Question 1

Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded

Accepted Answer

A)  does not change because there is no change in the money wage rate. 
B)  increases. 
C)  increases only if the price level also decreases. 
D)  decreases. 
A)  does not change because there is no change in the money wage rate. 
B)  increases. 
C)  increases only if the price level also decreases. 
D)  decreases.

Question 2

A problem with the neoclassical growth theory is its

Accepted Answer

A)  comparison of the economy to a perpetual motion machine. 
B)  prediction that population growth raises the real wage rate. 
C)  inability to explain persistent differences between countriesʹ GDP growth rates. 
D)  prediction that population growth lowers the real wage rate. 
A)  comparison of the economy to a perpetual motion machine. 
B)  prediction that population growth raises the real wage rate. 
C)  inability to explain persistent differences between countriesʹ GDP growth rates. 
D)  prediction that population growth lowers the real wage rate.

Question 3

The relationship between education and economic growth can best be summarized by saying that

Accepted Answer

A)  educational expenditures tend to divert funds from productive investments, which discourages economic growth. 
B)  educational expenditures tend to be inflationary, which discourages economic growth. 
C)  education has benefits beyond those who receive the education, which encourages economic growth. 
D)  educated people are less apt to consume goods that deplete economic resources, which encourages economic growth. 
A)  educational expenditures tend to divert funds from productive investments, which discourages economic growth. 
B)  educational expenditures tend to be inflationary, which discourages economic growth. 
C)  education has benefits beyond those who receive the education, which encourages economic growth. 
D)  educated people are less apt to consume goods that deplete economic resources, which encourages economic growth.

Question 4

Convergence of the income gap has been most dramatic between

Accepted Answer

A)  the Central European countries and the United States. 
B)  Africa and the United States. 
C)  South America and the United States. 
D)  Hong Kong and the United States. 
A)  the Central European countries and the United States. 
B)  Africa and the United States. 
C)  South America and the United States. 
D)  Hong Kong and the United States.

Question 5

Which of the following statements regarding U.S. economic growth is NOT correct?

Accepted Answer

A)  The growth rate of real GDP per person accelerated between 1973 to 1984. 
B)  The average annual growth rate of real GDP per person in the United States was rapid during World War II. 
C)  Over the past 100 years, on the average real GDP per person grew 2 percent a year. 
D)  In the 1930s, real GDP fell well below its trend. 
A)  The growth rate of real GDP per person accelerated between 1973 to 1984. 
B)  The average annual growth rate of real GDP per person in the United States was rapid during World War II. 
C)  Over the past 100 years, on the average real GDP per person grew 2 percent a year. 
D)  In the 1930s, real GDP fell well below its trend.

Question 6

Which of the following ideas apply to the neoclassical growth theory?
I. Technological change results from chance.
II. Growth in real GDP stops if technology stops advancing.

Accepted Answer

A)  both I and II 
B)  neither I nor II 
C)  II only 
D)  I only 
A)  both I and II 
B)  neither I nor II 
C)  II only 
D)  I only

Question 7

Which of the following policy actions could speed productivity growth?
I. Tax incentives to encourage saving.
II. Encouraging international trade.
III. Directing public funds toward financing basic research.

Accepted Answer

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

Question 8

If the price level increases, but workersʹ money wage rates remain constant,which of the following is TRUE?
I. The quantity of labor demanded will increase.
II. The real wage rate will decrease.
III. The demand for labor curve shifts rightward.

Accepted Answer

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

Question 9

Which of the following statements is correct?

Accepted Answer

A)  When human capital increases, the demand for labor curve shifts leftward. 
B)  When workers become more productive, the demand for labor curve shifts rightward. 
C)  When technology decreases, the supply of labor curve shifts leftward. 
D)  When labor force participation increases, the supply of labor curve shifts leftward. 
A)  When human capital increases, the demand for labor curve shifts leftward. 
B)  When workers become more productive, the demand for labor curve shifts rightward. 
C)  When technology decreases, the supply of labor curve shifts leftward. 
D)  When labor force participation increases, the supply of labor curve shifts leftward.

Question 10

What are the basic arguments of the classical growth theory?

Accepted Answer

The classical growth theory originated d

Question 11

What best explains why real GDP per person is always driven to the subsistence level in the classical model?

Accepted Answer

A)  Population growth occurs, increasing the supply of labor. 
B)  Growth is not possible so the demand for labor never changes. 
C)  Investment in capital decreases labor demand, decreasing the demand for labor. 
D)  Population growth occurs, shifting the labor supply curve leftward. 
A)  Population growth occurs, increasing the supply of labor. 
B)  Growth is not possible so the demand for labor never changes. 
C)  Investment in capital decreases labor demand, decreasing the demand for labor. 
D)  Population growth occurs, shifting the labor supply curve leftward.

Question 12

Factors that influence labor productivity include ___________.

Accepted Answer

A)  the labor demand curve 
B)  physical capital, human capital, and technology 
C)  physical capital, the real wage rate, and technology 
D)  the inflation rate, the real wage rate, and the exchange rate 
A)  the labor demand curve 
B)  physical capital, human capital, and technology 
C)  physical capital, the real wage rate, and technology 
D)  the inflation rate, the real wage rate, and the exchange rate

Question 13

Neoclassical growth theory proposes that

Accepted Answer

A)  discoveries result from choices that increase profits. 
B)  real GDP per person grows because technological change increases profit opportunities. 
C)  technological progress increases the population growth rate and drives down real wages. 
D)  real GDP growth is caused by growth in the population. 
A)  discoveries result from choices that increase profits. 
B)  real GDP per person grows because technological change increases profit opportunities. 
C)  technological progress increases the population growth rate and drives down real wages. 
D)  real GDP growth is caused by growth in the population.

Question 14

Over the past 100 years, real GDP per person in the United States has grown at an average of ____________percent a year.

Accepted Answer

A)  4 
B)  1 
C)  2 
D)  3 
A)  4 
B)  1 
C)  2 
D)  3

Question 15

Which of the following is associated with classical growth theory?
I. Growth in real GDP can continue indefinitely.
II. Technological growth increases as the population grows.
III. Population explosions bring real GDP per person back to subsistence levels.

Accepted Answer

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

Question 16

Use the table below to answer this question. The data show national savings rates as a percentage of GDP; the growth rate of real GDP per person; and birth rates in 2006.
$$\begin{array} { | l | c | l | l | } 
\hline \text { Country } & \begin{array} { c } 
\text { National Saving } \
\text { (\% of GDP) }
\end{array} & \begin{array} { l } 
\text { Growth rate of } \
\text { real GDP per } \
\text { person }
\end{array} & \text { Birth Rate } \
\hline \text { Japan } & 28 & 1.6 & 9.96 \
\hline \text { Canada } & 24 & 2.6 & 11.4 \
\hline \text { Germany } & 23 & 1.9 & 9.35 \
\hline \text { U.S. } & 14 & 1.9 & 14.2 \
\hline
\end{array}$$
If the data support the neoclassical growth theory, we would expect to see

Accepted Answer

A)  the United States with the highest economic growth rate because it has the highest birth rate. 
B)  the United States with the highest economic growth rate because a lower savings rate means more income is spent on consumption. 
C)  Canada with the highest economic growth rate because it has the highest real GDP per person. 
D)  Japan with the highest economic growth rate because the high saving means that more capital is accumulated. 
A)  the United States with the highest economic growth rate because it has the highest birth rate. 
B)  the United States with the highest economic growth rate because a lower savings rate means more income is spent on consumption. 
C)  Canada with the highest economic growth rate because it has the highest real GDP per person. 
D)  Japan with the highest economic growth rate because the high saving means that more capital is accumulated.

Question 17

How does the new growth theory explain economic growth?

Accepted Answer

The new growth theory explains growth as

Question 18

Classical growth theory asserts that

Accepted Answer

A)  an increase in the labor supply raises real wage rates. 
B)  real wage rates fall over time and, as they fall, they increase the population growth rate. 
C)  the economy can grow indefinitely. 
D)  population growth is determined by the level of real GDP per person. 
A)  an increase in the labor supply raises real wage rates. 
B)  real wage rates fall over time and, as they fall, they increase the population growth rate. 
C)  the economy can grow indefinitely. 
D)  population growth is determined by the level of real GDP per person.

Question 19

-In the above figure, the equilibrium level of labor is

Accepted Answer

A)  150 billion hours. 
B)  200 billion hours. 
C)  100 billion hours. 
D)  none of the above 
A)  150 billion hours. 
B)  200 billion hours. 
C)  100 billion hours. 
D)  none of the above

Question 20

A decrease in population shifts the

Accepted Answer

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

Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded

A problem with the neoclassical growth theory is its

The relationship between education and economic growth can best be summarized by saying that

Convergence of the income gap has been most dramatic between

Which of the following statements regarding U.S. economic growth is NOT correct?

Which of the following ideas apply to the neoclassical growth theory? I. Technological change results from chance. II. Growth in real GDP stops if technology stops advancing.

Which of the following policy actions could speed productivity growth? I. Tax incentives to encourage saving. II. Encouraging international trade. III. Directing public funds toward financing basic research.

If the price level increases, but workersʹ money wage rates remain constant,which of the following is TRUE? I. The quantity of labor demanded will increase. II. The real wage rate will decrease. III. The demand for labor curve shifts rightward.

Which of the following statements is correct?

What are the basic arguments of the classical growth theory?

What best explains why real GDP per person is always driven to the subsistence level in the classical model?

Factors that influence labor productivity include ___________.

Neoclassical growth theory proposes that

Over the past 100 years, real GDP per person in the United States has grown at an average of ____________percent a year.

Which of the following is associated with classical growth theory? I. Growth in real GDP can continue indefinitely. II. Technological growth increases as the population grows. III. Population explosions bring real GDP per person back to subsistence levels.

How does the new growth theory explain economic growth?

Classical growth theory asserts that

-In the above figure, the equilibrium level of labor is

A decrease in population shifts the

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

Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded

A problem with the neoclassical growth theory is its

The relationship between education and economic growth can best be summarized by saying that

Convergence of the income gap has been most dramatic between

Which of the following statements regarding U.S. economic growth is NOT correct?

Which of the following ideas apply to the neoclassical growth theory? I. Technological change results from chance. II. Growth in real GDP stops if technology stops advancing.

Which of the following policy actions could speed productivity growth? I. Tax incentives to encourage saving. II. Encouraging international trade. III. Directing public funds toward financing basic research.

If the price level increases, but workersʹ money wage rates remain constant,which of the following is TRUE? I. The quantity of labor demanded will increase. II. The real wage rate will decrease. III. The demand for labor curve shifts rightward.

Which of the following statements is correct?

What are the basic arguments of the classical growth theory?

What best explains why real GDP per person is always driven to the subsistence level in the classical model?

Factors that influence labor productivity include ___________.

Neoclassical growth theory proposes that

Over the past 100 years, real GDP per person in the United States has grown at an average of ____________percent a year.

Which of the following is associated with classical growth theory? I. Growth in real GDP can continue indefinitely. II. Technological growth increases as the population grows. III. Population explosions bring real GDP per person back to subsistence levels.

How does the new growth theory explain economic growth?

Classical growth theory asserts that

-In the above figure, the equilibrium level of labor is

A decrease in population shifts the

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