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1. What is the only thing that makes an economy grow in the long run?
(A) Increases in labor productivity growth
(B) Increases in the price level
(C) Increases in the interest rate
(D) Increases in the labor force
2. Through which of the following combinations do firms produce output?
(A) Capital and productivity
(B) Capital and labor
(C) Labor and productivity
(D) Labor and workers
3. Which of the following is not a form of capital?
(A) Machinery
(B) Knowledge
(C) Workers
(D) Tools
4. Which of the following is not a form of labor?
(A) Childrens work
(B) Adults work
(C) Immigrants work
(D) Machines work
6. What do you call the change in the growth level from year to year?
(A) The growth level
(B) The growth rate
The Universal Replicator is a machine that can replicate any physical good. If a car is put
into the Universal Replicator, the machine will create an exact working duplicate at the
touch of a button. It will work on any non-living object.
Assume this technology becomes widely adopted throughout the country by
manufacturers of all types of products.
Ask the class to answer the following questions. Give them time to write an answer to a
question, then discuss their answers before moving to the next question.
Common Answers, Questions, and Points for Discussion
1. What impact would the Universal Replicator have on the economy?
Most students focus on the negative aspects of this technology: job loss,
disruption of institutions, chaos.
Some will also see the positive side: the elimination of poverty, the ability to meet
all material needs, the elimination of tedious and unsafe jobs.
2. What
jobs
would
not
manufacturing, mining, agriculture, any assembly line job
be
needed?
3. What would happen to the price of goods? The price of goods would drop
dramatically.
4. What
kinds
of
problems
would
you
expect?
Structural unemployment, recession, waste disposal, idleness, income distribution
may become less equitable, skills become obsolete, new legal structures needed.
5. What
benefits
do
you
see?
More material goods, more leisure time, the ability to devote resources to social
problems.
6. What
kinds
of
jobs
would
still
be
necessary?
Designers, inventors, doctors, teachers, lawyers, police, barbers, etc. Most service
jobs will still be needed.
Of course, the Universal Replicator doesnt really exist but technological change
has had very similar effects. For example, look at the long-term advances in
agriculture. Two hundred years ago, 80% of the U.S. labor force worked in
farming. Today, farming accounts for only 2% of U.S. jobs. Agricultural
production has increased tremendously and food prices have decreased
substantially.
Manufacturing has followed a similar, but less extreme path. Fewer workers are
able to produce more goods at lower costs. The Deindustrialization of America
has been accompanied by increased industrial output.
As agricultural and manufacturing employment decline, we find more workers in
the service sector. Lower prices for agricultural and manufactured goods mean
services become relatively expensive. Many public issues, such as concerns about
health care, education, and police protection, are affected by this increase in the
relative cost of services.
Like the Universal Replicator, technological progress increases material wellbeing. The same questions remain: What happens to displaced workers? What
happens to the distribution of income? How are by-products, wastes, and
pollution handled?
Activity 2:
Start out by asking students what factors they believe will lead to greater economic
growth in the future.
Question: Are Natural Resources a Limit to Growth? This section points out that as the
population has grown over time, we have discovered ways to lower our use of natural
resources. Thus, most economists are not worried about shortages of natural resources.