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Use the rule of 70 to calculate how many years it will take to double the standard of living in an economy given different average annual rates of growth in labor productivity and enter the answers in the table.

Productivity

Years

1.0%

_____

1.4

_____

1.8

_____

2.2

_____

2.6

_____

3.0

_____

What can you conclude about the effect of small changes in the average annual rate of productivity growth on the standard of living?_________________________

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Related questions

In the table below, indicate how many years it will take to double the standard of living (years) in an economy given different annual rates of growth in labor productivity.

Productivity

1.0%

1.4%

1.8%

2.2%

2.6%

3.0%

What can you conclude about the importance of small changes in the growth rate of productivity on the standard of living?

Annual Growth Rates of Real GDP Per Capita

(in percents)

Ending
Year

1929

1933

-8.2

1939

0.2

1940

0.9

1945

3.7

10.3

1950

2.4

4.1

-1.8

1955

2.4

3.6

0.4

2.7

1960

2.2

2.9

0.6

1.7

0.8

1965

2.4

3.0

1.3

2.3

2.1

3.5

1970

2.3

2.9

1.5

2.3

2.2

2.9

2.3

1975

2.3

2.7

1.5

2.2

2.0

2.4

2.0

1.6

1980

2.3

2.7

1.7

2.2

2.1

2.5

2.2

2.1

2.6

1985

2.3

2.6

1.7

2.2

2.2

2.4

2.2

2.1

2.4

2.2

1990

2.3

2.6

1.8

2.2

2.2

2.4

2.2

2.2

2.4

2.2

2.3

1995

2.2

2.5

1.7

2.1

2.1

2.3

2.1

2.0

2.1

1.9

1.8

1.3

2001

2.3

2.5

1.9

2.2

2.2

2.3

2.2

2.2

2.3

2.2

2.2

2.1

2.8

1929

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

Starting Year

Source: Economic Report of the President, various years.


This table keeps changes in real GDP from being overstated by adjusting for

Select one:

a. productivity.

b. inflation.

c. standard of living.

d. population growth.

Question 2

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Question text

Per Capita GDP
Luxembourg

$33,609
United States

$33,586
Switzerland

$27,126
Japan

$23,311
Iceland

$23,230

Economists use numbers such as those in the table as a measure of

Select one:

a. net exports.

b. total dollar value of all final goods and services.

c. national income.

d. standard of living.

Question 3

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Per Capita GDP
Luxembourg

$33,609
United States

$33,586
Switzerland

$27,126
Japan

$23,311
Iceland

$23,230

The numbers in this table were calculated by

Select one:

a. multiplying GDP by total population.

b. dividing GDP by total population.

c. adding the dollar value of all final goods and services produced in the nation.

d. subtracting net exports from GDP.

Question 4

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Question text

A key gauge of future U.S. economic activity declined 0.5% last month, as the Sept. 11 terrorist attacks in New York and Washington weakened an already troubled economy.

The Conference Board said Monday its index of leading economic indicators fell to 109.2 in September,...the largest one-month decline since January 1996.... The index indicates where the overall U.S. economy is headed in the next three to six months....

The economy had been struggling for several months before the Sept. 11 attacks. Many economists have said they believe that a recession is unavoidable with the new uncertainties raised by the disaster.

Source: “Leading Indicators Decline,” USAToday.com, October 22, 2001.

The passage discusses a business fluctuation influenced by

Select one:

a. external shock.

b. monetary factors.

c. innovation.

d. capital expenditures.

Question 5

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Question text

For all the recent talk of cutting taxes, Congress rarely cuts them when the economy is growing robustly, as it is now, and unemployment is low. The worry among economists is that the extra money in people’s pockets may make an already strong economy too strong, finally stoking inflation after a long period of relatively stable prices.


Source: The New York Times, July 14, 1999.

The passage describes rising inflation as a possible result of

Select one:

a. a booming economy.

b. rising unemployment.

c. tax cuts.

d. a prolonged period of stable prices.

Ch 7

2) Suppose that the U.S. noninstitutional adult population is 230 million and the labor force participation rate is 67 percent.

a. What would be the size of the U.S. labor force?

b. If 85 million adults are not working, what is the unemployment rate?

3) Determine whether each of the following would be considered frictional, structural, seasonal, or cyclical unemployment:

a. A UPS employee who was hired for the Christmas season is laid off after Christmas

b. A worker is laid off due to reduced aggregate demand in the economy.

c. A worker in a DVD rental store becomes unemployed as video-on-demand cable service becomes more popular.

d. A new college graduate is looking for employment.

5) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would a more generous unemployment insurance system affect the full employment figure?

7) Here are some recent data on the U.S. consumer price index:

YEAR CPI YEAR CPI YEAR CPI

1992 140.3 1999 166.6 2006 201.6

1993 144.5 2000 172.2 2007 207.3

1994 148.2 2001 177.1 2008 215.3

1995 152.4 2002 179.9 2009 214.5

1996 156.9 2003 184.0 2010 218.1

1997 160.5 2004 188.9 2011 224.9

1998 163.0 2005 195.3 2012 229.6

Compute the inflation rate for each year 1993 – 2012 and determine which were years of inflation. In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?

Ch 8

1) How do we measure labor productivity? How do changes in labor productivity affect the U.S. standard of living?

5) Supposed that two nation start out in 2013 with identical levels of output per work hour – say, $100 per hour. In the first nation, labor productivity grows by 1 percent per year. In the second, it grows by 2 percent per year. Use a calculate or spreadsheet to determine how much output per hour each nation will be producing 20 years later, assuming that labor productivity growth rates do not change. The, determine how much each will be producing per hour 100 years later. What do your results tell you about the effect of small differences in productivity growth rates?

7) What are some examples, other than those given in the chapter of technological change that has caused unemployment? And what are some examples of new technologies that have created jobs? How do you think you might measure the net impact of technological change on overall employment and GDP in the United States?

Ch 7

2) Suppose that the U.S. noninstitutional adult population is 230 million and the labor force participation rate is 67 percent.

a. What would be the size of the U.S. labor force?

b. If 85 million adults are not working, what is the unemployment rate?

3) Determine whether each of the following would be considered frictional, structural, seasonal, or cyclical unemployment:

a. A UPS employee who was hired for the Christmas season is laid off after Christmas

b. A worker is laid off due to reduced aggregate demand in the economy.

c. A worker in a DVD rental store becomes unemployed as video-on-demand cable service becomes more popular.

d. A new college graduate is looking for employment.

5) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would a more generous unemployment insurance system affect the full employment figure?

7) Here are some recent data on the U.S. consumer price index:

YEAR CPI YEAR CPI YEAR CPI

1992 140.3 1999 166.6 2006 201.6

1993 144.5 2000 172.2 2007 207.3

1994 148.2 2001 177.1 2008 215.3

1995 152.4 2002 179.9 2009 214.5

1996 156.9 2003 184.0 2010 218.1

1997 160.5 2004 188.9 2011 224.9

1998 163.0 2005 195.3 2012 229.6

Compute the inflation rate for each year 1993 – 2012 and determine which were years of inflation. In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?

Ch 8

1) How do we measure labor productivity? How do changes in labor productivity affect the U.S. standard of living?

5) Supposed that two nation start out in 2013 with identical levels of output per work hour – say, $100 per hour. In the first nation, labor productivity grows by 1 percent per year. In the second, it grows by 2 percent per year. Use a calculate or spreadsheet to determine how much output per hour each nation will be producing 20 years later, assuming that labor productivity growth rates do not change. The, determine how much each will be producing per hour 100 years later. What do your results tell you about the effect of small differences in productivity growth rates?

7) What are some examples, other than those given in the chapter of technological change that has caused unemployment? And what are some examples of new technologies that have created jobs? How do you think you might measure the net impact of technological change on overall employment and GDP in the United States?

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