Question 1

What are the basic arguments of the neoclassical growth theory?

Accepted Answer

The neoclassical growth theory explains

Question 2

A problem with the neoclassical growth theory is its

Accepted Answer

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

Question 3

An assumption of classical growth theory is that when ________ the population growth rate ________.

Accepted Answer

A)  real GDP per person exceeds the subsistence level; increases 
B)  people become more skilled; decreases 
C)  the real wage rate falls; increases 
D)  saving declines; decreases 
A)  real GDP per person exceeds the subsistence level; increases 
B)  people become more skilled; decreases 
C)  the real wage rate falls; increases 
D)  saving declines; decreases

Question 4

Which of the following will NOT work to increase the rate of economic growth?

Accepted Answer

A)  increase saving 
B)  limit competition from international trade 
C)  improve the quality of education 
D)  All of the above will work to increase the rate of economic growth. 
A)  increase saving 
B)  limit competition from international trade 
C)  improve the quality of education 
D)  All of the above will work to increase the rate of economic growth.

Question 5

-In the illustration above, which figure shows an aggregate production function?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 6

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

Question 7

-In the above figure, if the real wage is $20 per hour, a labor

Accepted Answer

A)  shortage will occur and the real wage will rise. 
B)  shortage will occur and the real wage will fall. 
C)  surplus will occur and the real wage will rise. 
D)  surplus will occur and the real wage will fall. 
A)  shortage will occur and the real wage will rise. 
B)  shortage will occur and the real wage will fall. 
C)  surplus will occur and the real wage will rise. 
D)  surplus will occur and the real wage will fall.

Question 8

The curvature of the production function shows that as employment increases, the productivity of labor

Accepted Answer

A)  remains positive and increases. 
B)  remains positive but decreases. 
C)  decreases and becomes negative. 
D)  remains constant. 
A)  remains positive and increases. 
B)  remains positive but decreases. 
C)  decreases and becomes negative. 
D)  remains constant.

Question 9

The demand for labor curve

Accepted Answer

A)  is downward sloping because productivity of labor diminishes as more workers are employed. 
B)  is upward sloping and the supply curve of labor is downward sloping. 
C)  is upward sloping because productivity of labor diminishes as more workers are employed. 
D)  shifts rightward when the real wage rate rises. 
A)  is downward sloping because productivity of labor diminishes as more workers are employed. 
B)  is upward sloping and the supply curve of labor is downward sloping. 
C)  is upward sloping because productivity of labor diminishes as more workers are employed. 
D)  shifts rightward when the real wage rate rises.

Question 10

Employment and (total) potential GDP increase if the

Accepted Answer

A)  labor supply curve shifts rightward and the labor demand curve does not shift. 
B)  labor demand curve shifts leftward more than the labor supply curve shifts rightward. 
C)  labor demand curve shifts leftward and the labor supply curve does not shift. 
D)  None of the above answers are correct. 
A)  labor supply curve shifts rightward and the labor demand curve does not shift. 
B)  labor demand curve shifts leftward more than the labor supply curve shifts rightward. 
C)  labor demand curve shifts leftward and the labor supply curve does not shift. 
D)  None of the above answers are correct.

Question 11

The growth rate of real GDP per person in the United States has

Accepted Answer

A)  averaged approximately 2 percent per year over the past century. 
B)  has consistently been 2 percent per decade over the past century. 
C)  has been the highest in the world over the past 5 decades. 
D)  has increased every year over the past century. 
A)  averaged approximately 2 percent per year over the past century. 
B)  has consistently been 2 percent per decade over the past century. 
C)  has been the highest in the world over the past 5 decades. 
D)  has increased every year over the past century.

Question 12

The growth theory that predicts perpetual economic growth is

Accepted Answer

A)  classical growth theory. 
B)  neoclassical growth theory. 
C)  the new growth theory. 
D)  real growth theory. 
A)  classical growth theory. 
B)  neoclassical growth theory. 
C)  the new growth theory. 
D)  real growth theory.

Question 13

An advance in technology that increases productivity and an increase in the working-age population results in a

Accepted Answer

A)  rightward shift of the labor supply curve. 
B)  rightward shift of the labor demand curve. 
C)  rightward shift of the labor demand curve and of the labor supply curve. 
D)  no change to the production function. 
A)  rightward shift of the labor supply curve. 
B)  rightward shift of the labor demand curve. 
C)  rightward shift of the labor demand curve and of the labor supply curve. 
D)  no change to the production function.

Question 14

Over the past four decades

Accepted Answer

A)  the growth rate of real GDP per person in the United States has been increasing. 
B)  U.S. real GDP per person has fallen below that of the other rich industrial countries. 
C)  U.S. real GDP per person has increased. 
D)  Both answers A and C are correct. 
A)  the growth rate of real GDP per person in the United States has been increasing. 
B)  U.S. real GDP per person has fallen below that of the other rich industrial countries. 
C)  U.S. real GDP per person has increased. 
D)  Both answers A and C are correct.

Question 15

A factor that turned out to be a weakness of the classical theory of growth is its

Accepted Answer

A)  emphasis on saving and investment. 
B)  assumption that the growth rate of the population increases when income increases. 
C)  reliance on constant growth in technology. 
D)  neglect of the subsistence real wage. 
A)  emphasis on saving and investment. 
B)  assumption that the growth rate of the population increases when income increases. 
C)  reliance on constant growth in technology. 
D)  neglect of the subsistence real wage.

Question 16

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

Question 17

When the population increases with no change in labor productivity, employment ________ and potential GDP ________.

Accepted Answer

A)  decreases; decreases 
B)  increases; increases 
C)  decreases; increases 
D)  increases; decreases 
A)  decreases; decreases 
B)  increases; increases 
C)  decreases; increases 
D)  increases; decreases

Question 18

Strategy to Address Dependence on Foreign Workers, Labour Market Demands The prime minister of Malaysia announced his government's "immediate focus would be to enhance skills development and improve the quality of education." By "the constant upgrading of skills of the country's workforce" he hoped to improve the country's "global competitiveness and raise average incomes of workers."
Www)thestar.com.my 11/21/2008
The long-run benefit of enhancing "skill development and improve....education" is to

Accepted Answer

A)  improve property rights. 
B)  increase labor supply. 
C)  speed economic growth. 
D)  smooth the growth of labor productivity. 
A)  improve property rights. 
B)  increase labor supply. 
C)  speed economic growth. 
D)  smooth the growth of labor productivity.

Question 19

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

Accepted Answer

A)  in 2 years 
B)  in 15 years 
C)  never 
D)  in 10 years 
A)  in 2 years 
B)  in 15 years 
C)  never 
D)  in 10 years

Question 20

A country would achieve faster growth by

Accepted Answer

A)  encouraging free trade. 
B)  increasing the cost of education. 
C)  increasing union membership. 
D)  taxing income and not consumption. 
A)  encouraging free trade. 
B)  increasing the cost of education. 
C)  increasing union membership. 
D)  taxing income and not consumption.

What are the basic arguments of the neoclassical growth theory?

A problem with the neoclassical growth theory is its

An assumption of classical growth theory is that when the population growth rate .

Which of the following will NOT work to increase the rate of economic growth?

-In the illustration above, which figure shows an aggregate production function?

-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

-In the above figure, if the real wage is $20 per hour, a labor

The curvature of the production function shows that as employment increases, the productivity of labor

The demand for labor curve

Employment and (total) potential GDP increase if the

The growth rate of real GDP per person in the United States has

The growth theory that predicts perpetual economic growth is

An advance in technology that increases productivity and an increase in the working-age population results in a

Over the past four decades

A factor that turned out to be a weakness of the classical theory of growth is its

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

When the population increases with no change in labor productivity, employment and potential GDP .

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

A country would achieve faster growth by

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 6: Economic Growth

What are the basic arguments of the neoclassical growth theory?

A problem with the neoclassical growth theory is its

An assumption of classical growth theory is that when ________ the population growth rate ________.

Which of the following will NOT work to increase the rate of economic growth?

-In the illustration above, which figure shows an aggregate production function?

-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

-In the above figure, if the real wage is $20 per hour, a labor

The curvature of the production function shows that as employment increases, the productivity of labor

The demand for labor curve

Employment and (total) potential GDP increase if the

The growth rate of real GDP per person in the United States has

The growth theory that predicts perpetual economic growth is

An advance in technology that increases productivity and an increase in the working-age population results in a

Over the past four decades

A factor that turned out to be a weakness of the classical theory of growth is its

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

When the population increases with no change in labor productivity, employment ________ and potential GDP ________.

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

A country would achieve faster growth by

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

An assumption of classical growth theory is that when the population growth rate .

When the population increases with no change in labor productivity, employment and potential GDP .