Question

In: Economics

1. According to the aggregate production function, when inputs increase Multiple Choice the economy grows. GDP...

1. According to the aggregate production function, when inputs increase

Multiple Choice

  • the economy grows.

  • GDP declines.

  • inflation slows.

  • unemployment rises.

2.

Which person provides an example of structural unemployment?

Multiple Choice

  • A worker skilled at running an obsolete machine.

  • A student who goes to school instead of working.

  • A fast-food worker who quits that job to find a better-paying job.

  • A worker who stays at home to take care of children.

3.

Productivity is a key concept for measuring

Multiple Choice

  • average inflation rates.

  • the health and prosperity of an economy.

  • aggregate production function.

  • employment levels.

4.

Productivity is a key concept for measuring

Multiple Choice

  • average inflation rates.

  • the health and prosperity of an economy.

  • aggregate production function.

  • employment levels.

Solutions

Expert Solution

Answer 1.

The correct answer is Option (A) The economy grows

Explanation - According to the aggregate production function, the key inputs in the economy are level of capital, technological changes and labor efficiency. When these inputs increase, the economy growth with change in total potential output in the economy. The impact of change in these inputs is one the long-run aggregate supply curve that shifts to the right.

Answer 2.

The correct answer is Option (A) A worker skilled at running an obsolete machine

Explanation - Structural unemployment arises due to mismatch of skills available with a worker and those desired by companies. A worker skilled at running an obsolete machine is a good example as companies would not be using the machine and the worker is rendered unemployed until he matches the current skill requirements.

Answer 3.

The correct answer is Option (B) The health and prosperity of an economy

Explanation - When the real GDP increase, it indicates an increase in productivity or efficiency in an economy. At the same time, real GDP per capita is used to measure the change in standards of living. Therefore, it is productivity that measures the health and prosperity of an economy.

Note: Question 4 is the same as Question 3.

Rahul Sunny answered 1 year ago
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