Question 1

Average labor productivity equals:

Accepted Answer

Average labor productivity is output per employed worker.

Question 2

Which of the following correctly ranks the amounts from smallest to largest?

Accepted Answer

Total output must be the largest value as the other two measurements are obtained by dividing this output value with a number greater than one. Furthermore, output per person must be smaller than output per worker, as a nation is bound to have some people who are not workers - such as children, retired, students, etc.

Question 3

In Econland population and average labor productivity are constant. If a larger proportion of the population becomes employed workers, then total output will _____ and output per person will ______.

Accepted Answer

If a larger proportion of a constant population becomes employed, and average labor productivity is also constant, then total output must increase as more people are actively producing output. With more output and a constant population, output per person must also be increasing.

Question 4

Average consumption in an economy is best measured by _____, while average productivity in an economy is best measured by _____.

Accepted Answer

Average consumption in an economy is best measured by output per person, while average productivity in an economy is best measured by output per worker.

Question 5

The country of Northland produced $1,000 billion of output in one year. The population of Northland was 50 million, of whom 30 million were employed. What was average labor productivity in Northland?

Accepted Answer

Average labor productivity is output per employed worker, which is $33,333 ($1,000 billion / 30 million).

Question 6

Output per worker must be _____ output per person.

Accepted Answer

Output per worker must be greater than or equal to output per person, as a nation can never have fewer workers than people and the output divided is the same in both computations.

Question 7

In Econland population and average labor productivity are constant. If a larger proportion of the population enters retirement, then total output will _____ and output per person will ______.

Accepted Answer

If a larger proportion of a constant population enters retirement, and average labor productivity is also constant, then total output must decrease, as fewer people are actively producing output. With less output and a constant population, output per person must also be decreasing.

Question 8

Output per employed worker is called:

Accepted Answer

Average labor productivity is output per employed worker.

Question 9

Compared to the 1950-1973 period, output per worker _____ in the 1974-1995 period.

Accepted Answer

Between 1950 and 1973 in the United States, output per employed worker increased by more than 2 percent per year. But from 1974 to 1995 the average rate of increase in output per worker was close to 1 percent per year.

Question 10

The value of output was $1,000 billion in Northland and $2,000 billion in Southland. The population of Northland was 50 million and the population of Southland was 120 million. There were 30 million employed workers in Northland and 75 million employed workers in Southland. Average labor productivity was higher in _________ and the standard of living was _______.

Accepted Answer

Average labor productivity, which is output per employed worker, was $33,333 ($1,000 billion / 30 million) in Northland and 26,667 ($2,000 billion / 75 million) in Southland. So average labor productivity was higher in Northland. The standard of living, as measured by output per person, was $20,000 ($1,000 billion / 50 million) in Northland and 16,667 ($2,000 billion / 120 million) in Southland. So the standard of living was also higher in Northland.

Question 11

Output per person must be _____ output per worker.

Accepted Answer

Output per person must be less than or equal to output per worker, as a nation can never have fewer workers than people and the output divided is the same in both computations.

Question 12

Compared to 1929, total output in the U.S. today is approximately ____ times larger.

Accepted Answer

In 2014, the output of the U.S. economy was more than 15 times what it was 1929.

Question 13

In Econland population increased from 1 million to 1. 1 million, the number of employed workers increased from 500,000 to 600,000, but average labor productivity decreased from $20,000 per worker per year to $19,000 per worker per year. Total output in Econland _____ and the average standard of living _____.

Accepted Answer

Total output, which is the average labor productivity per worker times the number of workers, increased from $10 billion (500,000 * $20,000) to $11.4 billion (600,000 * $19,000). At the same time, the average standard of living, which is total output per person, increased from $10,000 ($10 billion / 1 million) to $10,364 ($11.4 billion / 1.1 million).

Question 14

In Econland population increased from 1 million to 1. 1 million, the number of employed workers increased from 500,000 to 600,000, but average labor productivity decreased from $20,000 per worker per year to $18,000 per worker per year. Total output in Econland _____ and the average standard of living _____.

Accepted Answer

Total output, which is the average labor productivity per worker times the number of workers, increased from $10 billion (500,000 * $20,000) to $10.8 billion (600,000 * $18,000). At the same time, the average standard of living, which is total output per person, decreased from $10,000 ($10 billion / 1 million) to $9,818 ($10.8 billion / 1.1 million).

Question 15

If living standards in a country, as measured by output per person, decrease, then total output must have:

Accepted Answer

Because of population growth, improvements in the general standard of living are measured by output per person. So a nation's living standards will decrease if total output is growing slower than the population is increasing or if total output is decreasing faster than the population is decreasing.

Question 16

Compared to 1929, total output per person in the U.S. today is approximately ____ times larger.

Accepted Answer

In 2014 a typical U.S. resident consumed more than five times the quantity of goods and services available to a typical resident at the onset of the Great Depression.

Question 17

The country of Southland produced $2,000 billion of output in one year. The population of Southland was 100 million, of whom 60 million were employed. What was average labor productivity in Southland?

Accepted Answer

Average labor productivity is output per employed worker, which is $33,333 ($2,000 billion / 60 million).

Question 18

The value of output was $100 billion in Northland and $200 billion in Southland. The population of Northland was 50 million and the population of Southland was 30 million. There were 30 million employed workers in Northland and 20 million employed workers in Southland.

Accepted Answer

Average labor productivity, which is output per employed worker, was $3,333 ($100 billion / 30 million) in Northland and 10,000 ($200 billion / 20 million) in Southland. So average labor productivity was higher in Southland. The standard of living, as measured by output per person, was $2,000 ($100 billion / 50 million) in Northland and 6,667 ($200 billion / 30 million) in Southland. So the standard of living was also higher in Southland.

Question 19

The process of steady increase in the quantity and quality of goods and services the economy can produce is called:

Accepted Answer

Economic growth is the steady increase in the quantity and quality of goods and services the economy can produce.

Question 20

Which of the following correctly ranks the amounts from largest to smallest?

Accepted Answer

Total output must be the largest value as the other two measurements are obtained by dividing this output value with a number greater than one. Furthermore, output per worker must be greater than output per person, as a nation is bound to have some people who are not workers - such as children, retired, students, etc.

Quiz 4: Macroeconomics: the Birds-Eye View of the Economy