Chapter 7 5) What was observed about labor markets during the Great Depression t

Question

Chapter 7 5) What was observed about labor markets during the Great Depression that was not explained by classical models? This was also what most models developed after the Great Depression tried to explain. A) persistent unemployment B) persistent inflation C) persistent growth D) persistent equilibrium 6) What event led economists to question the usefulness of classical models in explaining how the true economy works? A) the Great Depression B) World War II C) World War I D) the Revolutionary War 9) Persistent unemployment is consistent with the predictions of the classical models. Answer: FALSE 12) Briefly discuss the classical view of the labor market. Specifically, to what extent can unemployment occur based on the classical view? Explain. 4) When constructing a production function between labor and output, which of the following is not held constant? A) the stock of labor B) the stock of capital C) the level of technology D) B and C are both correct. Chapter 8 6) A person who is going to college is accumulating: A) human capital. B) common sense. C) street smarts. D) technological progress. 9) If the population of Country A is 400 and the real GDP of Country A is $200,000 , then the GDP per capita in country A is: A) $500. B) $50. C) $80,000,000. D) $8,000,000. 16) Using the rule of 70, how many years would it take for David's income to double if he was to experience a 4 percent increase in income each year? A) 35 B) 28 C) 22 D) 17.5 20) If a county has a growth rate of approximately 0.7 percent each year, it will take about: A) 100 years for its output to double, but only take about 49 years to double if its growth rate was 3 percent per year. B) 100 years for its output to double, but only take about 23 years to double if its growth rate was 3 percent per year. C) 49 years for its output to double, but only take about 23 years to double if its growth rate was 3 percent per year. D) 49 years for its output to double, but only take about 10 years to double if its growth rate was 3 percent per year. 22) According to the rule of 70, if Variable A grows at x% each year, then Variable A will double in approximately: A) 70x years. B) 70/x years. C) x/70 years. D) 70(1-x) years.

Explanation / Answer

5. A) persistent unemployment. As classical economy used to be Laissez faire where markets are perfect and there is no surplus or deficit in long run.

6. A) the Great Depression. Classical economy failed during this time

9. False

4. B) the stock of capital

Chapter 8 6. A) human capital. Higher education provided in college makes a person skilled and qualified.

9. A) $500 ; GDP per capita in country A is = Real GDP / Population => $200,000 / 400 => 500

16. D) 17.5

Rule of 70- Number of year to get double = 70 / growth rate of the variable => 70 / 4 => 17.5

20. B) 100 years for its output to double, but only take about 23 years to double if its growth rate was 3 percent per year.

Solve by Rule of 70 = 70 / 0.7 =100 and 70 / 3 = 23.33

22. B) 70/x years.

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