1) Discuss whether the followings are investment in human capital or not.

A) The city government green lights the construction of a new concert arena.

B) Rayburn Tool and Die Company purchases a new die-cutting machine.

C) Displaced workers return to school to update their skills.

D) Thompson Temp Agency replaces its desktop computers with laptop computers.

2) If the required reserve ratio is 15%, and the Central Bank sells 3 million KD worth of government securities to the public, calculate the change in the money supply assuming there is no leakage from the banking system and that all commercial banks are loaned up.

3)

Table 1

Period

Quantity of Labor

(L)

Quantity of Capital

(K)

Total Output

(Y)

1

50

50

200

2

50

60

215

3

50

70

225

4

50

80

230

a) During Period 1, calculate the labor productivity for period 1 and 3.

b) When moving from Period 1 to Period 4, discuss how labor productivity changes.

c) Calculate the output per capital During Period 2 and 4.

d) When moving from Period 1 to Period 4, discuss how output per capital changes

e) From Period 1 to Period 2, and Period 3 to Period 4, calculate the marginal return to capital.

f) When moving from Period 1 to Period 4, discuss how the marginal return to capital changes.

4) A company uses 50 workers and 20 units of capital to produce 400 units of output. If this company increases its capital to 30 units and, as a result, its output increases by 100 units, Discuss how the productivity of labor changes (increases or decreases), and calculate the new units of output per worker.