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1、Macroeconomics (Hubbard et aL)Chapter 4 Determining Aggregate Production 4.1 The Aggregate Production Function1) The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the firmsA) total factor productivity.B) marginal production level
2、.C) technological ratio.D) production function.Answer: DDiff: 1 Page Ref: 106Topic: The Aggregate Production FunctionObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring2) The processes a firm uses to turn inputs into outputs o
3、f goods and services are the firmsA) production function.B) technology.C) total factor productivity.D) manufacturing ideology.Answer: BDiff: 1 Page Ref: 106Topic: The Aggregate Production FunctionObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Reflective Thinki
4、ng Skills*: Recurring3) The aggregate production function is an equation that shows the relationship between andA) the inputs employed by firms; the maximum output firms can produce with those inputsB) the inputs employed by an individual firm in an economy; the average of the inputs employed by all
5、 firms in an economyC) the output produced by an individual firm in an economy; the average of the output produced by all firms in an economyD) the average level of capital used in production in an economy; the average level of labor used in production in an economyAnswer: ADiff: 1 Page Ref: 107Topi
6、c: The Aggregate Production FunctionObjective: LOI: Describe the aggregate production function.Special Feature: noneFigure 4.1Real GDR Y (billions of dollars)Labor, L (billions of hours)26) Refer to Figure 4.1. All else equal, an increase in labor hours will cause aA) shift from PF to PF?.B) shift f
7、rom PF? to PF.C) movement up and to the right along PF.D) movement down and to the left along PF?.Answer: CDiff: 2 Page Ref: 115-116Topic: Changes in Capital, Labor, and Total Factor ProductivityObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Analytic Skills*:
8、Recurring27) Refer to Figure 4.1. All else equal, an increase in total factor productivity will cause a A) shift from PF to PF?.B) shift from PF? to PF.C) movement up and to the right along PF.D) movement down and to the left along PF2.Answer: ADiff: 2 Page Ref: 115-116Topic: Changes in Capital, Lab
9、or, and Total Factor ProductivityObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Analytic Skills*: Recurring28) Refer to Figure 4.1. All else equal, an increase in the capital stock will cause aA) shift from PF to PF2-B) shift from PF? to PF.C) movement up and
10、to the right along PF.D) movement down and to the left along P尸2.Answer: ADiff: 2 Page Ref: 115-116Topic: Changes in Capital, Labor, and Total Factor ProductivityObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Analytic Skills*: Recurring29) Suppose that the pro
11、duction function is K = A内.35L065, current labor hours worked are 80,000 per year, the capital stock is $150,000, and real GDP is $750,000. What is the value of total factor productivity?Answer:y = A心.35L0.65, SoA = Y/C0.35L0.65 = $750,000 / ($ 150,000)0.35(80,000)0.65 = 7.52.Diff: 2 Page Ref: 109-1
12、11Topic: The Marginal Products of Capital and LaborObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring30) Suppose that the production function is Y = 4a/5L3/5. Assume that real GDP is $5,000 billion, capital stock is $15,000 b
13、illion, and the labor supply is 75 billion hours. What are the values for the marginal product of labor and the marginal product of capital? Show this data graphically.Answer:MPK= 2/5 (Y/K) = 2/5 ($5,000 billion)/($ 15,000 billion) = $0.13 per dollar of capital.MPL = 3/5 (Y/L) = 3/5 ($5,000 billion)
14、/(75 billion) = $40 per hour of labor.Diff: 2 Page Ref: 112-113Topic: The Marginal Products of Capital and LaborObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Analytic Skills*: Recurring31) Suppose that the production function is K = 4内7L03, current labor hour
15、s worked are 80,000 per year, the capital stock is $150,000, and total factor productivity is 3. What is the value of real GDP? What will happen to real GDP if total factor productivity doubles?Answer:y = AK0.7L0.3 = 3 ($150,000)0.7 x (80,000)03 二 $372,657.42.If total factor productivity doubles, GD
16、P will also double, and will equal $745,314.84.Diff: 2 Page Ref: 113Topic: Calculating Total Factor ProductivityObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Analytic Skills*: Recurring32) Suppose that the production function is K = aE35L065, current labor ho
17、urs worked are 80,000 per year, the capital stock is $150,000, and real GDP is $750,000. What is the value of total factor productivity?Answer:y = AE.35LO.65, so A = Y / x0.35L0.65 = $750,000 / ($ 150,000)0.35(80,000)0.65 = 7.52.Diff: 2 Page Ref: 114Topic: Calculating Total Factor ProductivityObject
18、ive: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Analytic Skills*: RecurringK Capital stock, K (billions of dollars)33) Suppose that the production function for an economy is / = AKBLIB. On one graph, show the production function undergoing two equal increases in labo
19、r hours, holding capital and total factor productivity constant, and on a second graph show the production function undergoing two equal increases in total factor productivity, holding capital and labor constant. Explain what happens to real GDP in each situation.Answer: Real GDP, Y (billions of dol
20、lars)Real GDR Y (billions of dollars)K Capital Stock, K (billions of dollars)On the first graph, the increase in labor hours will shift the production function up. The first increase in labor hours will shift the production function from PF to PF?, increasing real GDP from Y to 丫2. The second, equal
21、 increase in labor hours will shift the production function from PF2 to PF3, increasing real GDP from Y2 to 丫3. The second increase in labor hours does not shift the production function as much as the first increase does due to diminishing marginal returns to labor, so real GDP increases by a larger
22、 amount after the first increase in labor hours than it does after the second increase in labor hours.On the second graph, the increase in total factor productivity will shift the production function up. The first increase in total factor productivity will shift the production function from PF to PF
23、2, increasing real GDP from Y to Y% The second, equal increase in total factor productivity will shift the production function from PF2 to PF3, increasing real GDP from Y2 to Y3. The second increase in total factor productivity shifts the production function as much as the first increase does becaus
24、e diminishingmarginal returns do not apply to efficiency, so real GDP increases by the same amount after the first increase in total factor productivity as it does after the second increase in total factor productivity.Diff: 2 Page Ref: 114-115Topic: Changes in Capital, Labor, and Total Factor Produ
25、ctivityObjective: LOI: Describe the aggregate production function.Special Feature: Making the Connection: Foreign Direct Investment Increases Real GDP Growth inChinaAACSB: Reflective Thinking Skills4.2 A Model of Real GDP in the Long Run1) If the marginal product of labor is less than the nominal wa
26、ge divided by the price of output, a firm that wishes to maximize profits willA) hire more labor.B) lay off workers.C) maintain its current level of workers.D) raise the real wage.Answer: BDiff: 2 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined
27、 in the long run.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring2) If the nominal rental price of capital divided by the price of output is less than the marginal product of capital, a firm that wishes to maximize profits willA) purchase more capital goods.B) purchase fewer capita
28、l goods.C) maintain the current level of capital goods.D) allow capital goods to wear out without purchasing additional capital goods.Answer: ADiff: 2 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: R
29、eflective Thinking Skills*: Recurring3) A firm that wishes to maximize profits will continue to hire labor until theA) real wage = MPL.B) nominal wage = MPL.C) nominal wage 二 the real wage.D) nominal wage 二 the price level.Answer: ADiff: 1 Page Ref: 117Topic: The Markets for Capital and LaborObjecti
30、ve: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring4) A firm that wishes to maximize profits will continue to purchase capital goods until theA) nominal rental price of capital = MPK.B) real rental price of capital = MPK.C) n
31、ominal rental price of capital = the real rental price of capital.D) nominal rental price of capital = the price level.Answer: BDiff: 1 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Reflective Think
32、ing SkillsE) Recurring5) Suppose that the production function for the economy is K = 40.510.5. if the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 3, real GDP isA) $60,000.B) $75,000.C) $150,000.D) $300,000.Answer: ADiff: 2 Page Ref: 117Topic: The Markets for Ca
33、pital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Analytic Skills*: Recurring6) Suppose that the production function for the economy is K = AA5L05. if the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 3,
34、 the equilibrium real wage isA) $3.B) $4.50.C) $9.D) $16.67.Answer: ADiff: 2 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Analytic SkillsE) Recurring7) Suppose that the production function for the
35、economy is Y = 7M)5L0.5. If the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 3, the equilibrium real rental price of capital is A) $0.33.8) $0.75.C)$1.00.D) $2.22.Answer: BDiff: 2 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how r
36、eal GDP is determined in the long run.Special Feature: noneAACSB: Analytic Skills*: Recurring8) Suppose that the production function for the economy is Y = AJ0,2L0.8. if the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 1, real GDP isA) $13,195.08.B) $16,000.00.C
37、) $16,946.34.D) $28,000.00.Answer: ADiff: 2 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Analytic Skills*: Recurring9) Suppose that the production function for the economy is K = 40.210.8. if the c
38、apital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 1, the marginal product of labor isA) $0.80.B)$1.06.C)$1.32.D) $5.26.Answer: BDiff: 2 Page Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feat
39、ure: noneAACSB: Analytic Skills*: Recurring10) Suppose that the production function for the economy is K = AAOLO.S. if the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 1, the marginal product of capital is A) $0,066.B) $0.20.C)$1.05.D)$1.58.Answer: ADiff: 2 Page
40、 Ref: 117Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Analytic Skills*: Recurring11) The supply curves for labor and capital are and the demand curves for labor and capitalare.A) upward sloping; downward slopin
41、gB) vertical; horizontalC) vertical; downward slopingD) upward sloping; verticalAnswer: CDiff: 1 Page Ref: 117-118Topic: The Markets for Capital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Reflective Thinking SkillsE) Recurring12) All else
42、equal, if the demand for labor increases and the supply of labor does not change, the equilibrium real wage will and the equilibrium quantity of labor will.A) increase; increaseB) increase; not changeC) decrease; decreaseD) not change; increaseAnswer: BDiff: 2 Page Ref: 118Topic: The Markets for Cap
43、ital and LaborObjective: LO2: Explain how real GDP is determined in the long run.Special Feature: noneAACSB: Reflective Thinking Skills*: RecurringAACSB: Reflective Thinking Skills*: Recurring4) In the aggregate production function, Y represents real GDP, K represents the capital stock, L represents
44、 the quantity of labor, and A represents an index of efficiency. Which of the following equations represents the aggregate production function?A) Y=(KxL)/AB) YxA = (KxL)C) Y = AF(K, L)D) Y=(KxL)=A/FYAnswer: CDiff: 1 Page Ref: 107Topic: The Aggregate Production FunctionObjective: LOI: Describe the ag
45、gregate production function.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring5) In the aggregate production function, the symbol Which of the following equations best represents the concept of constant returns to scale? A) 3y = Ab(3K, 3L) 2y =2Ab(2K, 2L)C) l/4Y=(AF/4 )(4K,4L)D) 5y =
46、AF(K,L)/5Answer: ADiff: 2 Page Ref: 108Topic: The Cobb-Douglas Production FunctionObjective: LOI: Describe the aggregate production function. Special Feature: none AACSB: Reflective Thinking Skills *: RecurringA n represents an index of how efficiently the economy transforms capital and labor into r
47、eal GDP. A measures the influenceA) of any factor that determines real GDP.B) of the quantities of capital and labor that determine real GDP.C) of any factor that determines real GDP other than the quantities of capital and labor.D) of the quantities of capital and labor that determine real GDP, holding other factors constant.Answer: CDiff: 2 Page Ref: 107Topic: The Aggregate Production FunctionObjective: LOI: Describe the aggregate production function.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring13) All els