Question 1

Labor productivity in the base year was 20.The following year,the productivity index stood at 105.Labor productivity in the second year was:

Accepted Answer

Labor productivity in the second year can be found by dividing the productivity index by 100 and multiplying it by the base year productivity.
Labor productivity in the second year = (Productivity index / 100) x Base year productivity
= (105/100) x 20
= 21

Question 2

In year 1,an economy used 200 worker hours to produce 500 units of output.In year 2,the economy used 240 worker hours to produce 660 units of output.If year 1 is the base year,the productivity index for year 2 is:

Accepted Answer

The productivity index for year 2 compared to year 1 (base year) is calculated by dividing the productivity of year 2 by the productivity of year 1. Productivity is output per worker hour. For year 1, productivity is 500 units / 200 hours = 2.5 units per hour. For year 2, productivity is 660 units / 240 hours = 2.75 units per hour. The productivity index for year 2 is 2.75 / 2.5 = 1.10.

Question 3

Suppose productivity stood at 5.00 in year 1,and 5.25 in year 2.If year 1 is the base year,the productivity index for year 2 is:

Accepted Answer

The productivity index for year 2 is calculated as (Year 2 productivity / Year 1 productivity) * 100 = (5.25 / 5.00) * 100 = 105.

Question 4

The Bureau of Labor Statistics Index of Labor Productivity:

Accepted Answer

The Bureau of Labor Statistics Index of Labor Productivity is calculated by dividing real private-sector GDP by the number of private-sector worker hours. This measure provides a more accurate representation of productivity growth within the private sector, as it adjusts for inflation and excludes government and public sector output. Choices A and B are incorrect because the index covers only the private sector, not the entire economy, and it adjusts for inflation by using real GDP, not nominal GDP. Choice C is incorrect because it refers to nominal GDP, which does not account for inflation.

Question 5

Which of the following would not cause an increase in the BLS Index of Labor Productivity?

Accepted Answer

The BLS Index of Labor Productivity measures the level of output per hour of labor, so any increase in output per worker (including those in the public sector) would cause an increase in the index. Therefore, choice C would cause an increase in the index and is not the correct answer. Choices A, B, and D all involve factors that can increase a worker's productivity and therefore would cause an increase in the index.

Question 6

-The aggregate production function of a hypothetical economy is shown in the diagram at right.In year 1,production takes place at point R.Production at which of the following points for year 2 would indicate an unambiguous increase in labor productivity?

Accepted Answer

An unambiguous increase in labor productivity would be indicated by a movement to a higher point on the same production function curve, such as from point R to point S, which represents higher output with the same amount of labor.

Question 7

Which of the following is not considered a source of increased labor efficiency?

Accepted Answer

Increases in the capital-labor ratio are not considered a direct source of increased labor efficiency but rather a factor that can enhance productivity by providing more capital per worker. The other options directly contribute to labor efficiency through improvements in technology, optimal labor allocation, and beneficial societal changes.

Question 8

The average quality of labor has increased,partly because the demand for education and health care are:

Accepted Answer

The demand for education and health care is income elastic, which means that as national income rises, the demand for these items increases by more than proportionally. This leads to an increase in the quality of labor as people are better educated and healthier, and can contribute more effectively to the economy.

Question 9

If nominal wages rose 1.5% and productivity increased 3% in a given year,we should expect:

Accepted Answer

When productivity increases faster than wages, unit labor costs decrease. This can result in downward pressure on prices as firms are able to produce goods and services more efficiently without having to raise prices to cover the costs. Therefore, the correct choice is D, which states a decrease in unit labor costs and downward pressure on prices.

Question 10

The critical determinants of productivity growth include all of the following except:

Accepted Answer

The extent of import restrictions is not a critical determinant of productivity growth. Instead, it can impact international trade and business competitiveness. The other choices listed are considered critical determinants of productivity growth as they directly impact the efficient use of resources and labor output.

Question 11

According to evidence reported by Jorgenson,Ho,and Stiroh,the most important source of rising labor productivity over the period 1959 - 2006 was:

Accepted Answer

According to the evidence reported by Jorgenson, Ho, and Stiroh, the most important source of rising labor productivity over the period 1959-2006 was increases in the amount of capital goods employed with each worker hour of labor. This suggests that technological advancement played a significant role in enhancing labor productivity.

Question 12

Labor productivity is best defined as:

Accepted Answer

Labor productivity is defined as the amount of output (real GDP) produced per unit of labor input (number of worker hours). Therefore, the correct formula would be real GDP divided by the number of worker hours. Choice A and C refer to unit labor costs and labor costs respectively, which are not direct measures of productivity. Choice B refers to nominal GDP, which is not adjusted for inflation and therefore may not reflect changes in productivity over time.

Question 13

In year 1,an economy used 200 worker hours to produce 500 units of output.In year 2,the economy used 240 worker hours to produce 660 units of output.The rate of productivity growth from year 1 to year 2 is:

Accepted Answer

Productivity in year 1 is 500 units/200 hours = 2.5 units/hour. In year 2, it is 660 units/240 hours = 2.75 units/hour. The growth rate is ((2.75 - 2.5) / 2.5) * 100% = 10%.

Question 14

The secular increase in real wages resulted from increases in labor productivity:

Accepted Answer

The secular increase in real wages resulted from increases in labor productivity which have increased the demand for labor faster than the supply of labor. Higher productivity means that each worker can produce more output per hour of work, which increases the demand for labor as firms seek to produce more goods and services. This increased demand for labor results in higher wages as firms compete for scarce labor resources.

Question 15

If real GDP falls by 2% while work hours fall by 10%,then labor productivity:

Accepted Answer

Labor productivity is calculated as real GDP per hour worked. In this scenario, if real GDP falls by 2% but work hours fall by 10%, it means that the decrease in output is much less than the decrease in work hours. This implies that workers are producing more real output per hour worked, which is an increase in labor productivity. Therefore, the correct answer is C) rises.

Question 16

Which one of the following most closely corresponds to the average annual rate of productivity growth in the United States over the past century?

Accepted Answer

The average annual rate of productivity growth in the United States over the past century has been approximately 2-3%. This rate reflects the average increase in output per labor hour over a long period, accounting for various economic cycles and technological advancements.

Question 17

Which of the following is one of the reasons typically given for the relatively high secular growth rate of productivity for the period 1959 - 2006?

Accepted Answer

A three-fold increase in the capital stock is typically given as one of the reasons for the relatively high secular growth rate of productivity for the period 1959 - 2006. This means that there was a significant increase in physical capital per worker, which allowed for an increase in output per hour worked.

Question 18

One shortcoming of the Bureau of Labor Statistics Index of Labor Productivity is that it:

Accepted Answer

The Bureau of Labor Statistics Index of Labor Productivity ignores changes in the quality of output. This means that even if the output produced is of lower quality, the productivity index will not reflect it, which is a significant shortcoming of this measurement.

Question 19

Which one of the following wage-productivity combinations will place the greatest upward pressure on the price level?

Accepted Answer

When nominal wages increase more than productivity, it means that the cost of producing goods and services increases without a corresponding increase in output. This scenario, where nominal wages increase by 4% but productivity only increases by 2%, leads to higher production costs without a proportional increase in output, putting upward pressure on prices.

Question 20

Which of the following will leave unit labor costs unchanged?

Accepted Answer

If both nominal wages and productivity increase by the same percentage, unit labor costs remain unchanged because the increase in wages is offset by the increase in productivity.

Quiz 17: Labor Productivity: Wages,Prices,and Employment