Question 1

Within neoclassical growth theory, technological change ________ saving and ________ investment.

Accepted Answer

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

Question 2

The classical model of Malthus predicted that economies would

Accepted Answer

A)  continue to grow indefinitely. 
B)  experience rapid technological progress. 
C)  reach a state where the growth of real GDP per person stopped. 
D)  experience significant productivity growth. 
A)  continue to grow indefinitely. 
B)  experience rapid technological progress. 
C)  reach a state where the growth of real GDP per person stopped. 
D)  experience significant productivity growth.

Question 3

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.   www.econstats.com; www.os-connect.com
If the data support the neoclassical growth theory, we would expect to see

Accepted Answer

A)  Japan with the highest economic growth rate because the high saving means that more capital is accumulated. 
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)  the United States with the highest economic growth rate because it has the highest birth rate. 
A)  Japan with the highest economic growth rate because the high saving means that more capital is accumulated. 
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)  the United States with the highest economic growth rate because it has the highest birth rate.

Question 4

If the real wage rate is such that the quantity of labor supplied equals the quantity of labor demanded

Accepted Answer

A)  a full-employment equilibrium occurs. 
B)  actual GDP equals potential GDP. 
C)  the supply curve of labor is vertical. 
D)  Both answers A and B are correct. 
A)  a full-employment equilibrium occurs. 
B)  actual GDP equals potential GDP. 
C)  the supply curve of labor is vertical. 
D)  Both answers A and B are correct.

Question 5

Which theory emphasizes the significance of new discoveries that can be used by many people at the same time?

Accepted Answer

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

Question 6

According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE?

Accepted Answer

A)  India's PPF has been shifting rightward since 1997. 
B)  India's PPF has been shifting leftward since 1997. 
C)  India has been moving from a point within its PPF to points beyond its PPF. 
D)  India's PPF has not shifted since 1997. 
A)  India's PPF has been shifting rightward since 1997. 
B)  India's PPF has been shifting leftward since 1997. 
C)  India has been moving from a point within its PPF to points beyond its PPF. 
D)  India's PPF has not shifted since 1997.

Question 7

The aggregate production function describes the relationship between

Accepted Answer

A)  real GDP and the quantity of labor employed. 
B)  real GDP and the price level. 
C)  the rate of growth of real GDP and inflation. 
D)  real GDP and the unemployment rate. 
A)  real GDP and the quantity of labor employed. 
B)  real GDP and the price level. 
C)  the rate of growth of real GDP and inflation. 
D)  real GDP and the unemployment rate.

Question 8

If the price level rises by 4 percent and workers' money wage rates increase by 2 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)  the supply curve of labor shifts rightward. 
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)  the supply curve of labor shifts rightward.

Question 9

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

Accepted Answer

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

Question 10

According to new growth theory

Accepted Answer

A)  ever-advancing productivity keeps the population growth rate high. 
B)  knowledge does not experience diminishing returns. 
C)  growth rates and income levels per person around the globe will converge. 
D)  knowledge is subject to the law of diminishing returns. 
A)  ever-advancing productivity keeps the population growth rate high. 
B)  knowledge does not experience diminishing returns. 
C)  growth rates and income levels per person around the globe will converge. 
D)  knowledge is subject to the law of diminishing returns.

Question 11

If the saving rate increases, a country's growth rate of real GDP per hour of labor ________ and capital per hour of labor ________.

Accepted Answer

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

Question 12

The best definition for economic growth is

Accepted Answer

A)  a sustained expansion of production possibilities measured as the increase in real GDP over a given period. 
B)  a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period. 
C)  a sustained expansion of consumption goods over a given period. 
D)  a sustained expansion of production goods over a given period. 
A)  a sustained expansion of production possibilities measured as the increase in real GDP over a given period. 
B)  a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period. 
C)  a sustained expansion of consumption goods over a given period. 
D)  a sustained expansion of production goods over a given period.

Question 13

If both the supply of labor and the demand for labor increase, then

Accepted Answer

A)  potential GDP decreases. 
B)  potential GDP increases. 
C)  full employment decreases. 
D)  the impact on potential GDP is uncertain. 
A)  potential GDP decreases. 
B)  potential GDP increases. 
C)  full employment decreases. 
D)  the impact on potential GDP is uncertain.

Question 14

To achieve faster growth, economies can increase income tax rates in order to increase saving rates.

Accepted Answer

A) True 
 B)False

Question 15

The classical growth theory's view of the economy and its ability to achieve growth can be compared to a perpetual motion machine.

Accepted Answer

A) True 
 B)False

Question 16

Labor productivity increases with

Accepted Answer

A)  increases in consumption expenditure. 
B)  increases in depreciation. 
C)  increases in capital. 
D)  All of the above answers are correct. 
A)  increases in consumption expenditure. 
B)  increases in depreciation. 
C)  increases in capital. 
D)  All of the above answers are correct.

Question 17

New growth theory predicts that

Accepted Answer

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

Question 18

When labor productivity increases, the demand for labor curve ________ and the supply of labor curve ________.

Accepted Answer

A)  shifts rightward; shifts rightward 
B)  shifts rightward; does not shift 
C)  shifts leftward; shifts rightward 
D)  shift s leftward; does not shift 
A)  shifts rightward; shifts rightward 
B)  shifts rightward; does not shift 
C)  shifts leftward; shifts rightward 
D)  shift s leftward; does not shift

Question 19

If capital per hour of labor decreases, real GDP per hour of labor

Accepted Answer

A)  decreases because the level of technology decreases. 
B)  increases because the level of technology increases. 
C)  increases for a given level of technology. 
D)  decreases for a given level of technology. 
A)  decreases because the level of technology decreases. 
B)  increases because the level of technology increases. 
C)  increases for a given level of technology. 
D)  decreases for a given level of technology.

Question 20

Classical growth theory asserts that

Accepted Answer

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

Within neoclassical growth theory, technological change saving and investment.

The classical model of Malthus predicted that economies would

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. www.econstats.com; www.os-connect.com If the data support the neoclassical growth theory, we would expect to see

If the real wage rate is such that the quantity of labor supplied equals the quantity of labor demanded

Which theory emphasizes the significance of new discoveries that can be used by many people at the same time?

The aggregate production function describes the relationship between

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

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

According to new growth theory

If the saving rate increases, a country's growth rate of real GDP per hour of labor and capital per hour of labor .

The best definition for economic growth is

If both the supply of labor and the demand for labor increase, then

To achieve faster growth, economies can increase income tax rates in order to increase saving rates.

The classical growth theory's view of the economy and its ability to achieve growth can be compared to a perpetual motion machine.

Labor productivity increases with

New growth theory predicts that

When labor productivity increases, the demand for labor curve and the supply of labor curve .

If capital per hour of labor decreases, real GDP per hour of labor

Classical growth theory asserts that

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

Within neoclassical growth theory, technological change ________ saving and ________ investment.

The classical model of Malthus predicted that economies would

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. www.econstats.com; www.os-connect.com If the data support the neoclassical growth theory, we would expect to see

If the real wage rate is such that the quantity of labor supplied equals the quantity of labor demanded

Which theory emphasizes the significance of new discoveries that can be used by many people at the same time?

The aggregate production function describes the relationship between

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

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

According to new growth theory

If the saving rate increases, a country's growth rate of real GDP per hour of labor ________ and capital per hour of labor ________.

The best definition for economic growth is

If both the supply of labor and the demand for labor increase, then

To achieve faster growth, economies can increase income tax rates in order to increase saving rates.

The classical growth theory's view of the economy and its ability to achieve growth can be compared to a perpetual motion machine.

Labor productivity increases with

New growth theory predicts that

When labor productivity increases, the demand for labor curve ________ and the supply of labor curve ________.

If capital per hour of labor decreases, real GDP per hour of labor

Classical growth theory asserts that

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

Within neoclassical growth theory, technological change saving and investment.

If the saving rate increases, a country's growth rate of real GDP per hour of labor and capital per hour of labor .

When labor productivity increases, the demand for labor curve and the supply of labor curve .