Question 1

Classical growth theory asserts that

Accepted Answer

A)  only some countries can have economic growth. 
B)  growth in real GDP per person is temporary. 
C)  real GDP growth will eventually be a constant 3 percent per year. 
D)  nominal GDP growth is most important. 
A)  only some countries can have economic growth. 
B)  growth in real GDP per person is temporary. 
C)  real GDP growth will eventually be a constant 3 percent per year. 
D)  nominal GDP growth is most important.

Question 2

What happens to the real wage rate and potential GDP if population increases?

Accepted Answer

An increase in population increases the

Question 3

An increase in education and training

Accepted Answer

A)  decreases real GDP growth. 
B)  increases labor productivity. 
C)  increases aggregate hours. 
D)  increases the employment-to-population ratio. 
A)  decreases real GDP growth. 
B)  increases labor productivity. 
C)  increases aggregate hours. 
D)  increases the employment-to-population ratio.

Question 4

The aggregate production function shows that an economy increases its real GDP in the short run by

Accepted Answer

A)  using more labor. 
B)  increasing its physical capital stock. 
C)  developing new technologies. 
D)  exploring for new deposits of natural resources. 
A)  using more labor. 
B)  increasing its physical capital stock. 
C)  developing new technologies. 
D)  exploring for new deposits of natural resources.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  When the real wage increases, the labor supply curve shifts leftward. 
B)  When the real wage decreases, the labor supply curve shifts leftward. 
C)  When the real wage increases, the labor supply curve shifts rightward. 
D)  None of the above statements are correct. 
A)  When the real wage increases, the labor supply curve shifts leftward. 
B)  When the real wage decreases, the labor supply curve shifts leftward. 
C)  When the real wage increases, the labor supply curve shifts rightward. 
D)  None of the above statements are correct.

Question 6

Real GDP equals $12 trillion and aggregate hours equals 300 billion hours. What does labor productivity equal?

Accepted Answer

Labor productivity is real GDP

Question 7

If the price level rises faster than the money wage rate, the real wage rate falls.

Accepted Answer

A) True 
 B)False

Question 8

-In the figure, when the real wage rate is $10 an hour, ___________.

Accepted Answer

A)  a shortage of labor exists and the real wage rate will rise 
B)  the demand for labor will decrease 
C)  the demand for labor will increase 
D)  a surplus of labor exists and the real wage rate will fall 
A)  a shortage of labor exists and the real wage rate will rise 
B)  the demand for labor will decrease 
C)  the demand for labor will increase 
D)  a surplus of labor exists and the real wage rate will fall

Question 9

The demand for labor curve is

Accepted Answer

A)  upward sloping because firms demand labor. 
B)  downward sloping. 
C)  vertical at potential GDP. 
D)  upward sloping at potential GDP and downward sloping elsewhere. 
A)  upward sloping because firms demand labor. 
B)  downward sloping. 
C)  vertical at potential GDP. 
D)  upward sloping at potential GDP and downward sloping elsewhere.

Question 10

If the demand for labor increases
I. employment increases.
II. the real wage rate increases.

Accepted Answer

A)  Only II is correct. 
B)  Only I is correct. 
C)  Both I and II are correct. 
D)  Neither I nor II is correct. 
A)  Only II is correct. 
B)  Only I is correct. 
C)  Both I and II are correct. 
D)  Neither I nor II is correct.

Question 11

An advance in technology will

Accepted Answer

A)  shift the production function downward. 
B)  not shift the production function but will lead to a movement up along the production function. 
C)  shift the production function upward. 
D)  not shift the production function but will lead to a movement down along the production function. 
A)  shift the production function downward. 
B)  not shift the production function but will lead to a movement up along the production function. 
C)  shift the production function upward. 
D)  not shift the production function but will lead to a movement down along the production function.

Question 12

Full employment corresponds to

Accepted Answer

A)  equilibrium in the labor market, and real GDP exceeding potential GDP. 
B)  equilibrium in the labor market, with real GDP being equal to potential GDP. 
C)  being at the point where the marginal product of labor equals zero. 
D)  labor demand being greater than labor supply and real GDP being equal to potential GDP. 
A)  equilibrium in the labor market, and real GDP exceeding potential GDP. 
B)  equilibrium in the labor market, with real GDP being equal to potential GDP. 
C)  being at the point where the marginal product of labor equals zero. 
D)  labor demand being greater than labor supply and real GDP being equal to potential GDP.

Question 13

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

Accepted Answer

A)  increases to $50 trillion 
B)  decreases to $3 trillion 
C)  increases to $18 trillion 
D)  does not change 
A)  increases to $50 trillion 
B)  decreases to $3 trillion 
C)  increases to $18 trillion 
D)  does not change

Question 14

A movement along the aggregate production function is the result of a change in

Accepted Answer

A)  technology 
B)  capital 
C)  the quantity of labor 
D)  interest rates 
A)  technology 
B)  capital 
C)  the quantity of labor 
D)  interest rates

Question 15

The neoclassical growth theory concluded that economic growth is temporary because of a population explosion that occurs as a result of economic growth.

Accepted Answer

A) True 
 B)False

Question 16

If real GDP is $13,000 billion and aggregate hours are 270 billion, labor productivity equals

Accepted Answer

A)  $45 per hour. 
B)  $48 per hour. 
C)  $6.50 per hour. 
D)  $650 per hour. 
A)  $45 per hour. 
B)  $48 per hour. 
C)  $6.50 per hour. 
D)  $650 per hour.

Question 17

Labor growth depends mainly on and labor productivity growth depends on .

Accepted Answer

A)  growth in real GDP per person; technological advances 
B)  population growth; technological advances 
C)  population growth; increases in real GDP 
D)  growth in real GDP per person; growth rate of capital 
A)  growth in real GDP per person; technological advances 
B)  population growth; technological advances 
C)  population growth; increases in real GDP 
D)  growth in real GDP per person; growth rate of capital

Question 18

Hu Tells Leaders China Growth Will Help World Economy
Chinese President Hu Jintao told world leaders that his country ʺhas taken an active part in the international cooperation to deal with the financial crisisʹʹ by providing a ʺ$586 billion economic stimulus, focused on building low-rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit from more subsidies.ʺ
Hu stated that ʺChina is in itself an important contribution to international financial stability and world economic growth.ʹ
Which of the following will occur if Chinaʹs spending generates economic growth in real GDP per person?
i. There will be an upward shift in Chinaʹs aggregate production function.
ii. There will be a rightward shift in Chinaʹs labor demand curve.
iii. There will be an increase in the real wage.

Accepted Answer

A)  i, ii and iii. 
B)  ii and iii only. 
C)  i and ii only. 
D)  i and iii only. 
A)  i, ii and iii. 
B)  ii and iii only. 
C)  i and ii only. 
D)  i and iii only.

Question 19

The real wage rate measures the

Accepted Answer

A)  dollar value of an hour of work. 
B)  average weekly earnings in dollars of a worker. 
C)  dollar value of what a worker could earn in another job. 
D)  quantity of goods and services that an hour of work will buy. 
A)  dollar value of an hour of work. 
B)  average weekly earnings in dollars of a worker. 
C)  dollar value of what a worker could earn in another job. 
D)  quantity of goods and services that an hour of work will buy.

Question 20

As labor increases, there is a

Accepted Answer

A)  movement along the aggregate production function and real GDP will decrease less with each additional increase in labor. 
B)  movement along the aggregate production function, but no shift in it. 
C)  movement along the aggregate production function and real GDP will increase less with each additional increase in labor. 
D)  shift of the aggregate production function, but no movement along it. 
A)  movement along the aggregate production function and real GDP will decrease less with each additional increase in labor. 
B)  movement along the aggregate production function, but no shift in it. 
C)  movement along the aggregate production function and real GDP will increase less with each additional increase in labor. 
D)  shift of the aggregate production function, but no movement along it.

Classical growth theory asserts that

What happens to the real wage rate and potential GDP if population increases?

An increase in education and training

The aggregate production function shows that an economy increases its real GDP in the short run by

Which of the following statements is correct?

Real GDP equals $12 trillion and aggregate hours equals 300 billion hours. What does labor productivity equal?

If the price level rises faster than the money wage rate, the real wage rate falls.

-In the figure, when the real wage rate is $10 an hour, ___________.

The demand for labor curve is

If the demand for labor increases I. employment increases. II. the real wage rate increases.

An advance in technology will

Full employment corresponds to

A movement along the aggregate production function is the result of a change in

The neoclassical growth theory concluded that economic growth is temporary because of a population explosion that occurs as a result of economic growth.

If real GDP is $13,000 billion and aggregate hours are 270 billion, labor productivity equals

Labor growth depends mainly on and labor productivity growth depends on .

The real wage rate measures the

As labor increases, there is a

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

Classical growth theory asserts that

What happens to the real wage rate and potential GDP if population increases?

An increase in education and training

The aggregate production function shows that an economy increases its real GDP in the short run by

Which of the following statements is correct?

Real GDP equals $12 trillion and aggregate hours equals 300 billion hours. What does labor productivity equal?

If the price level rises faster than the money wage rate, the real wage rate falls.

-In the figure, when the real wage rate is $10 an hour, ___________.

The demand for labor curve is

If the demand for labor increases I. employment increases. II. the real wage rate increases.

An advance in technology will

Full employment corresponds to

A movement along the aggregate production function is the result of a change in

The neoclassical growth theory concluded that economic growth is temporary because of a population explosion that occurs as a result of economic growth.

If real GDP is $13,000 billion and aggregate hours are 270 billion, labor productivity equals

Labor growth depends mainly on and labor productivity growth depends on .

The real wage rate measures the

As labor increases, there is a

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