What does a productivity curve reflect? What leads to movements along a productivity curve and what leads to shifts in a productivity curve?
What will be an ideal response?
The productivity curve shows the relationship between the amount of capital per hour of labor and real GDP per hour of labor, that is, between capital per hour labor and labor productivity. The curve is upward sloping, but, due to diminishing returns, the slope becomes less steep as capital per hour of labor increases. If the amount of capital per hour of labor changes, there is a movement along the productivity curve. If the amount of human capital increases and/or technology advance occurs, the productivity curve shifts upward.
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Suppose the exchange rate for the U.S. dollar rises. This could be caused by
A) an increase in U.S. import demand. B) a decrease in the world demand for U.S. exports. C) a fall in the expected future exchange rate. D) an increase in the U.S. interest rate differential.
In the aggregate demand-aggregate supply model in the short run, a decrease in the money supply is likely to cause a(n): a. increase in both the price level and real GDP
b. decrease in both the price level and real GDP. c. increase in real GDP and a decrease in the price level. d. decrease in real GDP and an increase in the price level. e. increase in the price level only.
When the MPC gets smaller, the spending multiplier:
a. gets larger. b. gets smaller. c. stays the same. d. gets smaller at low real GDP, and larger at high real GDP. e. gets larger at low real GDP, and smaller at high real GDP.
The risk-free rate is usually approximated by interest rates on U.S. government debt, because the US government:
A. is considered extremely unlikely to default. B. sets all policy concerning interest rates. C. backs all loans secured with that rate. D. will never default on a loan that it makes.