Question 1

Workers with experience and skills sometimes lose their jobs and become unemployed due to changing technology or market conditions, even while firms in other industries or regions are looking to hire more workers. This type of unemployment is called

Accepted Answer

This type of unemployment, where workers become unemployed due to changing technology or market conditions, is known as structural unemployment.

Question 2

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?

Accepted Answer

Labor productivity is defined as the amount of output (real GDP) produced per unit of labor input (hours worked). Therefore, the best measure of labor productivity in this economy is real GDP per hour worked. Option C provides this measure as $200. Option A and B divide real GDP by different measures of labor input, making them inaccurate measures of labor productivity. Option D divides real GDP by the number of employed workers, which could be different from the total number of hours worked if workers have different working hours. Therefore, option C is the best measure of labor productivity in this economy.

Question 3

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

Accepted Answer

The situation described - technological change leading to job loss - is an example of structural unemployment. Structural unemployment refers to unemployment caused by changes in the structure of the economy, such as technological changes, that eliminate the need for certain types of labor.

Question 4

Workers with marketable skills sometimes quit a job and become unemployed, with the expectation of soon finding a better job. This type of unemployment is called

Accepted Answer

This type of unemployment is called frictional unemployment, which occurs when workers voluntarily leave their jobs with the expectation of finding a better one. This is a natural and unavoidable part of a dynamic economy with constant job turnover and mismatches between job openings and job seekers.

Question 5

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?

Accepted Answer

The index number 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. This helps us analyze the inflation or deflation in the economy.

Question 6

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

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 (i.e. number of hours worked). Option A is incorrect because "indexed productivity" is not a commonly used measure of productivity. Option B is incorrect because "factor productivity" is a broader measure that includes both labor and capital inputs, not just labor. Option C is incorrect because "capital productivity" only focuses on the contribution of capital inputs to output, and not labor. Option D is incorrect because "potential productivity" only measures the maximum level of output that can be produced in the long run, assuming full employment of all factors of production.

Question 7

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

Accepted Answer

Cyclical unemployment refers to unemployment that results from fluctuations in economic activity. If the cyclical unemployment rate is greater than zero, it means that the actual rate of unemployment is higher than the rate that would prevail if the economy was operating at full employment. This suggests that the economy is operating at less than full employment, as there are still people who are willing and able to work but cannot find jobs.

Question 8

A change in the Consumer Price Index measures

Accepted Answer

The Consumer Price Index (CPI) measures the average change in prices of a basket of goods and services consumed by households over time. It provides an indication of the level of inflation or deflation in an economy. Therefore, a change in CPI represents a change in a broad average price over some particular time span.

Question 9

What is the approximate measure 2014 data) of Canadaʹs productivity in terms of real GDP per hour worked expressed in 2007 dollars)?

Accepted Answer

The answer of What is the approximate measure 2014 data)...

Question 10

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?

Accepted Answer

GDP per hour worked is a better measure because it takes into account changes in the average number of hours worked per employed worker over time, which can affect overall productivity. Looking at GDP per employed worker only measures how much output is produced by each employed worker, but does not account for changes in the number of employed workers or changes in the hours worked per worker.

Question 11

In general, productivity is a measure of

Accepted Answer

Productivity is typically measured as the amount of output, usually measured in terms of real GDP, that an economy produces per unit of input, such as labor or capital. This measure is important because it reflects how efficiently resources are being used to produce goods and services, and can ultimately determine a country's economic growth and standard of living. Option A is related to productivity as it measures how much output is produced per capita, but it's not the same thing as productivity. Option C is incorrect because it suggests that productivity is only a function of total employment, when in fact it is impacted by many other factors, such as technology and education. Option D is incorrect because it refers to the economy's total production capacity, which isn't the same as its actual productivity. Option E is also incorrect because potential output is another way of referring to the economy's production capacity, rather than its actual productivity.

Question 12

The three main reasons that Canadaʹs real GDP has increased steadily for many years are

Accepted Answer

The three main reasons that Canada's real GDP has increased steadily for many years are rising employment, increasing stock of physical capital, and increasing productivity. These factors contribute to an increase in the production capacity of the economy and allow for sustained economic growth over time. Other factors such as education, participation rate of women, and exports can also contribute to economic growth, but they are not the primary drivers of long-term growth in real GDP.

Question 13

Cyclical unemployment is associated with which of the following?

Accepted Answer

Cyclical unemployment is caused by fluctuations in the business cycle, where economic downturns lead to a decrease in demand for labor and therefore a higher unemployment rate. This results in an output level that is different from the economy's potential output.

Question 14

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?

Accepted Answer

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

Question 15

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

Accepted Answer

The cyclical unemployment rate is the difference between the overall unemployment rate and the sum of frictional and structural unemployment rates. Hence, the cyclical unemployment rate would be:
Cyclical unemployment rate = Overall unemployment rate - (Frictional unemployment rate + Structural unemployment rate)
= 8.5% - 5.5%
= 3%
Therefore, the cyclical unemployment rate is 3%, which is option D.

Question 16

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

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 17

If the cyclical unemployment rate is negative, then the

Accepted Answer

A negative cyclical unemployment rate means that the actual unemployment rate is lower than the natural rate of unemployment (the rate that occurs when the economy is in equilibrium and there is no cyclical unemployment). This indicates that the economy is operating beyond full-employment, as there is a shortage of workers and businesses are competing to hire them.

Question 18

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

Accepted Answer

Productivity per worker has increased due to technological advancements and improvements in education and training, allowing for higher output and wages. The other options may have played a role, but they are not the primary reason for the increase in real income.

Question 19

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?

Accepted Answer

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

Question 20

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

Accepted Answer

Productivity growth refers to the increase in output per unit of input. This means that with the same amount of resources, more goods and services can be produced. As productivity increases, the economy becomes more efficient and can produce more output. This leads to an increase in material living standards over time.

Quiz 19: What Macroeconomics Is All About