Macroeconomics Final Study Guide

Labor productivity growth can be attributed to:

• improvement in technological process.

• a decline in university attendance.

• an increase in population growth.

• a decline in the physical capital per worker.

The most important driver for economic growth appears to be:

• increases in physical capital.

• increases in human capital.

• technological progress.

• Jeff Gordon.

Which of the following will NOT increase the productivity of labor?

• technological improvements

• an increase in the capital stock

• improvements in education

• an increase in the size of the labor force

Workers today are more productive than workers in the past because:

• workers now are physically stronger on average.

• workers now have more physical capital embodying better technology to work with.

• more workers now working with the same number of machines than in the past.

• they are paid more.

Diminishing returns to physical capital means that when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to:

• a smaller increase in the marginal product of labor.

• a decrease in the total amount of output produced.

• negative marginal product .

• a constant amount of total output.

In the long run, an increase in savings will generally:

• reduce the rate of economic growth.

• leave the rate of economic growth unchanged.

• increase the rate of economic growth.

• increase consumption simultaneously.

Economies with higher growth rates tend to be those that have:

• large amounts of natural resources.

• a stable government that protects property rights.

• high levels of government regulation.

• a large defense budget.

(Figure: Productivity) An improvement in technology with everything else remaining unchanged is shown on the diagram as:

• a movement from B to A.

• a movement from A to B.

• a movement from B to C.

• a movement from A to C.

(Figure: Productivity) An increase in physical capital per worker with everything else remaining unchanged is shown on the diagram as:

• a movement from B to C.

• a movement from A to C.

• a movement from A to B.

• a movement from B to A.

When tracking economic growth, why do economists prefer real GDP per capita over: a. real GDP?