By NEAS - 8/15/2018 4:44:06 PM
Macro Module 11 Marginal Product of Labor practice exam questions
(The attached PDF file has better formatting.)
● In 20X2, real GDP = 723, the price level = 116, and the nominal wage rate = 35.65 / hour
● In 20X3, real GDP = 880, the price level = 170, and the nominal wage rate = 46.27 / hour
The real interest rate, inflation rate, and bank transaction costs do not change, and the real demand for money is proportional to real GDP.
Question 11.1: Real demand for money
What is the percentage change in the real demand for money from 20X2 to 20X3?
Answer 11.1: (880 / 723) – 1 = 21.72%
(real demand for money is proportion to real GDP)
Question 11.2: Real money supply
What is the percentage change in the real money supply from 20X2 to 20X3?
Answer 11.2: 21.72%
(real money supply = real demand for money)
Question 11.3: Nominal money supply
What is the percentage change in the nominal money supply from 20X2 to 20X3?
Answer 11.3: (1 + 21.72%) × (170 / 116) – 1 = 78.38%
(multiply by change in the price level)
Question 11.4: Real wage rate
What is the percentage change in the real wage rate from 20X2 to 20X3?
Answer 11.4: (46.27 / 1.70) / (35.65 / 1.16) – 1 = -11.44%
(real wage rate = nominal wage rate / price level)
Question 11.5: Marginal product of labor
What is the percentage change in the marginal product of labor from 20X2 to 20X3?
Answer 11.5: -11.44%
(marginal product of labor is proportion to the real wage rate)
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