Question

1.The Industrial Revolution in England in large was the result of

		technological innovations that were financed mainly by government spending.
		population growth.
		growth in human capital.
		technological innovations encouraged by the market system.

2. If new capital increases labor productivity, the supply of labor ________ and the demand for labor ________.

		decreases; stays the same
		increases; decreases
		stays the same; increases
		increases; increases

3. Labor growth depends mainly on ________ and labor productivity growth depends on ________.

		population growth; technological advances
		growth in real GDP per person; growth rate of capital
		growth in real GDP per person; technological advances
		population growth; increases in real GDP

4.The labor demand curve slopes downward because

		workers supply more hours of work when the real wage rate rises.
		the firm maximizes profits by hiring more labor when the real wage rate rises.
		the firm maximizes profits by hiring more labor when the real wage rate falls.
		workers supply fewer hours of work when the real wage rate rises.

5. We are interested in long-term growth primarily because it brings

		lower price levels.
		higher standards of living.
		higher price levels.
		trade wars with our trading partners.

Answer 1

1. Technological innovations encouraged by the market system.

Explanation: The advent of capitalism created an incentive for private players to innovate, which resulted in technological innovation and fueled the industrial revolution.
2. Stays the same, increases

Explanation: In this case, the labor supply would remain the same. However, labor demand would increase as it will be more lucrative for firms to hire more workers as firms can produce more output at the same wage rate.

3. population growth; technological advances

Explanation: The labor force comes from the population. However, productivity (output for a given amount of labor input) increases when there is a more efficient production system i.e. technological improvement.

4. workers supply more hours of work when the real wage rate rises

Explanation: The supply of labor is inversely related to the real wage rate.

5. Higher standards of living.

Explanation: Long-term growth results in higher income for an average citizen and an improvement in the standard of living.