Chapter 6 Flashcards
Economic growth on the graph…
Is an outward shift of the PPF
True or False.
An increase in labor means an increase in real GDP
True
The real wage rate is…
The money wage/ price level
If labor is more productive, what grows?
Real GDP per person
If population growth increases, what changes?
Aggregate hours and real GDP increases
Increase in population…
Increases the supply of labor
When there is no change in demand what happens?
The equilibrium real wage rate falls, and the aggregate hours increase
Increase in aggregate hours…
Increase in potential GDP
An increase in labor means…
Increase demand for labor
No change in supply of labor
The real wage rate rise
Aggregate labor hours increase
Diminishing returns cause what to decrease?
Real GDP per hour of labor decrease
