Question 1

Since the early 1980s in Australia, which group of workers has experienced decreasing relative wage?

Accepted Answer

Since the early 1980s in Australia, workers with incomplete high school qualifications have experienced decreasing relative wages. This trend reflects broader economic shifts towards a knowledge-based economy, where higher education and skills are increasingly valued, leading to higher wages for those with more education and lower wages for those without.

Question 2

Employment growth will increase as a result of an increase in productivity when which of the following occurs?

Accepted Answer

When output growth exceeds productivity growth, more workers are needed to produce the additional output, leading to employment growth.

Question 3

Which of the following statements about Australia during the 1996- 2011 period is correct?

Accepted Answer

During the period of 1996-2011, Australia's output growth has been faster than employment growth, with output experiencing an average annual growth rate of 3.3% compared to the employment growth rate of 1.8%. This was largely due to the country's strong economic policy framework, sound financial system, and abundant natural resources.

Question 4

Which of the following represents the wage- setting relation when changes in labour productivity are allowed to occur?

Accepted Answer

The answer of Which of the following represents the wage-...

Question 5

Employment will remain constant as a result of an increase in productivity when which of the following occurs?

Accepted Answer

When productivity growth is equal to output growth, employment levels can remain constant because the amount of work required to produce the output does not change relative to the efficiency of production.

Question 6

Suppose the aggregate production function is represented by Y = AN. Which of the following expressions represents the number of additional workers required to increase production by one unit?

Accepted Answer

Given the production function Y = AN, the marginal product of labor (MPL) is A, meaning that each additional worker increases output by A units. To increase production by one unit, 1/A workers are needed, as 1 = A*(1/A).

Question 7

Assume an economy experiences, for a given period, a 1% increase in output and a 5% increase in productivity. Given this information, we know that which of the following occurred for this economy during this economy?

Accepted Answer

If productivity increases by 5% but output only increases by 1%, it means less labor was needed to produce more efficiently. Therefore, employment likely decreased.

Question 8

In recent years, the increasing relative wage of skilled labour has been mostly due to:

Accepted Answer

The increasing relative wage of skilled labour is due to an increase in the demand for skilled labour that exceeds the increase in supply. This can be attributed to factors such as technological advancement, globalization, and an emphasis on higher education and specialized skills in the workforce.

Question 9

Assume that expectations of P and A are correct. Now suppose that there is a 1.6% increase in A. Given this information, which of the following will occur?

Accepted Answer

According to the Solow-Swan model, an increase in A will lead to an increase in the real wage and a decrease in the natural rate of unemployment (as there are more productive workers available). Since the expectations of A are correct, there will be no additional effect on the natural rate of unemployment. Therefore, the only effect will be a 1.6% increase in the real wage.

Question 10

In recent years in Australia, relative wages of the least educated workers:

Accepted Answer

In recent years in Australia, the trend has shown a decrease in the relative wages of the least educated workers, alongside a decrease in the relative wages of university-educated workers, reflecting broader wage compression and changes in the labor market that affect workers across different education levels.

Question 11

A major explanation for the decline in employment in the textiles industry in Australia is:

Accepted Answer

The shift in production towards low-wage countries has led to a decline in employment in the textiles industry in Australia.

Question 12

Suppose an economy experiences an increase in technological progress. This increase in technological progress will:

Accepted Answer

An increase in technological progress will lead to changes in the types of goods produced as new technologies are developed and new products become possible. It will also allow the same amount of output to be produced with fewer workers, as machines and automation are used to increase efficiency. Finally, it will allow more output to be produced with the same number of workers, as workers are able to produce more per hour with the help of technology. Therefore, all of the above statements are true.

Question 13

Technological unemployment is a macroeconomic phenomenon that occurs when:

Accepted Answer

Technological unemployment is a macroeconomic phenomenon that occurs when unemployment changes as a result of technological change. As technology replaces human labor in certain sectors and industries, workers may become unemployed and unable to find new work in their field, leading to technological unemployment.

Question 14

Assume an economy experiences an increase in productivity that occurs as a result of a more widespread implementation of a major technological breakthrough. Given this information, we would expect which of the following to occur?

Accepted Answer

An increase in productivity leads to a decrease in costs of production, allowing firms to produce and sell more output at lower prices. This leads to an increase in aggregate supply, shifting the aggregate supply curve to the right. As a result, the economy experiences an increase in real output and a decrease in the price level. With a lower price level, consumers have a higher real purchasing power and tend to buy more goods and services, leading to an increase in aggregate demand. Therefore, we would expect a shift of the aggregate demand curve to the right.

Question 15

"Churning" refers to:

Accepted Answer

"Churning" refers to the structural changes in the economy that are often associated with technological progress. This process can involve shifts in the types of jobs available, the skills required for employment, and the sectors of the economy that are growing or shrinking, all of which are driven by advancements in technology and changes in market demand.

Question 16

Assume that expectations of P and A are correct. Now suppose that there is a 4% increase in A. Given this
Information, which of the following will occur?

Accepted Answer

The PS relation will shift up by 4% because an increase in A will lead to an increase in P.

Question 17

Suppose workers expectations of prices and productivity are accurate. For this economy, an increase in productivity will cause which of the following?

Accepted Answer

An increase in productivity means that workers can produce more goods and services for each hour of work. This typically leads to an increase in the real wage, as workers are more valuable to employers. However, it does not necessarily change the natural rate of unemployment, which is determined by factors such as the structure of the labor market and policies affecting labor, rather than by productivity directly.

Question 18

Assume that expectations of the price level and productivity are accurate. Now suppose that the economy experiences an increase in productivity. Which of the following will occur in the medium run?

Accepted Answer

The answer of Assume that expectations of the price level...

Question 19

Based on our understanding of the price- setting equation, which of the following will not cause a decrease in the price level?

Accepted Answer

The answer of Based on our understanding of the price-...

Question 20

Assume an economy experiences, for a given period, a 4% increase in output and a 4% increase in productivity. Given this information, we know that which of the following occurred for this economy during this economy?

Accepted Answer

If output and productivity both increase by 4%, it means that the same amount of output is being produced more efficiently but does not necessarily require more labor. Therefore, employment has not changed, as the increase in productivity compensates exactly for the increase in output.

Quiz 13: Technological Progress: the Short, the Medium and the Long Run