Describe how the labor force, the nation's capital stock, and the rate of technical progress contribute to potential GDP growth and labor productivity
Potential GDP growth depends on the growth in the labor force and nations capital stock, in addition to the rate of technical progress. We know that GDP depends on these three factors through a production function. The production function simply expresses how inputs (labor, capital, and technology) are transformed into output.
With respect to labor productivity, we can express growth rate of GDP as:
Growth rate of potential GDP = Growth rate of labor input × Growth rate of labor productivity
Growth in the labor force is equivalent to growth in the labor inputs used to produce GDP. Growth in the capital stock and technology contribute to labor productivity growth. For example, with more machines, an individual worker can be more productive with each hour of work. Likewise, with access to a better machine (improved technology), a worker can produce more in each other of work.
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Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $30, producer surplus is
A) $0. B) $16. C) $52. D) $68.
Haiti has a lower literacy rate (the percentage of those over 15 who can read and write) compared to other Latin American and Caribbean countries. Where does this low literacy rate fit into the factors that explain the wealth of nations?
A. It indicates that Haiti is short on human capital. B. It shows that it lacks entrepreneurship. C. It shows a lack of natural resources. D. It indicates that Haiti is short of physical capital.
Figure 33-5
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Over a five-year period, economists observed that the unemployment–inflation relationship appeared as in Figure 33-5. Economic theory would conclude that the period
A. was dominated by supply shocks such as increased energy and food costs. B. was affected by both supply and demand shocks, with demand shocks dominating. C. was dominated by demand-side changes. D. cannot be explained because the relationship is the opposite of what the Phillips curve would predict.
Suppose that in a series of paired-choice votes a new park is preferred to a new recreation center and a new recreation center is preferred to street widening. Also suppose that street widening is preferred to a new park. This set of votes is an example
of the: A. principal-agent problem. B. benefits-received principle. C. median-voter model. D. paradox of voting.