Exam 8: Economic Growth

Economists define economic growth as

Shifts to the right in the long-run aggregate supply curve are the result of

Which of the following must also shift if the long-run aggregate supply curve shifts?

Economic growth can be modeled as I. an outward shift of the economy's production possibilities curve. II. a rightward shift of the economy's long-run aggregate supply curve. III. a rightward shift of the labor demand and the labor supply curves. IV. a downward shift of the economy's aggregate production function.

Suppose a country's potential level of real GDP grows at a rate of 6% per year. Use the rule of 72 to calculate how long it takes for the country's potential output to double.

A factor critical to economic growth is

A change in the availability of natural resources will shift the aggregate production function.

If real GDP grows at 3% and population grows at 1.2%, then real GDP per capita grows by 4.2%.

Figure 8-1 -Refer to Figure 8-1. A movement from F to B

The skills, training, and education possessed by workers contribute to economic growth

Define economic growth. Why is it described as a process rather than an event?

Real GDP tends to fluctuate around potential output.

Suppose that real GDP per capita of a rich country is $40,000. Real GDP per capita in a poor country is $10,000. Suppose that rate of growth of GDP per capita in the rich country is 3.6% per year and in the poor country is 7.2% per year. Using the rule of 72, calculate how many years it will take for real GDP per capita in the poor country to catch up with GDP per capita in the rich country?

Figure 8-3 -Refer to Figure 8-3. Exponential economic growth can be depicted by

During the industrial revolution, the United States saw increases in the demand for labor and increases in the supply of labor. The increase in real wages rose during this period is consistent with which of the following statements?

An increase in saving

Figure 8-6 -Refer to Figure 8-6. Assume that the economy is initially in long-run equilibrium. What happens if investment spending increases?

A change in the supply of labor will shift the long-run aggregate supply curve.

According to the rule of 72, a 12% annual increase in real GDP would lead to a doubling of real GDP in 8 years.

Economic growth is defined in terms of changes in the economy's level of goods and services produced from one period to the next.