Question 1

An important foundation of the new growth theory is that

Accepted Answer

A)  the growth rate of the capital stock is more important than the growth rate of new knowledge in generating economic growth. 
B)  we will get more technological advances the greater the rewards people receive from making technological advances. 
C)  improvements in labor productivity are poor measures of technological growth. 
D)  we will get more technological advances the more the government is involved in deciding which technology to pursue. 
A)  the growth rate of the capital stock is more important than the growth rate of new knowledge in generating economic growth. 
B)  we will get more technological advances the greater the rewards people receive from making technological advances. 
C)  improvements in labor productivity are poor measures of technological growth. 
D)  we will get more technological advances the more the government is involved in deciding which technology to pursue.

Question 2

New growth theory predicts that

Accepted Answer

A)  government policies can do nothing to foster increased growth. 
B)  economic growth is only temporary. 
C)  economic growth is eroded by changes in taxes. 
D)  economic growth can last indefinitely. 
A)  government policies can do nothing to foster increased growth. 
B)  economic growth is only temporary. 
C)  economic growth is eroded by changes in taxes. 
D)  economic growth can last indefinitely.

Question 3

People base their labor supply on the_________ because they care about ________.

Accepted Answer

A)  real wage; what their earnings will buy 
B)  money wage; a surplus of labor 
C)  money wage; the amount of labor firms demand 
D)  real wage; the equality of money wages and the price level 
A)  real wage; what their earnings will buy 
B)  money wage; a surplus of labor 
C)  money wage; the amount of labor firms demand 
D)  real wage; the equality of money wages and the price level

Question 4

If the price level rises by 4 percent and workersʹ money wage rates increase by 2 percent, then the

Accepted Answer

A)  quantity of labor supplied increases. 
B)  quantity of labor supplied does not change because there is no change in the real wage rate. 
C)  quantity of labor supplied decreases. 
D)  the supply curve of labor shifts rightward. 
A)  quantity of labor supplied increases. 
B)  quantity of labor supplied does not change because there is no change in the real wage rate. 
C)  quantity of labor supplied decreases. 
D)  the supply curve of labor shifts rightward.

Question 5

New growth theory

Accepted Answer

A)  concludes that economic growth is temporary. 
B)  dates from the 18th century. 
C)  states that economic growth arises from peopleʹs choices. 
D)  asserts that population growth is the source of economic growth. 
A)  concludes that economic growth is temporary. 
B)  dates from the 18th century. 
C)  states that economic growth arises from peopleʹs choices. 
D)  asserts that population growth is the source of economic growth.

Question 6

Which of the following is NOT associated with the new growth theory?

Accepted Answer

A)  research 
B)  natural resources 
C)  innovation 
D)  technology 
A)  research 
B)  natural resources 
C)  innovation 
D)  technology

Question 7

$$\begin{array} { | l | c | c | } 
\hline \begin{array} { c } 
\text { Real wage rate } \
\text { (2005 dollars } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { demanded (billions } \
\text { of hours peryear) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { supplied (billions } \
\text { of hours per year) }
\end{array} \
\hline 15 & 70 & 10 \
\hline 20 & 60 & 20 \
\hline 25 & 50 & 30 \
\hline 30 & 40 & 40 \
\hline 35 & 30 & 50 \
\hline
\end{array}$$ 
 $\begin{array}{|c|c|}
\hline\text { Real GDF } & \text { Quantity of labor } \
\text { (trillions of 2005 } & \text { (billions of hours } \
\text { dollars per year) } & \text { per year) } \
\hline 3 & 20 \
\hline 9 & 30 \
\hline 14 & 40 \
\hline 18 & 50 \
\hline 21 & 60 \
\hline
\end{array}$
-The tables above show the labor market and the production function schedule for the country of Pickett. Potential GDP is ____________

Accepted Answer

A)  $6 trillion 
B)  $25 trillion 
C)  $14 trillion 
D)  $40 trillion 
A)  $6 trillion 
B)  $25 trillion 
C)  $14 trillion 
D)  $40 trillion

Question 8

An advance in technology increases the productivity of labor. As a result, the nationʹs production function shifts __________and the__________ labor curve shifts rightward.

Accepted Answer

A)  upward; supply of 
B)  downward; supply of 
C)  upward; demand for 
D)  downward; demand for 
A)  upward; supply of 
B)  downward; supply of 
C)  upward; demand for 
D)  downward; demand for

Question 9

An advance in technology shifts the production function upward and shifts the labor

Accepted Answer

A)  demand curve leftward. 
B)  supply curve rightward. 
C)  supply curve leftward. 
D)  demand curve rightward. 
A)  demand curve leftward. 
B)  supply curve rightward. 
C)  supply curve leftward. 
D)  demand curve rightward.

Question 10

How will an increase in physical capital affect labor productivity, labor demand, and potential GDP?

Accepted Answer

An increase in capital increases labor p

Question 11

Which growth theory predicts perpetual growth?

Accepted Answer

A)  classical growth theory 
B)  new growth theory 
C)  neoclassical growth theory 
D)  None of the above answers is correct. 
A)  classical growth theory 
B)  new growth theory 
C)  neoclassical growth theory 
D)  None of the above answers is correct.

Question 12

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

Accepted Answer

A)  $104 per hour. 
B)  $6.75 per hour. 
C)  $123 per hour. 
D)  $675 per hour. 
A)  $104 per hour. 
B)  $6.75 per hour. 
C)  $123 per hour. 
D)  $675 per hour.

Question 13

Saving and investment that increase a nationʹs capital lead to

Accepted Answer

A)  a decrease in the amount of capital per worker. 
B)  slower growth because there is a lack of consumption. 
C)  an increase in labor productivity. 
D)  a decrease in labor productivity as capital is used to replace labor. 
A)  a decrease in the amount of capital per worker. 
B)  slower growth because there is a lack of consumption. 
C)  an increase in labor productivity. 
D)  a decrease in labor productivity as capital is used to replace labor.

Question 14

Explain how the labor market and the production function determine potential GDP.

Accepted Answer

The labor market determines the equilibr

Question 15

If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded,

Accepted Answer

A)  the real wage rate will rise to restore equilibrium. 
B)  there is a shortage of labor. 
C)  the real wage rate is greater than the equilibrium real wage rate. 
D)  None of the above answers is correct. 
A)  the real wage rate will rise to restore equilibrium. 
B)  there is a shortage of labor. 
C)  the real wage rate is greater than the equilibrium real wage rate. 
D)  None of the above answers is correct.

Question 16

In 2010, of the following _____________which nations had the highest level of real GDP per person?

Accepted Answer

A)  Canada. 
B)  Europe Big 4. 
C)  Japan. 
D)  China. 
A)  Canada. 
B)  Europe Big 4. 
C)  Japan. 
D)  China.

Question 17

Economic growth tends to be higher in a country that

Accepted Answer

A)  has an economy open to international trade. 
B)  does not grant patents to inventors. 
C)  has an undeveloped system of property rights. 
D)  has a low savings rate. 
A)  has an economy open to international trade. 
B)  does not grant patents to inventors. 
C)  has an undeveloped system of property rights. 
D)  has a low savings rate.

Question 18

Real GDP per person is slowly converging around the world.

Accepted Answer

A) True 
 B)False

Question 19

Suppose a nationʹs population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?

Accepted Answer

A)  10 percent per year 
B)  2 percent per year 
C)  5 
D)  3 percent per year 
A)  10 percent per year 
B)  2 percent per year 
C)  5 
D)  3 percent per year

Question 20

A higher savings rate that leads to an increase in the capital stock

Accepted Answer

A)  leads to higher interest rates. 
B)  is associated with a decrease in the rate of growth of the population. 
C)  leads to increases in labor productivity. 
D)  immediately decreases investment. 
A)  leads to higher interest rates. 
B)  is associated with a decrease in the rate of growth of the population. 
C)  leads to increases in labor productivity. 
D)  immediately decreases investment.

An important foundation of the new growth theory is that

New growth theory predicts that

People base their labor supply on the_ because they care about .

If the price level rises by 4 percent and workersʹ money wage rates increase by 2 percent, then the

New growth theory

Which of the following is NOT associated with the new growth theory?

An advance in technology increases the productivity of labor. As a result, the nationʹs production function shifts and the labor curve shifts rightward.

An advance in technology shifts the production function upward and shifts the labor

How will an increase in physical capital affect labor productivity, labor demand, and potential GDP?

Which growth theory predicts perpetual growth?

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

Saving and investment that increase a nationʹs capital lead to

Explain how the labor market and the production function determine potential GDP.

If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded,

In 2010, of the following _____________which nations had the highest level of real GDP per person?

Economic growth tends to be higher in a country that

Real GDP per person is slowly converging around the world.

Suppose a nationʹs population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?

A higher savings rate that leads to an increase in the capital stock

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 6: Economic Growth

An important foundation of the new growth theory is that

New growth theory predicts that

People base their labor supply on the_________ because they care about ________.

If the price level rises by 4 percent and workersʹ money wage rates increase by 2 percent, then the

New growth theory

Which of the following is NOT associated with the new growth theory?

An advance in technology increases the productivity of labor. As a result, the nationʹs production function shifts __________and the__________ labor curve shifts rightward.

An advance in technology shifts the production function upward and shifts the labor

How will an increase in physical capital affect labor productivity, labor demand, and potential GDP?

Which growth theory predicts perpetual growth?

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

Saving and investment that increase a nationʹs capital lead to

Explain how the labor market and the production function determine potential GDP.

If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded,

In 2010, of the following _____________which nations had the highest level of real GDP per person?

Economic growth tends to be higher in a country that

Real GDP per person is slowly converging around the world.

Suppose a nationʹs population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?

A higher savings rate that leads to an increase in the capital stock

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

People base their labor supply on the_ because they care about .

An advance in technology increases the productivity of labor. As a result, the nationʹs production function shifts and the labor curve shifts rightward.