ECN 104 QUIZ 2 QUESTIONS WITH
100% CORRECT ANSWERS 2024
LATEST UPDATE
How has productivity growth changed? - Answer- 1. Technological advance
2. Capital each worker has to work with
3. Education and training
4. Economies of scale
5. Resource allocation
Technological advance - Answer- Discovery of new knowledge that allows for resources
to be combined in new ways and increase output
Quantity of Capital per Worker - Answer- - more and better plant equipment
- increased quantity per worker over time
Education and Training - Answer- - contribute to human capital
- on-the-job training etc
Economies of scale - Answer- Reductions in the average total cost of producing a
product as the firm expands the size of plant in the long run
Improved resource allocation - Answer- workers over time have moved from low-
productivity employment to high-productivity employment
Real wage - Answer- Purchasing power of the nominal wage
Rapid growth in 1989-2000 was caused by: - Answer- - the microchip and information
technology
- new start-ups
- increasing returns (more specialized inputs, spreading of dev costs, simultaneous
consumption, network effects, learning-by-doing)
- global competition
Implications of economic growth - Answer- stronger productivity growth + heightened
global competition = higher rate economic growth
, Anti-Growth view - Answer- - pollution, climate change, ozone depletion
- emphasizes poor distribution of wealth
- people are making a better living, but are necessarily living a good life
- finite natural resources available
Why is growth important despite its disadvantages - Answer- - greater material
abundance
- higher living standards
- better infrastructure
- more leisures + luxuries
- can help prevent environmental pollution
Business cycle - Answer- A pattern of alternating rises and declines in the rate of
economic activity
Business cycle phases - Answer- 1. Peak: prices rise, full employment, output near full
economy's capacity
2. Recession: decline in total output, income, and employment (six months minimum)
3. Through: output, employment at lowest
4. Expansion: real GDP, income, employment rise
Why do business cycle fluctuations occur? - Answer- Sticky prices interacting with
economic shocks
What are the sources of demand and supply shocks? - Answer- - Irregular innovation
- Productivity changes
- Monetary factors
- Political events
- Financial instability
- Pandemics
What good are most/least impacted by cyclical fluctuations? - Answer- Most affected:
capital goods (house), and durables (car)
Least affected: service industries and nondurable consumer goods
Labour force - Answer- people who are working + not working but actively seeking
employment
Unemployment rate - Answer- Formula: unemployed/labor force * 100
Does not include: discouraged workers + part-timers
Frictional unemployment - Answer- - people who are unemployed as they actively seek
employment
- market does not operate perfectly, and there will be friction (gap) when a person
switches between jobs
100% CORRECT ANSWERS 2024
LATEST UPDATE
How has productivity growth changed? - Answer- 1. Technological advance
2. Capital each worker has to work with
3. Education and training
4. Economies of scale
5. Resource allocation
Technological advance - Answer- Discovery of new knowledge that allows for resources
to be combined in new ways and increase output
Quantity of Capital per Worker - Answer- - more and better plant equipment
- increased quantity per worker over time
Education and Training - Answer- - contribute to human capital
- on-the-job training etc
Economies of scale - Answer- Reductions in the average total cost of producing a
product as the firm expands the size of plant in the long run
Improved resource allocation - Answer- workers over time have moved from low-
productivity employment to high-productivity employment
Real wage - Answer- Purchasing power of the nominal wage
Rapid growth in 1989-2000 was caused by: - Answer- - the microchip and information
technology
- new start-ups
- increasing returns (more specialized inputs, spreading of dev costs, simultaneous
consumption, network effects, learning-by-doing)
- global competition
Implications of economic growth - Answer- stronger productivity growth + heightened
global competition = higher rate economic growth
, Anti-Growth view - Answer- - pollution, climate change, ozone depletion
- emphasizes poor distribution of wealth
- people are making a better living, but are necessarily living a good life
- finite natural resources available
Why is growth important despite its disadvantages - Answer- - greater material
abundance
- higher living standards
- better infrastructure
- more leisures + luxuries
- can help prevent environmental pollution
Business cycle - Answer- A pattern of alternating rises and declines in the rate of
economic activity
Business cycle phases - Answer- 1. Peak: prices rise, full employment, output near full
economy's capacity
2. Recession: decline in total output, income, and employment (six months minimum)
3. Through: output, employment at lowest
4. Expansion: real GDP, income, employment rise
Why do business cycle fluctuations occur? - Answer- Sticky prices interacting with
economic shocks
What are the sources of demand and supply shocks? - Answer- - Irregular innovation
- Productivity changes
- Monetary factors
- Political events
- Financial instability
- Pandemics
What good are most/least impacted by cyclical fluctuations? - Answer- Most affected:
capital goods (house), and durables (car)
Least affected: service industries and nondurable consumer goods
Labour force - Answer- people who are working + not working but actively seeking
employment
Unemployment rate - Answer- Formula: unemployed/labor force * 100
Does not include: discouraged workers + part-timers
Frictional unemployment - Answer- - people who are unemployed as they actively seek
employment
- market does not operate perfectly, and there will be friction (gap) when a person
switches between jobs
