Question

1. New symbols in this section include A, Y, L, pop, and combinations of them, like Y/pop and Y/L. As you know, they are interrelated. Which of the following is correct?

-An increase in A directly affects Y/pop and directly affects Y/L.

-An increase in A directly affects Y/pop and indirectly affects Y/L.

-An increase in A indirectly affects Y/pop and directly affects Y/L.

- An increase in A indirectly affects Y/pop and indirectly affects Y/L.

2. What is the best description of "A," a new variable in this section?

-It captures what happens when there is an increase in production per worker when there is no change in how much capital each worker has.

-It captures what happens when there is an increase in production per worker when there is a change in how much capital each worker has.

-It captures what happens when there is an increase in capital per worker when there is no increase in production per worker.

3. A movement along the per-worker production curve is pretty common. Which best describes such a movement? (multiple may be right)

-If education improved in a country.

-If firms in a country reorganized their production processes to produce more with the same inputs.

-When firms in a country added capital of types they already have.

-If firms in a country replaced current types of capital with better capital.

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Answer 1

Answer 1: An increase in A directly affects Y/pop and directly affects Y/L.

An increase in A will lead to increase in the level of output produced by each unit of the labor. Thus, it can be stated that an increase in A has a direct impact on Y/pop and also directly affects Y/L. Since output produced increases, there is a direct increase in Y/pop and Y/L in the economy.

Answer 2: It captures what happens when there is an increase in production per worker when there is no change in how much capital each worker has.

Increase in A shows that how of the increase in the output can be attributed to the increase in technological growth when output per worker in the economy is not increasing.

Answer 3: When firms in a country added capital of types they already have, If firms in a country replaced current types of capital with better capital.

A movement along the per worker production function is caused by the increase in capital per worker caused by adding more capital and replacing current types of capital with better capital.