Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Approximately what percentage of families in the U.S. own homes?

Accepted Answer

A)  10% 
B)  25% 
C)  50% 
D)  67% 
A)  10% 
B)  25% 
C)  50% 
D)  67%

Question 3

Use the following to answer questions.
Exhibit: Aggregate Production Function, Labor Market, and LRAS  
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS) The real wage is the ratio of

Accepted Answer

A)  the price level to the nominal wage. 
B)  the nominal wage to the quantity of labor employed. 
C)  the nominal wage to the price level. 
D)  real GDP to the nominal wage. 
A)  the price level to the nominal wage. 
B)  the nominal wage to the quantity of labor employed. 
C)  the nominal wage to the price level. 
D)  real GDP to the nominal wage.

Question 4

Use the following to answer questions .
Exhibit: Economic Growth, AD and AS Analysis  
-(Exhibit: Economic Growth, AD and AS Analysis) Assume that the economy is initially in long-run equilibrium. Suppose the federal government initiates a tax program that stimulates firms to increase their investment and this leads to economic growth. This policy might, in the short run, result in

Accepted Answer

A)  a leftward shift of the aggregate demand and the short-run aggregate supply curve and in the long run, a rightward shift of the long-run aggregate supply curve. 
B)  a rightward shift of the aggregate demand curve and in the long run, a rightward shift of the long-run aggregate supply and the short-run aggregate supply curves. 
C)  a rightward shift of the short-run aggregate supply curve and in the long run, a rightward shift of the long-run aggregate supply curve. 
D)  a leftward shift of the aggregate demand curve and in the long run, a rightward shift of the long-run aggregate supply and the short-run aggregate supply curves. 
A)  a leftward shift of the aggregate demand and the short-run aggregate supply curve and in the long run, a rightward shift of the long-run aggregate supply curve. 
B)  a rightward shift of the aggregate demand curve and in the long run, a rightward shift of the long-run aggregate supply and the short-run aggregate supply curves. 
C)  a rightward shift of the short-run aggregate supply curve and in the long run, a rightward shift of the long-run aggregate supply curve. 
D)  a leftward shift of the aggregate demand curve and in the long run, a rightward shift of the long-run aggregate supply and the short-run aggregate supply curves.

Question 5

Suppose that real GDP per capita of Monrovia is $30,000. RGDP per capita in Westova is $15,000. Suppose that rate of growth of real GDP per capita in Monrovia is 3.17% per year and in Westova it is 6.34% per year. Using the rule of 72, calculate how many years it will take for RGDP per capita in Westova to catch up with RGDP per capita in Monrovia.

Accepted Answer

A)  approximately 11 years 
B)  approximately 23 years 
C)  approximately 34 years 
D)  approximately 46 years 
A)  approximately 11 years 
B)  approximately 23 years 
C)  approximately 34 years 
D)  approximately 46 years

Question 6

Use the following to answer questions .
Exhibit: Production Possibilities Curves 2  
-(Exhibit: Production Possibilities Curves 2) The movement from point R inside the frontier CD to point P on the frontier CD
I. will increase real RGDP.
II. will increase the size of the nation's labor force.
III. represents economic growth.

Accepted Answer

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

Question 7

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 8

Which of the following factors contribute to economic growth?

Accepted Answer

A)  A decrease in physical capital 
B)  An increase in the availability of natural resources 
C)  An increase in the price level 
D)  A decrease in unemployment 
A)  A decrease in physical capital 
B)  An increase in the availability of natural resources 
C)  An increase in the price level 
D)  A decrease in unemployment

Question 9

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 10

The real wage is the ratio of the price level to the nominal wage.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer questions.
Exhibit: Aggregate Production Function, Labor Market, and LRAS  
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS) In Panel (c), the long-run aggregate supply curve is vertical because

Accepted Answer

A)  of diminishing marginal returns. 
B)  of sticky wages and prices. 
C)  perfectly flexible nominal wages in the long run allow any number of wage/price level combinations to result in a real wage that equilibrates the labor market. 
D)  the economy is not constrained by diminishing marginal returns since it can change the quantities of all factors of production. 
A)  of diminishing marginal returns. 
B)  of sticky wages and prices. 
C)  perfectly flexible nominal wages in the long run allow any number of wage/price level combinations to result in a real wage that equilibrates the labor market. 
D)  the economy is not constrained by diminishing marginal returns since it can change the quantities of all factors of production.

Question 12

Use the following to answer questions .
Exhibit: Economic Growth, AD and AS Analysis  
-(Exhibit: Economic Growth, AD and AS Analysis) 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 13

Economic growth is defined as

Accepted Answer

A)  growth in nominal gross domestic product over time. 
B)  the process by which a country's potential output grows over time. 
C)  the process by which scarcity is eliminated over time. 
D)  growth in money supply over time. 
A)  growth in nominal gross domestic product over time. 
B)  the process by which a country's potential output grows over time. 
C)  the process by which scarcity is eliminated over time. 
D)  growth in money supply over time.

Question 14

What is the opportunity cost of allocating more and more resources to the production of capital goods?

Accepted Answer

A)  a decrease in real income 
B)  the amount of consumption goods that could have been produced 
C)  the increase in pollution 
D)  the environmental goods foregone 
A)  a decrease in real income 
B)  the amount of consumption goods that could have been produced 
C)  the increase in pollution 
D)  the environmental goods foregone

Question 15

The model of aggregate demand and long-run aggregate supply predicts that, all other things unchanged, improved technology will

Accepted Answer

A)  reduce employment. 
B)  lower real wages. 
C)  increase the demand for labor and boost real wages. 
D)  increase the supply of labor and boost real wages. 
A)  reduce employment. 
B)  lower real wages. 
C)  increase the demand for labor and boost real wages. 
D)  increase the supply of labor and boost real wages.

Question 16

Which of the following is an example of an investment in human capital?

Accepted Answer

A)  enrolling in a course to improve your computer skills 
B)  purchasing a computer to increase the productivity of your workers 
C)  installing a new piece of software on your computer which enables you to read documents online 
D)  accepting a job in the computer industry 
A)  enrolling in a course to improve your computer skills 
B)  purchasing a computer to increase the productivity of your workers 
C)  installing a new piece of software on your computer which enables you to read documents online 
D)  accepting a job in the computer industry

Question 17

The position of the long-run aggregate supply curve is determined by the aggregate production function and the demand and supply curves for labor.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions .
Exhibit: Production Possibilities Curves 1  
-(Exhibit: Production Possibilities Curves 1) Economic growth is represented by a movement

Accepted Answer

A)  from C to D. 
B)  from D to E. 
C)  from F to A. 
D)  from B to C. 
A)  from C to D. 
B)  from D to E. 
C)  from F to A. 
D)  from B to C.

Question 19

Which of the following statements is true?

Accepted Answer

A)  Technological gains tend to reduce the demand for labor because producers substitute technology and capital for labor. 
B)  Technological change and capital investment tend to increase real wages because labor productivity increases. 
C)  Technological change and capital investment tend to reduce the quantity of labor employed, and reduce real wages. 
D)  Technological change and capital investment tend to reduce the demand for labor and increase the supply of labor leading to an indeterminate effect on real wages. 
A)  Technological gains tend to reduce the demand for labor because producers substitute technology and capital for labor. 
B)  Technological change and capital investment tend to increase real wages because labor productivity increases. 
C)  Technological change and capital investment tend to reduce the quantity of labor employed, and reduce real wages. 
D)  Technological change and capital investment tend to reduce the demand for labor and increase the supply of labor leading to an indeterminate effect on real wages.

Question 20

The rate of economic growth per capita in Mamoogia from 20006 to 2010 was 1.8% per year, while in Kennan, over the same period it was 3.6%. In 2010, per capita real GDP was $28,900 in Mamoogia and $12,700 in Kennan. Assume the growth rates for each country remain the same. Which country will have a higher level of potential output in 2050?

Accepted Answer

A)  Kennan 
B)  Mamoogia 
C)  Their potential output will be the same. 
D)  It will depend on the rate of population growth in each country. 
A)  Kennan 
B)  Mamoogia 
C)  Their potential output will be the same. 
D)  It will depend on the rate of population growth in each country.

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

Approximately what percentage of families in the U.S. own homes?

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) The real wage is the ratio of

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

Which of the following factors contribute to economic growth?

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 real wage is the ratio of the price level to the nominal wage.

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) In Panel (c), the long-run aggregate supply curve is vertical because

Use the following to answer questions . Exhibit: Economic Growth, AD and AS Analysis -(Exhibit: Economic Growth, AD and AS Analysis) 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?

Economic growth is defined as

What is the opportunity cost of allocating more and more resources to the production of capital goods?

The model of aggregate demand and long-run aggregate supply predicts that, all other things unchanged, improved technology will

Which of the following is an example of an investment in human capital?

The position of the long-run aggregate supply curve is determined by the aggregate production function and the demand and supply curves for labor.

Use the following to answer questions . Exhibit: Production Possibilities Curves 1 -(Exhibit: Production Possibilities Curves 1) Economic growth is represented by a movement

Which of the following statements is true?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters

Exam 8: Economic Growth

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

Approximately what percentage of families in the U.S. own homes?

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) The real wage is the ratio of

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

Which of the following factors contribute to economic growth?

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 real wage is the ratio of the price level to the nominal wage.

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) In Panel (c), the long-run aggregate supply curve is vertical because

Use the following to answer questions . Exhibit: Economic Growth, AD and AS Analysis -(Exhibit: Economic Growth, AD and AS Analysis) 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?

Economic growth is defined as

What is the opportunity cost of allocating more and more resources to the production of capital goods?

The model of aggregate demand and long-run aggregate supply predicts that, all other things unchanged, improved technology will

Which of the following is an example of an investment in human capital?

The position of the long-run aggregate supply curve is determined by the aggregate production function and the demand and supply curves for labor.

Use the following to answer questions . Exhibit: Production Possibilities Curves 1 -(Exhibit: Production Possibilities Curves 1) Economic growth is represented by a movement

Which of the following statements is true?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters