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macro95ex3

# macro95ex3 - Chapter 3 Productivity Output and Employment T...

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Chapter 3 Productivity, Output, and Employment T Multiple Choice Questions 1. A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the (a) real interest rate. (b) productivity relation. (c) production function. (d) marginal product. Answer: C Level of difficulty: 1 Section: 3.1 2. In the production function Y = AF ( K , N ), A is _____, K is _____, and N is _____. (a) total factor productivity; the capital stock; the number of workers employed (b) total factor productivity; investment; the number of workers employed (c) the productivity of labor; the capital stock; the size of the labor force (d) the productivity of labor; investment; the size of the labor force Answer: A Level of difficulty: 1 Section: 3.1 3. In the production function Y = AF ( K , N ), total factor productivity is (a) Y / A . (b) A . (c) K / N . (d) Y / N . Answer: B Level of difficulty: 1 Section: 3.1 4. Suppose the economy’s production function is Y = A K 0.3 N 0.7 . If K = 2000, N = 100, and A = 1, then Y = 246. If K and N both rise by 10%, and A is unchanged, by how much does Y increase? (a) 5% (b) 10% (c) 15% (d) 20% Answer: B Level of difficulty: 2 Section: 3.1

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32 Abel/Bernanke • Macroeconomics, Fifth Edition 5. If Y = A N (75 + K / N ), where K = 1000, N = 20, and A = 10, what happens if K doubles and N doubles? (a) Y is unchanged. (b) Y increases 50%. (c) Y doubles. (d) Y quadruples. Answer: C Level of difficulty: 2 Section: 3.1 6. Suppose the economy’s production function is Y = AK 0.3 N 0.7 . When K = 1000, N = 50, and A = 15, what is Y ? (a) 1842 (b) 6106 (c) 750,000 (d) 123 Answer: A Level of difficulty: 1 Section: 3.1 7. Suppose that in 2003 Freedonia had GDP equal to 2000 million, the capital stock was equal to 1700 million, the number of employees equaled 70 million. The production function is Y = AK 0.25 N 0.75 . Total factor productivity of the economy in that year was approximately equal to (a) 0.09. (b) 2.61. (c) 4.19. (d) 12.87. Answer: D Level of difficulty: 3 Section: 3.1 8. The table below represents Freedonia’s macroeconomic data for 2003 and 2004. Year 2003 2004 Y 2000 2100 K 1700 1785 N 70 75 Suppose that the production function is given by Y = AK 0.25 N 0.75 . Between 2003 and 2004, total factor productivity of Freedonia’s economy increased by (a) –1.5%. (b) 5.0%. (c) 5.5%. (d) 12.7%. Answer: A Level of difficulty: 3 Section: 3.1
Chapter 3 Productivity, Output, and Employment 33 9. The two main characteristics of the production function are (a) it slopes downward from left to right, and the slope becomes flatter as the input increases. (b) it slopes upward from left to right, and the slope becomes steeper as the input increases. (c) it slopes upward from left to right, and the slope becomes flatter as the input increases.

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macro95ex3 - Chapter 3 Productivity Output and Employment T...

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