ECO+2013+Aggr+Prod+Function+Questions+for+Web

# ECO+2013+Aggr+Prod+Function+Questions+for+Web - Questions...

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Questions about the Aggregate Production Function 1. The law of diminishing returns states that output increases but by ever smaller increments as a. all factors increase in the same proportion. b. technology improves through learning by doing. c. the quantity of one input increases in equal increments while the quantities of all other inputs remain the same. d. technology improves by equal increments while the quantities of all inputs remain the same. 2. In the United States an increase of one percent in K causes an increase of a. one-third of one percent in real GDP. b. two-thirds of one percent in real GDP. c. one percent in real GDP. d. three percent in real GDP. 3. In the United States an increase of one percent in the number of worker-hours causes an increase of 4. If the social opportunity cost of something is zero, then it is 5. In the aggregate production function, replication applies when 6. If the share of labor is 2/3 and from 2000 to 2010 the rate of growth of capital is 1.5%, the rate of growth of technology is 0.8%, and the rate of growth of worker-hours is 1.2%, then the rate of growth of real GDP will be a. 1.3%. b. 2.1%. c. 2.5%. d. 3.2%. 7. As the number of worker-hours rises from 100 to 200 to 300 to 400 to 500, with capital and technology constant, the amount of output rises from 216 to 246 to 300 to 327 to 350. These numbers a. violate the rules for an aggregate production function. b. do not violate the rules for an aggregate production function. 1

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8. If the share of capital is 2/5 and from 2000 to 2010 the rate of growth of capital is 1.8%, the rate of growth of technology is 1.2%, and the rate of growth of worker-hours is 0.9%, then the rate of growth of real GDP will be
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