Question 1

If output per capita doubles in 30 years and the population doubles in 60 years, what is the growth rate of output?

Accepted Answer

A)  3.6% per year 
B)  2.4% per year 
C)  2% per year 
D)  1.2% per year 
A)  3.6% per year 
B)  2.4% per year 
C)  2% per year 
D)  1.2% per year

Question 2

If population increases at an average rate of 2% per year and output increases at an average rate of 5% per year, then output per capita will double in

Accepted Answer

A)  14.4 years. 
B)  18 years. 
C)  24 years. 
D)  36 years. 
A)  14.4 years. 
B)  18 years. 
C)  24 years. 
D)  36 years.

Question 3

Identify four factors that contribute to economic growth and explain how each factor affects economic growth.

Accepted Answer

1) Investment in physical capital: When

Question 4

Figure 8-4  
-Refer to Figure 8-4. In drawing the aggregate production function, which of the following variables is not held constant?

Accepted Answer

A)  capital 
B)  labor 
C)  technology 
D)  quantity of land 
A)  capital 
B)  labor 
C)  technology 
D)  quantity of land

Question 5

If the rate of growth of output per capita is 8% and the rate of growth of population is 2%, what is the rate of growth of output?

Accepted Answer

A)  4% 
B)  6% 
C)  8% 
D)  10% 
A)  4% 
B)  6% 
C)  8% 
D)  10%

Question 6

The determinants of economic growth include all of the following except

Accepted Answer

A)  technological improvement. 
B)  growth in physical capital. 
C)  growth in human capital. 
D)  growth in money supply. 
A)  technological improvement. 
B)  growth in physical capital. 
C)  growth in human capital. 
D)  growth in money supply.

Question 7

Economic growth is an exponential process. What does this mean?

Accepted Answer

A)  It means that the returns to huge capital investments made today will diminish at an increasing rate over time. 
B)  It means that small differences in sustained growth rates have significant effects on a nation's real income over long periods of time. 
C)  It means that countries must allocate increasing amounts of resources to capital goods to see constant increases in the growth rate of potential output. 
D)  It means that if a country allocates a fixed amount of resources to capital goods, its potential output will increase at an increasing rate over long periods of time. 
A)  It means that the returns to huge capital investments made today will diminish at an increasing rate over time. 
B)  It means that small differences in sustained growth rates have significant effects on a nation's real income over long periods of time. 
C)  It means that countries must allocate increasing amounts of resources to capital goods to see constant increases in the growth rate of potential output. 
D)  It means that if a country allocates a fixed amount of resources to capital goods, its potential output will increase at an increasing rate over long periods of time.

Question 8

Holding all else constant, a country's standard of living will rise if its

Accepted Answer

A)  nominal GDP grows at a faster rate than real GDP. 
B)  nominal GDP grows at a slower rate than real GDP. 
C)  rate of population growth exceeds the rate of growth of real GDP. 
D)  rate of population growth is less than the rate of growth of real GDP. 
A)  nominal GDP grows at a faster rate than real GDP. 
B)  nominal GDP grows at a slower rate than real GDP. 
C)  rate of population growth exceeds the rate of growth of real GDP. 
D)  rate of population growth is less than the rate of growth of real GDP.

Question 9

Figure 8-2  
-Refer to Figure 8-2. Assume that a nation is operating on production possibilities curve CD. Economic growth is best illustrated by a

Accepted Answer

A)  shift from curve CD to curve AB. 
B)  shift from curve CD to curve EF. 
C)  movement from point Q to point O on the frontier CD. 
D)  movement from point R inside the frontier CD to point P on the frontier CD. 
A)  shift from curve CD to curve AB. 
B)  shift from curve CD to curve EF. 
C)  movement from point Q to point O on the frontier CD. 
D)  movement from point R inside the frontier CD to point P on the frontier CD.

Question 10

Suppose labor is the only variable that changes. If production displays diminishing marginal returns, each additional unit of labor

Accepted Answer

A)  adds more and more to total output. 
B)  adds less and less to total output. 
C)  adds a fixed amount to total output. 
D)  actually decreases output. 
A)  adds more and more to total output. 
B)  adds less and less to total output. 
C)  adds a fixed amount to total output. 
D)  actually decreases output.

Question 11

Figure 8-6  
-Refer to Figure 8-6. Assume that the economy is initially in long-run equilibrium. What happens in the long-run if the capital stock in this economy increases over time?

Accepted Answer

A)  The nation's capacity to produce will increase as represented by a rightward shift of the long-run aggregate supply curve. 
B)  The nation's capacity to produce will increase as represented by a rightward shift of the short-run aggregate supply curve. The long-run aggregate supply curve and the aggregate demand curves remain unchanged. 
C)  The nation's capacity to produce will increase as represented by a rightward shift of the long-run aggregate demand curve. 
D)  The nation's capacity to produce will increase as represented by a rightward shift of the short-run aggregate supply curve and the aggregate demand curve. The long-run aggregate supply curve remains unchanged. 
A)  The nation's capacity to produce will increase as represented by a rightward shift of the long-run aggregate supply curve. 
B)  The nation's capacity to produce will increase as represented by a rightward shift of the short-run aggregate supply curve. The long-run aggregate supply curve and the aggregate demand curves remain unchanged. 
C)  The nation's capacity to produce will increase as represented by a rightward shift of the long-run aggregate demand curve. 
D)  The nation's capacity to produce will increase as represented by a rightward shift of the short-run aggregate supply curve and the aggregate demand curve. The long-run aggregate supply curve remains unchanged.

Question 12

Which of the following occurred during the industrial revolution in the United States?
I. More and more firms shifted toward mass production and automation.
II. More and more firms substituted capital investment and technology for labor, leading to a decrease in the demand for labor.
III. Technological change and capital investment displaced workers in some industries, although for the economy as a whole, the demand for labor increased.

Accepted Answer

A)  I only 
B)  I and II only 
C)  I and III only 
D)  II only 
E)  III only 
A)  I only 
B)  I and II only 
C)  I and III only 
D)  II only 
E)  III only

Question 13

Using actual values of real GDP to measure economic growth

Accepted Answer

A)  yields misleading results because changes in real GDP are affected by cyclical changes that do not represent economic growth. 
B)  is the most widely accepted method of measuring economic growth. 
C)  introduces problems because of inaccuracies in the measurement of real GDP. 
D)  is superior to using actual values of nominal GDP because it allows us to isolate the effects of price changes. 
A)  yields misleading results because changes in real GDP are affected by cyclical changes that do not represent economic growth. 
B)  is the most widely accepted method of measuring economic growth. 
C)  introduces problems because of inaccuracies in the measurement of real GDP. 
D)  is superior to using actual values of nominal GDP because it allows us to isolate the effects of price changes.

Question 14

All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?

Accepted Answer

A)  Its labor force participation rate decreases by 5% per year compared to 3% per year. 
B)  Its saving rate falls from 8% to 1% per year. 
C)  Government expenditures on basic research increases by 10% per year. 
D)  The number of students completing college education falls. 
A)  Its labor force participation rate decreases by 5% per year compared to 3% per year. 
B)  Its saving rate falls from 8% to 1% per year. 
C)  Government expenditures on basic research increases by 10% per year. 
D)  The number of students completing college education falls.

Question 15

Which of the following will not increase labor's productivity?

Accepted Answer

A)  education 
B)  technology 
C)  new capital 
D)  growth in output 
A)  education 
B)  technology 
C)  new capital 
D)  growth in output

Question 16

The rule of 72 states that grows at some exponential rate of z percent

Accepted Answer

A)  will double in value in approximately 72 years. 
B)  will double in value in approximately 72 ÷ z years. 
C)  will double in value in approximately 72 * z years. 
D)  will double in value in approximately 72z years. 
A)  will double in value in approximately 72 years. 
B)  will double in value in approximately 72 ÷ z years. 
C)  will double in value in approximately 72 * z years. 
D)  will double in value in approximately 72z years.

Question 17

During the industrial revolution (the period between the Civil War and World War I), the United States had a massive influx of working age immigrants. What happens in the labor market?

Accepted Answer

A)  The supply of labor curve shifts to the right. 
B)  The demand for labor curve shifts to the right. 
C)  The supply of labor and the demand for labor curves shift to the right. 
D)  There will be an upward movement along the labor supply curve. 
A)  The supply of labor curve shifts to the right. 
B)  The demand for labor curve shifts to the right. 
C)  The supply of labor and the demand for labor curves shift to the right. 
D)  There will be an upward movement along the labor supply curve.

Question 18

Consider a firm that produces output using labor and capital. The firm's stock of capital is fixed and in order to increase output, it must employ more workers. Which of the following occurs as the number of workers increases?

Accepted Answer

A)  Output per worker rises. 
B)  Capital per worker falls. 
C)  Wage per worker falls. 
D)  Total output increases exponentially. 
A)  Output per worker rises. 
B)  Capital per worker falls. 
C)  Wage per worker falls. 
D)  Total output increases exponentially.

Question 19

Figure 8-5   Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve.
-Refer to Figure 8-5. The economy could achieve its potential output at a price level- nominal wage combination of

Accepted Answer

A)  1.5 and $60,000. 
B)  1.0 and $50,000. 
C)  1.0 and $45,000 
D)  0.5 and $30,000. 
A)  1.5 and $60,000. 
B)  1.0 and $50,000. 
C)  1.0 and $45,000 
D)  0.5 and $30,000.

Question 20

All of the following are sources of economic growth except

Accepted Answer

A)  increases in human capital. 
B)  an increase in the savings rate. 
C)  an increase in consumption spending to stimulate production. 
D)  increases in physical capital. 
A)  increases in human capital. 
B)  an increase in the savings rate. 
C)  an increase in consumption spending to stimulate production. 
D)  increases in physical capital.

If output per capita doubles in 30 years and the population doubles in 60 years, what is the growth rate of output?

If population increases at an average rate of 2% per year and output increases at an average rate of 5% per year, then output per capita will double in

Identify four factors that contribute to economic growth and explain how each factor affects economic growth.

Figure 8-4 -Refer to Figure 8-4. In drawing the aggregate production function, which of the following variables is not held constant?

If the rate of growth of output per capita is 8% and the rate of growth of population is 2%, what is the rate of growth of output?

The determinants of economic growth include all of the following except

Economic growth is an exponential process. What does this mean?

Holding all else constant, a country's standard of living will rise if its

Figure 8-2 -Refer to Figure 8-2. Assume that a nation is operating on production possibilities curve CD. Economic growth is best illustrated by a

Suppose labor is the only variable that changes. If production displays diminishing marginal returns, each additional unit of labor

Figure 8-6 -Refer to Figure 8-6. Assume that the economy is initially in long-run equilibrium. What happens in the long-run if the capital stock in this economy increases over time?

Using actual values of real GDP to measure economic growth

All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?

Which of the following will not increase labor's productivity?

The rule of 72 states that grows at some exponential rate of z percent

During the industrial revolution (the period between the Civil War and World War I), the United States had a massive influx of working age immigrants. What happens in the labor market?

Consider a firm that produces output using labor and capital. The firm's stock of capital is fixed and in order to increase output, it must employ more workers. Which of the following occurs as the number of workers increases?

Figure 8-5 Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve. -Refer to Figure 8-5. The economy could achieve its potential output at a price level- nominal wage combination of

All of the following are sources of economic growth except

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 8: Economic Growth

If output per capita doubles in 30 years and the population doubles in 60 years, what is the growth rate of output?

If population increases at an average rate of 2% per year and output increases at an average rate of 5% per year, then output per capita will double in

Identify four factors that contribute to economic growth and explain how each factor affects economic growth.

Figure 8-4 -Refer to Figure 8-4. In drawing the aggregate production function, which of the following variables is not held constant?

If the rate of growth of output per capita is 8% and the rate of growth of population is 2%, what is the rate of growth of output?

The determinants of economic growth include all of the following except

Economic growth is an exponential process. What does this mean?

Holding all else constant, a country's standard of living will rise if its

Figure 8-2 -Refer to Figure 8-2. Assume that a nation is operating on production possibilities curve CD. Economic growth is best illustrated by a

Suppose labor is the only variable that changes. If production displays diminishing marginal returns, each additional unit of labor

Figure 8-6 -Refer to Figure 8-6. Assume that the economy is initially in long-run equilibrium. What happens in the long-run if the capital stock in this economy increases over time?

Using actual values of real GDP to measure economic growth

All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?

Which of the following will not increase labor's productivity?

The rule of 72 states that grows at some exponential rate of z percent

During the industrial revolution (the period between the Civil War and World War I), the United States had a massive influx of working age immigrants. What happens in the labor market?

Consider a firm that produces output using labor and capital. The firm's stock of capital is fixed and in order to increase output, it must employ more workers. Which of the following occurs as the number of workers increases?

Figure 8-5 Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve. -Refer to Figure 8-5. The economy could achieve its potential output at a price level- nominal wage combination of

All of the following are sources of economic growth except

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters