Macroeconomics 8th Canadian Edition Andrew Abel – Test Bank

Macroeconomics 8th Canadian Edition Andrew Abel – Test Bank

Macroeconomics, Cdn. 8e (Abel et al.)

Chapter 3   Productivity, Output, and Employment

3.1   Multiple-Choice Questions

1) In the production function Y = AF(K,N), A is ________, K is ________, and N is ________.

A) total factor productivity; the capital stock; the number of workers employed

B) total factor productivity; investment; the number of workers employed

C) the productivity of labour; the capital stock; the size of the labour force

D) the productivity of labour; investment; the size of the labour force

Answer:  A

Diff: 1      Type: MC      Page Ref: 48

2) In the production function Y = AF(K,N), A is

A) labour productivity.

B) total factor productivity.

C) capital productivity.

D) the marginal productivity of capital.

Answer:  B

Diff: 1      Type: MC      Page Ref: 48

3) Suppose the economy’s production function is Y = AK0.3N0.7. If K = 1000 and N = 50, then

Y = 2000. What is Y if K = 2000 and N = 100?

A) 4000

B) 3500

C) 3400

D) 3000

Answer:  A

Diff: 3      Type: MC      Page Ref: 48

4) Under certain circumstances, the production function Y = AF(K,N) can be rewritten as Y = ANF(K,N). In this case, suppose that both K and N double. What happens to output?

A) It remains unchanged.

B) It is reduced by one-half.

C) It is increased by a factor of 4.

D) It doubles.

Answer:  D

Diff: 2      Type: MC      Page Ref: 49