Question 1

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 2

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 3

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
A)cyclical unemployment.
B)frictional unemployment.
C)historical unemployment.
D)natural rate of unemployment.
E)structural unemployment.

Accepted Answer

Structural unemployment occurs when workers' skills or experience are no longer in demand due to changes in technology or market conditions, leading to a mismatch between the skills of the unemployed workers and the skills required by employers who are hiring. This is different from frictional unemployment, which occurs when workers are between jobs or searching for new ones, and cyclical unemployment, which occurs during economic downturns when overall demand for labor decreases. Historical unemployment and natural rate of unemployment are not relevant to this scenario.

Question 4

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

To measure labor productivity, we need to calculate real GDP per hour worked. Therefore, we divide the real GDP ($1 billion) by the total number of hours worked (5 million), which gives us real GDP per hour worked of $200.

Question 5

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 a broad average price of a basket of goods and services over a specific period of time, typically a month or a year. It reflects the change in the cost of living for consumers, as it tracks the price changes of commonly purchased goods and services. Therefore, a change in the Consumer Price Index indicates a change in the level of inflation, and not necessarily a change in a specific absolute price, quantities sold, relative prices, or GDP.

Question 6

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 labour productivity, which can be measured as real GDP divided by the number of units of work effort.

Question 7

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 a better measure because the average number of hours worked per employed worker has changed over time, and this change can affect the productivity measured by GDP per employed worker. GDP per hour worked eliminates this factor and provides a more accurate measurement of changes in productivity.

Question 8

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 it to the value of the same index number from another time period to determine the rate of change of the price level.

Question 9

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 by an economy per unit of input (such as labor, capital, and natural resources). It is a measure of efficiency and is important for economic growth and development.

Question 10

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
A)cyclical unemployment.
B)frictional unemployment.
C)historical unemployment.
D)overly-optimistic unemployment.
E)structural unemployment.

Accepted Answer

This is an example of frictional unemployment, as workers are temporarily between jobs while they search for a better opportunity.

Question 11

Most economists believe that 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 refers to the increase in the amount of output produced per unit of input. As productivity increases, businesses can produce more goods and services with the same amount of resources or produce the same amount of goods and services with fewer resources, leading to increased efficiency and higher material living standards. Real GDP growth, rising employment, and growth in the capital stock can also contribute to rising living standards, but productivity growth is the primary driver of long-term improvements in material well-being. Rising real wages may result from productivity growth, but they are not the cause of it.

Question 12

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

A negative cyclical unemployment rate means that the actual unemployment rate is lower than the natural rate of unemployment, which indicates that the economy is overutilizing resources and operating beyond full employment.

Question 13

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 situation described fits the definition of structural unemployment, which occurs when skills are no longer in demand due to changes in the structure of the economy. The tellers are no longer needed due to automation and technological changes in the banking industry, while software engineers are in increasing demand. The other types of unemployment (cyclical, frictional, natural, underemployment) do not accurately describe this situation.

Question 14

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

Cyclical unemployment = Unemployment rate - (Frictional unemployment + Structural unemployment) 
Cyclical unemployment = 8.5% - 5.5% = 3.0%

Question 15

Cyclical unemployment is associated with which of the following?
A)changes to the economy's industrial structure resulting from growth in some industries and decline in others
B)an output level different from the economy's potential output
C)differences between the characteristics of the supply of labour and the demand for labour
D)people entering the labour force typically take some time to find a job
E)people quitting their present jobs to look for other jobs

Accepted Answer

Cyclical unemployment is primarily caused by changes in the business cycle, or fluctuations in economic activity. It occurs when the actual level of output in the economy is below its potential level, resulting in a decrease in demand for labor, and ultimately causing unemployment.

Question 16

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 unemployment rate that results from fluctuations in the business cycle. If the cyclical unemployment rate is greater than zero, it means that the economy is not operating at full employment because there are people who are willing and able to work but unable to find jobs due to a lack of demand for labor. Therefore, option C is the best answer.

Question 17

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 18

What is the approximate measure (2014 data)of Canada's productivity in terms of real GDP per hour worked (expressed in 2007 dollars)?
A)$10
B)$92
C)$200
D)$475
E)$45

Accepted Answer

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

Question 19

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 for an average Canadian today is because productivity per worker is much higher today than in the past, due to advancements in technology, machinery, and improved work processes. While factors such as an increase in the labour force and low inflation may have contributed to some extent, they are not the primary reasons for the significant increase in real income. Free-trade agreements and increased life span may have had some positive impacts on the economy as a whole but they are not directly related to the increase in real income for an average Canadian worker.

Question 20

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 rise in employment increases the number of workers, the increasing stock of physical capital enhances the productivity of those workers, and increasing productivity means that each worker can produce more goods or services. All of these factors contribute to an increase in real GDP over time.

Quiz 19: What Macroeconomics Is All About

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

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

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

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

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?

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?

In general,productivity is a measure of

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

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

If the cyclical unemployment rate is negative,then the

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

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

Cyclical unemployment is associated with which of the following?

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

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?

What is the approximate measure (2014 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?

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