Question 1

Using the rule of 72,determine how long it would take for real GDP to double if it grew at a constant growth rate of 8 percent.

Accepted Answer

A) 576 years. 
B) 72 years. 
C) 8 years. 
D) 9 years. 
A) 576 years. 
B) 72 years. 
C) 8 years. 
D) 9 years.

Question 2

An increase in public works spending is likely to

Accepted Answer

A) Increase market efficiency. 
B) Decrease physical capital investment. 
C) Have no effect on physical capital investment. 
D) Increase transportation costs and environmental impact. 
A) Increase market efficiency. 
B) Decrease physical capital investment. 
C) Have no effect on physical capital investment. 
D) Increase transportation costs and environmental impact.

Question 3

The entry of baby boomers into the labor force and increased labor force participation of women

Accepted Answer

A) Increased the employment rate and caused per capita GDP to rise. 
B) Increased the employment rate and caused per capita GDP to fall. 
C) Decreased the employment rate and caused per capita GDP to rise. 
D) Decreased the employment rate and caused per capita GDP to fall. 
A) Increased the employment rate and caused per capita GDP to rise. 
B) Increased the employment rate and caused per capita GDP to fall. 
C) Decreased the employment rate and caused per capita GDP to rise. 
D) Decreased the employment rate and caused per capita GDP to fall.

Question 4

The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology are known as

Accepted Answer

A) Consumption possibilities. 
B) Production possibilities. 
C) Real GDP. 
D) Nominal GDP. 
A) Consumption possibilities. 
B) Production possibilities. 
C) Real GDP. 
D) Nominal GDP.

Question 5

Research and development include all of the following except for

Accepted Answer

A) Foreign investment in current machinery. 
B) Scientific research. 
C) New production techniques. 
D) Development of management improvements. 
A) Foreign investment in current machinery. 
B) Scientific research. 
C) New production techniques. 
D) Development of management improvements.

Question 6

Which of the following would increase labor productivity,ceteris paribus?

Accepted Answer

A) An increase in the number of participants in the labor force. 
B) An increase in the quality of capital. 
C) Crowding out. 
D) A decrease in the quantity of capital. 
A) An increase in the number of participants in the labor force. 
B) An increase in the quality of capital. 
C) Crowding out. 
D) A decrease in the quantity of capital.

Question 7

A higher labor to capital ratio results in greater productivity of labor.

Accepted Answer

A) True 
 B)False

Question 8

As the baby boomers reached their prime working years,there was

Accepted Answer

A) No change in productivity. 
B) A decrease in average productivity. 
C) An increase in average productivity. 
D) A decrease in total productivity. 
A) No change in productivity. 
B) A decrease in average productivity. 
C) An increase in average productivity. 
D) A decrease in total productivity.

Question 9

Using the rule of 72,determine how long it would take for real GDP to double if it grew at a constant growth rate of 4 percent.

Accepted Answer

A) 4 years. 
B) 18 years. 
C) 72 years. 
D) 144 years. 
A) 4 years. 
B) 18 years. 
C) 72 years. 
D) 144 years.

Question 10

Labor productivity is measured as total labor-hours divided by total output.

Accepted Answer

A) True 
 B)False

Question 11

The process of economic growth is

Accepted Answer

A) Not affected by previous year's growth. 
B) Cumulative,whereby gains made in one year accumulate in future years. 
C) Not important to economists. 
D) Constantly occurring in the United States. 
A) Not affected by previous year's growth. 
B) Cumulative,whereby gains made in one year accumulate in future years. 
C) Not important to economists. 
D) Constantly occurring in the United States.

Question 12

Long-run economic growth can occur as the result of

Accepted Answer

A) A rightward shift in aggregate demand. 
B) The employment of more of the available resources. 
C) A technological advance. 
D) An increase in the price level. 
A) A rightward shift in aggregate demand. 
B) The employment of more of the available resources. 
C) A technological advance. 
D) An increase in the price level.

Question 13

Which measurement is most useful for comparing the standard of living in different countries?

Accepted Answer

A) GDP per worker. 
B) The growth rate of the labor force. 
C) The growth rate of real GDP. 
D) GDP per capita. 
A) GDP per worker. 
B) The growth rate of the labor force. 
C) The growth rate of real GDP. 
D) GDP per capita.

Question 14

Refer to Figure 17.3.Assume X units of plants and equipment wear out each year.What will happen to the PPC in the future if the economy currently produces at point W?

Accepted Answer

A) It will stay roughly the same. 
B) It will shift outward. 
C) It will shift inward. 
D) This cannot be determined with the information given. 
A) It will stay roughly the same. 
B) It will shift outward. 
C) It will shift inward. 
D) This cannot be determined with the information given.

Question 15

Saving is a basic source of investment financing.

Accepted Answer

A) True 
 B)False

Question 16

What are some of the sources of long-run economic growth,and which is the greatest contributor to growth?

Accepted Answer

Research and development accou

Question 17

If a country currently produces a mix of output that lies inside its production possibilities curve,then macro stabilization policies try to

Accepted Answer

A) Shift the aggregate demand curve to the right. 
B) Shift the aggregate demand curve to the left. 
C) Shift the short-run aggregate supply curve to the left. 
D) Move the economy to the right down the existing aggregate demand curve. 
A) Shift the aggregate demand curve to the right. 
B) Shift the aggregate demand curve to the left. 
C) Shift the short-run aggregate supply curve to the left. 
D) Move the economy to the right down the existing aggregate demand curve.

Question 18

If the real U.S.GDP was $10 trillion in 2000 and the U.S.population was 280 million,the per capita real GDP would have been closest to

Accepted Answer

A) $2,800 per person. 
B) $28,000 per person. 
C) $35,714 per person. 
D) $5,000 per person. 
A) $2,800 per person. 
B) $28,000 per person. 
C) $35,714 per person. 
D) $5,000 per person.

Question 19

Which of the following has made the greatest contribution to advances in productivity in recent years?

Accepted Answer

A) Improvement in management. 
B) Spending on research and development. 
C) Increases in capital per worker. 
D) Improvements in the quality of labor. 
A) Improvement in management. 
B) Spending on research and development. 
C) Increases in capital per worker. 
D) Improvements in the quality of labor.

Question 20

A movement from point C to point E in Figure 17.5 illustrates

Accepted Answer

A) A decrease in the capacity to produce. 
B) The short-run opportunity cost of achieving long-run economic growth. 
C) An increase in the capacity to produce. 
D) An increase in the unemployment rate. 
A) A decrease in the capacity to produce. 
B) The short-run opportunity cost of achieving long-run economic growth. 
C) An increase in the capacity to produce. 
D) An increase in the unemployment rate.

Exam 17: Growth and Productivity: Long-Run Possibilities

Using the rule of 72,determine how long it would take for real GDP to double if it grew at a constant growth rate of 8 percent.

An increase in public works spending is likely to

The entry of baby boomers into the labor force and increased labor force participation of women

The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology are known as

Research and development include all of the following except for

Which of the following would increase labor productivity,ceteris paribus?

A higher labor to capital ratio results in greater productivity of labor.

As the baby boomers reached their prime working years,there was

Using the rule of 72,determine how long it would take for real GDP to double if it grew at a constant growth rate of 4 percent.

Labor productivity is measured as total labor-hours divided by total output.

The process of economic growth is

Long-run economic growth can occur as the result of

Which measurement is most useful for comparing the standard of living in different countries?

Refer to Figure 17.3.Assume X units of plants and equipment wear out each year.What will happen to the PPC in the future if the economy currently produces at point W?

Saving is a basic source of investment financing.

What are some of the sources of long-run economic growth,and which is the greatest contributor to growth?

If a country currently produces a mix of output that lies inside its production possibilities curve,then macro stabilization policies try to

If the real U.S.GDP was $10 trillion in 2000 and the U.S.population was 280 million,the per capita real GDP would have been closest to

Which of the following has made the greatest contribution to advances in productivity in recent years?

A movement from point C to point E in Figure 17.5 illustrates

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