Q23 Suppose capital per worker goes up from 10 to 11 in 2013, from 11 to 12 in 2

Question

Q23

Suppose capital per worker goes up from 10 to 11 in 2013, from 11 to 12 in 2014, and from 12 to 13 in 2015. Using the standard production function from class, what is going to be true about output per worker?

Output per worker is going down every year at a increasing rate.

Output per worker is going down every year at a decreasing rate.

Output per worker is going up every year at a increasing rate.

Output per worker is going up every year at a decreasing rate.

Q24

If the Consumer Price Index falls from 220 to 200, then

the economy experiences inflation of 9.1% and the value of money decreases.

the economy experiences inflation of 10% and the value of money decreases.

the economy experiences deflation of 10% and the value of money increases.

the economy experiences deflation of 9.1% and the value of money increases.

Output per worker is going down every year at a increasing rate.

Output per worker is going down every year at a decreasing rate.

Output per worker is going up every year at a increasing rate.

Output per worker is going up every year at a decreasing rate.

Explanation / Answer

23. Output per worker and capital per worker have positive relation but they tend to exhibit capital deepening where rise in capital per worker increases output per worker at a decreasing rate. D is correct

24. Inflation is (-20/220) = -9.1%. Hence value of money is increased because purchasing power has increased. D is correct.

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