Question 1

Which growth theory predicts perpetual growth?

Accepted Answer

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

Question 2

Neoclassical growth theory

Accepted Answer

A)  predicts that growth rates and incomes per person throughout the world will converge. 
B)  predicts that the faster growing underdeveloped nations will overtake and then surpass the industrial nations. 
C)  predicts that nations that enjoy a technological advantage will maintain that advantage. 
D)  makes no predictions about the relative growth or incomes among countries. 
A)  predicts that growth rates and incomes per person throughout the world will converge. 
B)  predicts that the faster growing underdeveloped nations will overtake and then surpass the industrial nations. 
C)  predicts that nations that enjoy a technological advantage will maintain that advantage. 
D)  makes no predictions about the relative growth or incomes among countries.

Question 3

If the price level increases and workers' money wage rates remain constant,which of the following will occur?
I. The quantity of labor supplied will decrease.
II. The real wage rate will decrease.
III. The labor supply curve will shift rightward.

Accepted Answer

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

Question 4

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

Question 5

What is the main shortcoming of the neoclassical growth model and how does the new growth theory address this shortcoming?

Accepted Answer

One difficulty with the neoclassical mod

Question 6

Dividing the value of real GDP by aggregate labor hours gives

Accepted Answer

A)  the net domestic product. 
B)  labor productivity. 
C)  the size of the labor force. 
D)  the rate of capital accumulation. 
A)  the net domestic product. 
B)  labor productivity. 
C)  the size of the labor force. 
D)  the rate of capital accumulation.

Question 7

If the price level rises by 3 percent and workers' money wage rate increase by 1 percent, then the

Accepted Answer

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

Question 8

One policy that would increase the saving rate would be

Accepted Answer

A)  raising taxes on the returns to saving. 
B)  raising taxes on the returns to investment. 
C)  taxing consumption. 
D)  raising taxes on saving. 
A)  raising taxes on the returns to saving. 
B)  raising taxes on the returns to investment. 
C)  taxing consumption. 
D)  raising taxes on saving.

Question 9

In 2016, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2017, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2017 was

Accepted Answer

A)  $1,545. 
B)  $380. 
C)  $1,413. 
D)  $132. 
A)  $1,545. 
B)  $380. 
C)  $1,413. 
D)  $132.

Question 10

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

Accepted Answer

A)  14 
B)  7 
C)  4 
D)  30 
A)  14 
B)  7 
C)  4 
D)  30

Question 11

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012?

Accepted Answer

A)  0.38 percent 
B)  9.0 percent 
C)  3.8 percent 
D)  8.3 percent 
A)  0.38 percent 
B)  9.0 percent 
C)  3.8 percent 
D)  8.3 percent

Question 12

A key assumption of new growth theory is that

Accepted Answer

A)  all technological change is the result of luck. 
B)  higher incomes lead to a higher birth rate. 
C)  a successful innovator has the opportunity to earn a temporary, above-average profit. 
D)  the population growth rate is lower than the real interest rate. 
A)  all technological change is the result of luck. 
B)  higher incomes lead to a higher birth rate. 
C)  a successful innovator has the opportunity to earn a temporary, above-average profit. 
D)  the population growth rate is lower than the real interest rate.

Question 13

The quantity of labor supplied depends on the

Accepted Answer

A)  money wage rate not the real wage rate. 
B)  real wage rate not the money wage rate. 
C)  price of output not the money wage rate nor the real wage rate. 
D)  level of profits. 
A)  money wage rate not the real wage rate. 
B)  real wage rate not the money wage rate. 
C)  price of output not the money wage rate nor the real wage rate. 
D)  level of profits.

Question 14

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

Accepted Answer

A)  capital input and real GDP 
B)  labor input and real GDP 
C)  labor input, capital input and real GDP 
D)  technology and real GDP 
A)  capital input and real GDP 
B)  labor input and real GDP 
C)  labor input, capital input and real GDP 
D)  technology and real GDP

Question 15

An advance in technology will

Accepted Answer

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

Question 16

"Global Innovation 1000-Money Isn't Everything." The report by Booz Allen Hamilton Consulting claims that "There is no direct relationship between R&D spending and significant measures of corporate success such as growth, profitability, and shareholder return. ...However, the pace of corporate R&D spending continues to accelerate, as many executives continue to believe that enhanced innovation is required to fuel their future growth.
Www)boozallen.com 10/11/2005
The report provides ________ evidence of the ________.

Accepted Answer

A)  conflicting; new growth model which claims that profits are linked to innovation 
B)  supporting; new growth model which claims that innovation is indirectly related to profit 
C)  conflicting; neoclassical growth model which claims that population growth spurs technology 
D)  supporting; neoclassical growth model which claims that technology advances are random 
A)  conflicting; new growth model which claims that profits are linked to innovation 
B)  supporting; new growth model which claims that innovation is indirectly related to profit 
C)  conflicting; neoclassical growth model which claims that population growth spurs technology 
D)  supporting; neoclassical growth model which claims that technology advances are random

Question 17

What is the role of profits in the neoclassical growth theory versus the new growth theory?

Accepted Answer

Profits play essentially no role in the

Question 18

All else equal, an increase in population decreases potential GDP.

Accepted Answer

A) True 
 B)False

Question 19

Since 1980,

Accepted Answer

A)  Japan has experienced faster growth than the United States in every decade. 
B)  growth rates in Mexico have exceeded those in the United States. 
C)  real GDP per person in Hong Kong and Singapore have grown and are approaching or surpassing that in the United States. 
D)  real GDP per person in China has grown rapidly and is now about 50 percent of that in the United States. 
A)  Japan has experienced faster growth than the United States in every decade. 
B)  growth rates in Mexico have exceeded those in the United States. 
C)  real GDP per person in Hong Kong and Singapore have grown and are approaching or surpassing that in the United States. 
D)  real GDP per person in China has grown rapidly and is now about 50 percent of that in the United States.

Question 20

Which of the following is consistent with classical growth theory?

Accepted Answer

A)  Real GDP per person will increase because technological change induces investment. 
B)  Real GDP per person will never permanently increase. 
C)  Competition destroys innovation and decreases profit. 
D)  As real GDP increases, there will be a decrease in the rate of population growth. 
A)  Real GDP per person will increase because technological change induces investment. 
B)  Real GDP per person will never permanently increase. 
C)  Competition destroys innovation and decreases profit. 
D)  As real GDP increases, there will be a decrease in the rate of population growth.

Which growth theory predicts perpetual growth?

Neoclassical growth theory

If the price level increases and workers' money wage rates remain constant,which of the following will occur? I. The quantity of labor supplied will decrease. II. The real wage rate will decrease. III. The labor supply curve will shift rightward.

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.

What is the main shortcoming of the neoclassical growth model and how does the new growth theory address this shortcoming?

Dividing the value of real GDP by aggregate labor hours gives

If the price level rises by 3 percent and workers' money wage rate increase by 1 percent, then the

One policy that would increase the saving rate would be

In 2016, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2017, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2017 was

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012?

A key assumption of new growth theory is that

The quantity of labor supplied depends on the

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

An advance in technology will

What is the role of profits in the neoclassical growth theory versus the new growth theory?

All else equal, an increase in population decreases potential GDP.

Since 1980,

Which of the following is consistent with classical growth theory?

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

Which growth theory predicts perpetual growth?

Neoclassical growth theory

If the price level increases and workers' money wage rates remain constant,which of the following will occur? I. The quantity of labor supplied will decrease. II. The real wage rate will decrease. III. The labor supply curve will shift rightward.

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.

What is the main shortcoming of the neoclassical growth model and how does the new growth theory address this shortcoming?

Dividing the value of real GDP by aggregate labor hours gives

If the price level rises by 3 percent and workers' money wage rate increase by 1 percent, then the

One policy that would increase the saving rate would be

In 2016, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2017, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2017 was

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012?

A key assumption of new growth theory is that

The quantity of labor supplied depends on the

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

An advance in technology will

What is the role of profits in the neoclassical growth theory versus the new growth theory?

All else equal, an increase in population decreases potential GDP.

Since 1980,

Which of the following is consistent with classical growth theory?

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