Question 1

In year 1,an economy used 200 worker hours to produce 500 units of output.In year 2,the economy used 240 worker hours to produce 660 units of output.The rate of productivity growth from year 1 to year 2 is:

Accepted Answer

A) 1% 
B) 2% 
C) 3.2% 
D) 10%

Question 2

Which of the following best describes the relationship between productivity changes and investment during a recession?

Accepted Answer

A) Unit labor costs rise,plant and equipment are utilized more,investment rises 
B) Unit labor costs fall,plant and equipment are utilized more,investment rises 
C) Unit labor costs fall,plant and equipment are utilized less,investment rises 
D) Unit labor costs rise,plant and equipment are utilized less,investment falls

Question 3

Which of the following is not considered a source of increased labor efficiency?

Accepted Answer

A) Technological progress 
B) Reallocation of labor from less to more productive uses 
C) Changes in society's institutional and cultural setting and resulting public policies 
D) Increases in the capital-labor ratio

Question 4

Which of the following will leave unit labor costs unchanged?

Accepted Answer

A) Nominal wages and productivity both increase by 3% 
B) Nominal wages do not increase,regardless of the productivity increase 
C) Real wages do not increase,regardless of the productivity increase 
D) Real wages,productivity,and prices all increase by 3%

Question 5

One shortcoming of the Bureau of Labor Statistics Index of Labor Productivity is that it:

Accepted Answer

A) overstates the importance of capital investments 
B) fails to include part-time workers 
C) double counts public sector output 
D) ignores changes in the quality of output

Question 6

Under what conditions would we expect to find the greatest growth of output and employment in a specific industry?

Accepted Answer

A) High productivity growth,price-elastic product demand,income-elastic product demand 
B) High productivity growth,price-elastic product demand,income-inelastic product demand 
C) Low productivity growth,price-inelastic product demand,income-inelastic product demand 
D) High productivity growth,price-inelastic product demand,income-elastic product demand

Question 7

In year 1,an economy used 200 worker hours to produce 500 units of output.In year 2,the economy used 240 worker hours to produce 660 units of output.If year 1 is the base year,the productivity index for year 2 is:

Accepted Answer

A) .10 
B) 1.10 
C) 1.25 
D) 1.32

Question 8

Which one of the following most closely corresponds to the average annual rate of productivity growth in the U.S.for the period 1973 - 1995?

Accepted Answer

A) 0-1% 
B) 1-2% 
C) 3-4% 
D) 5-8%

Question 9

According to evidence reported by Jorgenson,Ho,and Stiroh,the most important source of rising labor productivity over the period 1959 - 2006 was:

Accepted Answer

A) increased efficiency with which inputs are combined 
B) decreases in the rate of inflation 
C) improvement in the average quality of the labor force 
D) increases in the amount of capital goods employed with each worker hour of labor

Question 10

Suppose demand conditions in industries X and Y are identical but that productivity increases by 5% in industry X and 2% in industry Y.If economy-wide productivity and the average wage each rise by 3%,we should expect that:

Accepted Answer

A) output and employment in X will increase relative to Y 
B) output and employment in X and Y will not change relative to one another,since wages will increase by 5% in X and 2% in Y 
C) output and employment in Y will increase relative to X 
D) no statement can be made concerning output and employment in either industry without more information

Question 11

Suppose demand conditions in industries X and Y are identical but that productivity increases by 5% in industry X and 2% in industry Y.If economy-wide productivity and the average wage each rise by 3%,we should expect that unit labor costs will:

Accepted Answer

A) increase by the same amount in both industries,in accord with the overall increase in the average wage 
B) increase in both industries,but more in industry X than industry Y 
C) increase in industry X and decrease in industry Y 
D) decrease in industry X and increase in industry Y

Question 12

Which one of the following wage-productivity combinations will place the greatest upward pressure on the price level?

Accepted Answer

A) Nominal wage increase of 5%,productivity increase of 5% 
B) Nominal wage increase of 4%,productivity increase of 2% 
C) Nominal wage decrease of 5%,productivity increase of 5% 
D) Nominal wage increase of 2%,productivity increase of 4%

Question 13

The Bureau of Labor Statistics Index of Labor Productivity:

Accepted Answer

A) probably understates the entire economy's productivity growth 
B) is calculated by dividing real GDP by the total number of worker hours 
C) is calculated by dividing nominal private-sector GDP by the number of private-sector worker hours 
D) is calculated by dividing real private-sector GDP by the number of private-sector worker hours

Question 14

An economy-wide increase in productivity caused by improved technology would most likely:

Accepted Answer

A) increase unemployment,because any given output could be produced with less labor 
B) increase inflation,thereby decreasing profits and investment 
C) increase output,but decrease employment 
D) increase real incomes,thereby increasing aggregate demand and reducing unemployment

Question 15

Suppose that an economy's real wages and its average productivity are both increasing at a 2% annual rate.Further assume that productivity in industry X is growing at a 4% annual rate.Under what conditions might output and employment in industry X fall?

Accepted Answer

A) Price-elastic product demand 
B) Price-inelastic product demand 
C) The output of industry X is an inferior good 
D) The output of industry X is a normal good

Question 16

Productivity growth:

Accepted Answer

A) has been associated with rising aggregate unemployment 
B) has been associated with growing aggregate employment 
C) in specific industries results in growing employment in those industries 
D) in specific industries results in growing unemployment in those industries

Question 17

The average quality of labor has increased,partly because the demand for education and health care are:

Accepted Answer

A) income elastic-rising national income generates more than proportional increases in spending on these items 
B) income elastic-falling national income generates more than proportional increases in spending on these items 
C) income inelastic-rising national income generates more than proportional increases in spending on these items 
D) income inelastic-rising national income generates less than proportional increases in spending on these items

Question 18

Which one of the following most closely corresponds to the average annual rate of productivity growth in the United States over the past century?

Accepted Answer

A) 0-1% 
B) 2-3% 
C) 4-5% 
D) 6-7%

Question 19

Suppose productivity stood at 5.00 in year 1,and 5.25 in year 2.If year 1 is the base year,the productivity index for year 2 is:

Accepted Answer

A) 0.25 
B) 5 
C) 105 
D) 125

Question 20

For the 1948 - 2011 period in the U.S.,the rate of productivity growth in years of declining real output was:

Accepted Answer

A) negative 
B) positive 
C) faster than in years of expanding real output 
D) slower than in years of expanding real output

Exam 17: Labor Productivity: Wages,Prices,and Employment