CAS EC 102 Lecture Notes - Lecture 8: Technological Change, Human Capital, Diminishing Returns

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CAS EC 102 Full Course Notes

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A country"s standard of living depends on its ability to produce goods and services. This ability depends on productivity, the average quantity of goods and services produced per hour or labor input. Y = real gdp = quantity of output produced. So productivity = y/l (output per labor hour) Country a produces b of gdp with 1b person hours of labor. Country b produces b of gdp with 5b person hours of labor. Productivity in country b = 5 (cid:3042)(cid:3033) (cid:2869) (cid:3043)(cid:3032)(cid:3045)(cid:3046)(cid:3042)(cid:3041) (cid:3045)(cid:3046). = per person hr. When a nation"s workers are very productive, real gdp is large and incomes are high. When productivity grows rapidly, so do living standards. No universally agreed answer, but several hypotheses. Rising oil prices and new environmental requirements made existing machines prematurely obsolete. It only appeared to slow down due to measurement problems. Difficulty measuring productivity in the production of services, which became a bigger part of the economy in the 1970s.

Related Questions

QUESTION 31

Suppose that twenty-five years ago a country had nominal GDP of $1,800, a GDP deflator of 150, and a population of 100. Today it has nominal GDP of $2,800, a GDP deflator of 270, and population of 180. What happened to the real GDP per person?

It more than doubled

It increased, but it less than doubled

It was unchanged

It decreased

1 points

QUESTION 32

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

grew by 2%

grew by 6%

grew by 8%

grew by 12%

1 points

QUESTION 33

Suppose todayâs CPI is 134.85, and suppose one must spend $986 today to purchase the same basket of goods and services that could be bought for $680 in 1989. Then the CPI in 1989 was

24.27

60.68

93.00

195.53

1 points

QUESTION 34

If your firmâs production function has a decreasing returns to scale and you increase all your inputs by 60%, then your firm's output will

not change

increase, but by less than 60%

increase by 60%

increase by more than 60%

QUESTION 36

Suppose country's nominal GDP tripled, population grew by 40%, and prices doubles over the last 25 year. What happened to nominal GDP per person?

increased by 114%

increased by 93%

increased by 87%

decreased by 69%

1 points

QUESTION 37

A barber shop produces 288 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shopâs productivity is 3 haircuts per hour of labor, then how many barbers does the shop employ?

None of the above is correct

1 points

QUESTION 38

If the nominal interest rate is 11% and the rate of inflation is 6%, then the real interest rate is

-5%

1.67%

11%

1 points

QUESTION 39

Last year real GDP in Greatland was 651 billion and the population was 2.4 million. The year before, real GDP was 460 billion and the population was 1.9 million. What was the growth rate of real GDP per person during the year?

12 percent

10 percent

4 percent

2 percent

1 points

QUESTION 40

If real GDP increases by 40% and the GDP deflator decreases by 10%, then nominal GDP increases by

40%

30%

26%

-10%

CAS EC 102 Lecture Notes - Lecture 8: Technological Change, Human Capital, Diminishing Returns

CAS EC 102 Full Course Notes

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