Question 1

If capital per worker rises

Accepted Answer

A)  labor productivity decreases. 
B)  no technological progress occurs. 
C)  labor productivity increases. 
D)  firms respond by raising their prices. 
A)  labor productivity decreases. 
B)  no technological progress occurs. 
C)  labor productivity increases. 
D)  firms respond by raising their prices.

Question 2

If new capital increases labor productivity, the supply of labor ________ and the demand for labor ________.

Accepted Answer

A)  stays the same; increases 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; stays the same 
A)  stays the same; increases 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; stays the same

Question 3

In general, a higher real wage rate decreases the quantity of labor supplied because fewer people enter the labor force.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is CORRECT?
I. Higher savings rates can stimulate economic growth.
II. Limiting international trade can stimulate economic growth.

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

The Rule of 70 is used to

Accepted Answer

A)  estimate how much of an economy's growth rate is due to increases in capital per hour of labor. 
B)  calculate the standard of living. 
C)  calculate the economy's growth rate. 
D)  estimate how long it will take the level of any variable to double. 
A)  estimate how much of an economy's growth rate is due to increases in capital per hour of labor. 
B)  calculate the standard of living. 
C)  calculate the economy's growth rate. 
D)  estimate how long it will take the level of any variable to double.

Question 6

A central proposition of the new growth theory is that

Accepted Answer

A)  growth will cease but prosperity will persist. 
B)  knowledge is not subject to diminishing returns. 
C)  government direction and oversight is necessary for consistent growth. 
D)  growth is often just an illusion fostered by growth accounting. 
A)  growth will cease but prosperity will persist. 
B)  knowledge is not subject to diminishing returns. 
C)  government direction and oversight is necessary for consistent growth. 
D)  growth is often just an illusion fostered by growth accounting.

Question 7

The more education that workers have, the ________ is their human capital and the ________ is their productivity.

Accepted Answer

A)  larger; higher 
B)  larger; smaller 
C)  smaller; higher 
D)  smaller; smaller 
A)  larger; higher 
B)  larger; smaller 
C)  smaller; higher 
D)  smaller; smaller

Question 8

The higher the real wage rate, the higher the labor force participation rate.

Accepted Answer

A) True 
 B)False

Question 9

The United States had the largest real GDP per person until the 2015 when the China's real GDP per person overtook and then exceeded that in the United States.

Accepted Answer

A) True 
 B)False

Question 10

An advance in technology increases the productivity of labor. As a result, the nation's production function shifts ________ and the ________ labor curve shifts rightward.

Accepted Answer

A)  upward; demand for 
B)  downward; demand for 
C)  upward; supply of 
D)  downward; supply of 
A)  upward; demand for 
B)  downward; demand for 
C)  upward; supply of 
D)  downward; supply of

Question 11

Convergence of the income gap has been most dramatic between

Accepted Answer

A)  Taiwan and the United States. 
B)  Mexico and the United States. 
C)  Canada and the United States. 
D)  Europe's Big Four and the United States. 
A)  Taiwan and the United States. 
B)  Mexico and the United States. 
C)  Canada and the United States. 
D)  Europe's Big Four and the United States.

Question 12

Define the aggregate production function. Discuss why the aggregate production function exhibits diminishing returns.

Accepted Answer

The aggregate production function is the

Question 13

Neoclassical growth theory assumes that technological progress

Accepted Answer

A)  is determined by investment. 
B)  is determined by saving. 
C)  responds to economic incentives. 
D)  is a purely chance event. 
A)  is determined by investment. 
B)  is determined by saving. 
C)  responds to economic incentives. 
D)  is a purely chance event.

Question 14

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

Accepted Answer

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

Question 15

A recent article states that "...gains from two centuries of rapid technological innovation are largely exhausted, and new discoveries lack the same revolutionary quality....{Further}, 80 percent of the growth between 1950 and 1993 came from the new application of old ideas, and these old ideas are now mostly wrung dry."
(The Economist, 03/03/2011)
-If this quote is TRUE, what would the neoclassical growth theory predict?

Accepted Answer

A)  Economic growth stops because most technological advances have already been made. 
B)  Economic growth is temporary regardless of technological change and GDP per person returns to subsistence levels. 
C)  Economic growth will persist indefinitely because technological change will accelerate again as firms seek profits. 
D)  Economic growth will accelerate because these technological changes are permanent. 
A)  Economic growth stops because most technological advances have already been made. 
B)  Economic growth is temporary regardless of technological change and GDP per person returns to subsistence levels. 
C)  Economic growth will persist indefinitely because technological change will accelerate again as firms seek profits. 
D)  Economic growth will accelerate because these technological changes are permanent.

Question 16

Describe ways that governments can promote faster economic growth.

Accepted Answer

Policies for increasing the economic gro

Question 17

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

Question 18

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

Accepted Answer

A)  Japan 
B)  The big 4 nations of Europe 
C)  United States 
D)  Canada 
A)  Japan 
B)  The big 4 nations of Europe 
C)  United States 
D)  Canada

Question 19

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

Accepted Answer

A)  $6.75 per hour. 
B)  $104 per hour. 
C)  $123 per hour. 
D)  $675 per hour. 
A)  $6.75 per hour. 
B)  $104 per hour. 
C)  $123 per hour. 
D)  $675 per hour.

Question 20

If the labor and capital grow more quickly, then real GDP will

Accepted Answer

A)  not grow fast enough. 
B)  grow more quickly. 
C)  grow more slowly. 
D)  stay fixed at potential GDP. 
A)  not grow fast enough. 
B)  grow more quickly. 
C)  grow more slowly. 
D)  stay fixed at potential GDP.

If capital per worker rises

If new capital increases labor productivity, the supply of labor and the demand for labor .

In general, a higher real wage rate decreases the quantity of labor supplied because fewer people enter the labor force.

Which of the following statements is CORRECT? I. Higher savings rates can stimulate economic growth. II. Limiting international trade can stimulate economic growth.

The Rule of 70 is used to

A central proposition of the new growth theory is that

The more education that workers have, the is their human capital and the is their productivity.

The higher the real wage rate, the higher the labor force participation rate.

The United States had the largest real GDP per person until the 2015 when the China's real GDP per person overtook and then exceeded that in the United States.

An advance in technology increases the productivity of labor. As a result, the nation's production function shifts and the labor curve shifts rightward.

Convergence of the income gap has been most dramatic between

Define the aggregate production function. Discuss why the aggregate production function exhibits diminishing returns.

Neoclassical growth theory assumes that technological progress

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

Describe ways that governments can promote faster economic growth.

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.

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

If the labor and capital grow more quickly, then real GDP will

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

If capital per worker rises

If new capital increases labor productivity, the supply of labor ________ and the demand for labor ________.

In general, a higher real wage rate decreases the quantity of labor supplied because fewer people enter the labor force.

Which of the following statements is CORRECT? I. Higher savings rates can stimulate economic growth. II. Limiting international trade can stimulate economic growth.

The Rule of 70 is used to

A central proposition of the new growth theory is that

The more education that workers have, the ________ is their human capital and the ________ is their productivity.

The higher the real wage rate, the higher the labor force participation rate.

The United States had the largest real GDP per person until the 2015 when the China's real GDP per person overtook and then exceeded that in the United States.

An advance in technology increases the productivity of labor. As a result, the nation's production function shifts ________ and the ________ labor curve shifts rightward.

Convergence of the income gap has been most dramatic between

Define the aggregate production function. Discuss why the aggregate production function exhibits diminishing returns.

Neoclassical growth theory assumes that technological progress

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

Describe ways that governments can promote faster economic growth.

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.

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

If real GDP is $13,500 billion and aggregate hours are 110 billion, labor productivity equals

If the labor and capital grow more quickly, then real GDP will

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

If new capital increases labor productivity, the supply of labor and the demand for labor .

The more education that workers have, the is their human capital and the is their productivity.

An advance in technology increases the productivity of labor. As a result, the nation's production function shifts and the labor curve shifts rightward.