Any influence that increases labor productivity increases real GDP at each level of labor hours and shifts the production function upward. An increase in physical capital, human capital, or a technological advance all increase labor productivity.

a.False

b.True

The money wage rate is the quantity of good and services that an hour of labor earns whereas real wage rate is the number of dollars an hour of labor earns.

a.False

b.True

In the Classical Model, potential output cannot be increased by __________________.

a.monetary growth

b.better technology

c.more capital

d.higher labour supply