Question

An increase in labour hours will lead to Question 1 options:

a) neither a movement along nor a shift of the aggregate production function.

b) a movement along the aggregate production function.

c) a downward shift of the aggregate production function.

d) both a movement along and an upward shift of the aggregate production function. e) an upward shift of the aggregate production function.

Question 2:-

An increase in labour productivity ________ the real wage rate and an increase in population ________ the real wage rate.

Question 2 options:

	a) raises; lowers
	b) lowers; raises
	c) raises; does not change
	d) raises; raises
	e) lowers; lowers

Question 3:- Labour productivity rises when

Question 3 options:

	a) the amount of capital per worker increases.
	b) the real wage rate falls.
	c) the working-age population grows.
	d) new full-time jobs are created.
	e) firms invest more in hiring workers than in replacing worn-out capital

Question 4:- Capital increases when

Question 4 options:

	a) net investment is zero.
	b) net investment exceeds gross investment.
	c) gross investment is negative.
	d) net investment is positive.
	e) gross investment exceeds net investment.

Question 5:- Which of the following is false?

Question 5 options:

	a) Y = C + S + T
	b) Y = C + I + G + M - X
	c) Y = C + I + G + X -M
	d) I = S + (T - G) + (M - X)
	e) Y + M = C + I + G + X

Question 6:- All of the following are sources of loanable funds EXCEPT

Question 6 options:

	a) business investment.
	b) international borrowing.
	c) government budget surplus.
	d) private saving.
	e) none of the above are sources of loanable funds.

Answer 1

Answer 1.

b) a movement along the aggregate production function

reason- When labor hours increases, productivity increases. more output is produced. so there is movement along the production function.

Answer 2. raises, lowers

reason- rise in labor productivity, increasss Wage rate as workers are more efficient now. while rise in population leads to excess supply of labor and fall in real wage rate.

Answer . 3. the amount of capital per worker increases

reason- labor productivity is the quantity of real GDP produced by an hour of labor.

when capital per worker Increases productivity Increases.

Answer4. net investment is positive.

reason- When net investment is positive it means Gross investment is greater than depreciation. so capital Increases

Answer 5. Y=C+G+I+M-X

reason- M- X is net imports but X-M net export is added in C,G, I. So, this is wrong

Answer 6. international borrow saving season- Government surolsu, private aavibgs, business savings are all loanable funds sources.