ECN 204 Lecture : Chapter 7.docx

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turquoisewildebeest476

26 Mar 2012

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Document Summary

Average quantity of g&s produced from each hour of a worker"s time. Y = real gdp = quantity of output produced. Y/l = productivity (output per worker) what productivity is worth in real terms. When nations workers are productive, real gdp is large and incomes are high. When productivity grows rapidly, so do living standards. Stock of equipment and structures used to produce g&s is called physical capital, denoted k. Productivity is higher when average worker has more capital (machines, equipment) An increase in k/l causes an increase in y/l. Knowledge and skills workers acquire through education, training and experience (h) Productivity is higher when the average worker has more human capital (education, skills) Increase in h/l cause and increase in y/l. Inputs into production that nature provides (land, mineral deposits) More n allows country to produce more y, and increase in n/l causes and increase in y/l.

Related Questions

Consider the table below-containing data for two nations, Alfa and Beta, for the years 1995 and 2015.

	1995		2015
Country	Average labor productivity	Output per person	Average labor productivity	Output per person
Alfa	$42,770	$14,114	$39,773	$20,661
Beta	$27,975	$13,428	$44,765	$21,935

a. Which of the following statements are true for nations Alfa and Beta:

	Labor productivity increased in both nations.
	Labor productivity decreased in both nations.
	Living standards increased in both nations.
	Living standards increased in Beta but not an Alfa.

b. Is it possible for average living standards to rise during a period in which average labor productivity is falling?

	No, because average living standards only increase because of increased labor productivity.
	Yes, if the output per person is falling less than labor productivity.
	No, because average living standards are measured as output per worker.
	Yes, if the nation experiences increased employment relative to population.

ochrewhale32

1) Which of the following things would increase the value of Total Factor Productivity (TFP)?

a. A new production method that can produce smaller, more efficient microchips.

b. None of the other answers.

c. A company hires a large amount of workers after building a brand new factory.

d. Foreign investors invest in physical capital.

2) The country of Rupertopia has one factory for all its workers in 2011 and 2012. There were 100 workers in 2011 and 150 workers in 2012. Additionally, there were 200 people living in Rupertopia in 2011 and 1,000 people in 2012. Real GDP was one million dollars in 2011 and two million dollars in 2012. Which of the following statements regarding labor productivity is true:

a. Labor productivity in Rupertopia exhibits constant returns.

b. Labor productivity in Rupertopia exhibits increasing returns.

c. Labor productivity in Rupertopia exhibits diminishing returns.

d. More information is needed to determine whether labor productivity in Rupertopia exhibits diminishing, constant, or increasing returns.

3) Which of the following changes would help to improve a country's productivity level?

a. Improvements in the health of workers

b. None of the other answers.

c. Tuition increases at local Universities

d. A lower birth rate

4) When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly. This statement:

a. is an assertion that capital is subject to increasing returns.

b. is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant.

c. represents an unconventional view of the production process.

d. All of the other answers are correct.

5) Economic growth can be influenced by government policies. Which of the following can influence the economy's growth rate?

a. All of the other answers are correct

b. Promoting research and development of technologies

c. Fostering education

d. Maintaining property rights