500.Which of the following is the best measure of labour productivity in this economy?

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour.Which of the following is the best measure of labour productivity in this economy?

In some macroeconomic analyses,it is common to treat the level of productivity as roughly constant.This is a justifiable assumption in

If nominal national income increased by 10% over a certain period of time while real national income increased by 20%,then

In general,productivity is a measure of

The most common measure of productivity is ,which can be measured as real GDP divided by .

Inflation is the rate of change of average prices in the economy.In general,we can say that inflation

The price level is measured in some time period with an index number,such as the number 118.6.How is such a number of use to us?

The three main reasons that Canada's real GDP has increased steadily for many years are

As the banking industry becomes more and more automated,tellers find themselves with unneeded skills and some of them become unemployed.At the same time,software engineers are in increasing demand.These unemployed tellers would be classified as

Changes in productivity can be analyzed by looking at how GDP per employed worker changes over time or how GDP per hour worked changes over time.Why might one measure be more preferable than the other?

What is the approximate measure (2017 data) of Canada's productivity in terms of real GDP per hour worked (expressed in 2007 dollars) ?

Why is real income for an average Canadian today so much higher than it was for an average Canadian 100 years ago?

Suppose the unemployment rate is 8.5% and we know that frictional and structural unemployment together account for 5.5%.The cyclical unemployment rate is then

If the cyclical unemployment rate is greater than zero,then the