Question 1

If output per capita doubles in 24 years and the population doubles in 18 years, what is the growth rate of output?

Accepted Answer

A)  4% per year 
B)  5% per year 
C)  6% per year 
D)  7% per year 
A)  4% per year 
B)  5% per year 
C)  6% per year 
D)  7% per year

Question 2

An increase in saving, all other things unchanged,

Accepted Answer

A)  decreases the amount of resources available for investment. 
B)  increases the amount of resources that can be devoted to the purchase of capital goods. 
C)  reduces real GDP by decreasing consumption. 
D)  increases a country's present standard of living. 
A)  decreases the amount of resources available for investment. 
B)  increases the amount of resources that can be devoted to the purchase of capital goods. 
C)  reduces real GDP by decreasing consumption. 
D)  increases a country's present standard of living.

Question 3

During the industrial revolution, technological changes, capital investment, and the number of workers employed all increased. What must be true about capital and labor?

Accepted Answer

A)  They are substitute inputs in production. 
B)  They are complementary inputs in production. 
C)  They are substitute outputs in production. 
D)  They are complementary outputs in production. 
A)  They are substitute inputs in production. 
B)  They are complementary inputs in production. 
C)  They are substitute outputs in production. 
D)  They are complementary outputs in production.

Question 4

Economists define economic growth as

Accepted Answer

A)  changes in real GDP from year to year that occur as aggregate demand and short-run aggregate supply change. 
B)  an increase in the standard of living of a nation. 
C)  an increase in nominal GDP combined with price stability. 
D)  the process through which the economy's potential output is increased. 
A)  changes in real GDP from year to year that occur as aggregate demand and short-run aggregate supply change. 
B)  an increase in the standard of living of a nation. 
C)  an increase in nominal GDP combined with price stability. 
D)  the process through which the economy's potential output is increased.

Question 5

A factor critical to economic growth is

Accepted Answer

A)  increased saving rates. 
B)  increases in human consumption. 
C)  reduced dependence on imports. 
D)  technological change that increases labor productivity. 
A)  increased saving rates. 
B)  increases in human consumption. 
C)  reduced dependence on imports. 
D)  technological change that increases labor productivity.

Question 6

Suppose real GDPs in Hauck and Meran are identical at $10 trillion in 2010. Suppose Hauck's economic growth rate is 2% and Meran's is 4% and the rates remain constant over time. Calculate the percentage difference in their levels of potential output in 2046.

Accepted Answer

A)  There will be no difference in their levels of potential output. 
B)  Meran's potential output will be 50% higher than that of Hauck's. 
C)  Hauck's potential output will be 100% higher than that of Meran's. 
D)  Meran's potential output will be 100% higher than that of Hauck's. 
A)  There will be no difference in their levels of potential output. 
B)  Meran's potential output will be 50% higher than that of Hauck's. 
C)  Hauck's potential output will be 100% higher than that of Meran's. 
D)  Meran's potential output will be 100% higher than that of Hauck's.

Question 7

Use the following to answer questions .
Exhibit: Production Possibilities Curves 1  
-(Exhibit: Production Possibilities Curves 1) A movement from F to B

Accepted Answer

A)  will increase real GDP and represents economic growth. 
B)  will increase real GDP but does not represent economic growth. 
C)  implies that the country's productive ability has increased. 
D)  will not increase real GDP or potential output. 
A)  will increase real GDP and represents economic growth. 
B)  will increase real GDP but does not represent economic growth. 
C)  implies that the country's productive ability has increased. 
D)  will not increase real GDP or potential output.

Question 8

Use the following to answer questions.
Exhibit: Aggregate Production Function, Labor Market, and LRAS  
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS) If a change in technology moves the aggregate production function upward,

Accepted Answer

A)  the demand for labor will remain the same. 
B)  the demand for labor falls. 
C)  the demand for labor increases. 
D)  the demand and supply of labor will increase. 
A)  the demand for labor will remain the same. 
B)  the demand for labor falls. 
C)  the demand for labor increases. 
D)  the demand and supply of labor will increase.

Question 9

Exponential growth means the growth rate increases over time.

Accepted Answer

A) True 
 B)False

Question 10

Economic growth is best measured by the increase in

Accepted Answer

A)  nominal GDP. 
B)  potential output. 
C)  disposable personal income in current dollars. 
D)  disposable personal income in real dollars. 
A)  nominal GDP. 
B)  potential output. 
C)  disposable personal income in current dollars. 
D)  disposable personal income in real dollars.

Question 11

What is the relationship between average household income and standard of living?

Accepted Answer

A)  There is no relationship. Increasing average income says nothing about income distribution. 
B)  Rising income enables households to acquire more of the goods and services that improve their material standard of living. 
C)  Rising income tends to increase the crime rate and violence, thereby lowering a country's standard of living. 
D)  There is no relationship. Standard of living depends on productivity not household income. 
A)  There is no relationship. Increasing average income says nothing about income distribution. 
B)  Rising income enables households to acquire more of the goods and services that improve their material standard of living. 
C)  Rising income tends to increase the crime rate and violence, thereby lowering a country's standard of living. 
D)  There is no relationship. Standard of living depends on productivity not household income.

Question 12

Economic growth can be achieved through

Accepted Answer

A)  a decrease in the supply of labor. 
B)  a decrease in the labor force participation rate. 
C)  an increase in the production of capital goods. 
D)  a reduction in expenditures on research and development. 
A)  a decrease in the supply of labor. 
B)  a decrease in the labor force participation rate. 
C)  an increase in the production of capital goods. 
D)  a reduction in expenditures on research and development.

Question 13

The aggregate production function shows the ________ for given levels of labor and other factors of production.

Accepted Answer

A)  real GDP 
B)  possible combinations of two goods 
C)  marginal product of labor 
D)  potential output 
A)  real GDP 
B)  possible combinations of two goods 
C)  marginal product of labor 
D)  potential output

Question 14

For economic growth to take place, we must consume more and save less.

Accepted Answer

A) True 
 B)False

Question 15

Economic growth can be represented by

Accepted Answer

A)  an increasing equilibrium output level 
B)  a rightward shift of an economy's short-run aggregate supply curve. 
C)  a rightward shift of an economy's long-run aggregate demand curve. 
D)  a rightward shift of an economy's long-run aggregate supply curve. 
A)  an increasing equilibrium output level 
B)  a rightward shift of an economy's short-run aggregate supply curve. 
C)  a rightward shift of an economy's long-run aggregate demand curve. 
D)  a rightward shift of an economy's long-run aggregate supply curve.

Question 16

All else constant, if real GDP doubles in 12 years, its average annual growth rate is

Accepted Answer

A)  approximately 6% . 
B)  approximately 5%. 
C)  approximately 4%. 
D)  approximately 3%. 
A)  approximately 6% . 
B)  approximately 5%. 
C)  approximately 4%. 
D)  approximately 3%.

Question 17

Use the following to answer questions .
Exhibit: Production Possibilities Curves 2  
-(Exhibit: Production Possibilities Curves 2) A cyclical increase in the level of economic activity is represented 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 18

The theory of economic growth focuses on the

Accepted Answer

A)  growth of real income equality in the long run; not on the growth of real income in the short run. 
B)  growth of resources in the long run, not on the efficiency of resource use in the short run. 
C)  growth of potential output over the long run, not on fluctuations in the level of economic activity in the short run. 
D)  advancements in technology over the long run, not on short-run increases in real GDP. 
A)  growth of real income equality in the long run; not on the growth of real income in the short run. 
B)  growth of resources in the long run, not on the efficiency of resource use in the short run. 
C)  growth of potential output over the long run, not on fluctuations in the level of economic activity in the short run. 
D)  advancements in technology over the long run, not on short-run increases in real GDP.

Question 19

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?

Accepted Answer

A)  10 years 
B)  20 years 
C)  30 years 
D)  40 years 
A)  10 years 
B)  20 years 
C)  30 years 
D)  40 years

Question 20

Which of the following statements is true?

Accepted Answer

A)  Measuring economic growth as the rate of increase in actual real GDP is a valid measure. 
B)  Measuring economic growth as the rate of increase in actual real GDP leads to an inaccurate measure of economic growth. 
C)  Economic growth must be measured in nominal terms converted to real values each year. 
D)  Economic growth must be measured in real GDP terms and converted to nominal terms each year. 
A)  Measuring economic growth as the rate of increase in actual real GDP is a valid measure. 
B)  Measuring economic growth as the rate of increase in actual real GDP leads to an inaccurate measure of economic growth. 
C)  Economic growth must be measured in nominal terms converted to real values each year. 
D)  Economic growth must be measured in real GDP terms and converted to nominal terms each year.

If output per capita doubles in 24 years and the population doubles in 18 years, what is the growth rate of output?

An increase in saving, all other things unchanged,

During the industrial revolution, technological changes, capital investment, and the number of workers employed all increased. What must be true about capital and labor?

Economists define economic growth as

A factor critical to economic growth is

Suppose real GDPs in Hauck and Meran are identical at $10 trillion in 2010. Suppose Hauck's economic growth rate is 2% and Meran's is 4% and the rates remain constant over time. Calculate the percentage difference in their levels of potential output in 2046.

Use the following to answer questions . Exhibit: Production Possibilities Curves 1 -(Exhibit: Production Possibilities Curves 1) A movement from F to B

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) If a change in technology moves the aggregate production function upward,

Exponential growth means the growth rate increases over time.

Economic growth is best measured by the increase in

What is the relationship between average household income and standard of living?

Economic growth can be achieved through

The aggregate production function shows the ________ for given levels of labor and other factors of production.

For economic growth to take place, we must consume more and save less.

Economic growth can be represented by

All else constant, if real GDP doubles in 12 years, its average annual growth rate is

Use the following to answer questions . Exhibit: Production Possibilities Curves 2 -(Exhibit: Production Possibilities Curves 2) A cyclical increase in the level of economic activity is represented by a

The theory of economic growth focuses on the

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

If output per capita doubles in 24 years and the population doubles in 18 years, what is the growth rate of output?

An increase in saving, all other things unchanged,

During the industrial revolution, technological changes, capital investment, and the number of workers employed all increased. What must be true about capital and labor?

Economists define economic growth as

A factor critical to economic growth is

Suppose real GDPs in Hauck and Meran are identical at $10 trillion in 2010. Suppose Hauck's economic growth rate is 2% and Meran's is 4% and the rates remain constant over time. Calculate the percentage difference in their levels of potential output in 2046.

Use the following to answer questions . Exhibit: Production Possibilities Curves 1 -(Exhibit: Production Possibilities Curves 1) A movement from F to B

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) If a change in technology moves the aggregate production function upward,

Exponential growth means the growth rate increases over time.

Economic growth is best measured by the increase in

What is the relationship between average household income and standard of living?

Economic growth can be achieved through

The aggregate production function shows the ________ for given levels of labor and other factors of production.

For economic growth to take place, we must consume more and save less.

Economic growth can be represented by

All else constant, if real GDP doubles in 12 years, its average annual growth rate is

Use the following to answer questions . Exhibit: Production Possibilities Curves 2 -(Exhibit: Production Possibilities Curves 2) A cyclical increase in the level of economic activity is represented by a

The theory of economic growth focuses on the

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