Question 1

If you invest $1,000 in a savings account and the annual interest rate is 3.6 percent, your account balance will double in value in approximately _____ years.

Accepted Answer

A)  185 years 
B)  72 years 
C)  34 years 
D)  20 years 
E)  3.4 years 
A)  185 years 
B)  72 years 
C)  34 years 
D)  20 years 
E)  3.4 years D

Question 2

Total factor productivity is the ratio of a:

Accepted Answer

A)  firm's marginal revenue to its marginal cost. 
B)  firm's total revenues to its total costs. 
C)  nation's total income to its total output. 
D)  nation's output to its stock of labor and capital. 
E)  nation's savings to its capital stock. 
A)  firm's marginal revenue to its marginal cost. 
B)  firm's total revenues to its total costs. 
C)  nation's total income to its total output. 
D)  nation's output to its stock of labor and capital. 
E)  nation's savings to its capital stock. D

Question 3

Economic growth measured in terms of an increase in per capita real GDP is not a good measure of the distribution of income in a nation.

Accepted Answer

A) True 
 B)False  True

Question 4

Poor countries grow faster than rich countries because of rapid growth in the labor force.

Accepted Answer

A) True 
 B)False

Question 5

If Korea's average annual growth rate is 9 percent and that of the United States is 4 percent, the time required for Korea's real GDP to double will be ____ less than the time required for the GDP of the United States to double.

Accepted Answer

A)  3 years 
B)  6 years 
C)  12 years 
D)  15 years 
E)  10 years 
A)  3 years 
B)  6 years 
C)  12 years 
D)  15 years 
E)  10 years

Question 6

Suppose that the economy grows by 4 percent, total factor productivity grows by 3 percent, and the labor force increases by 6 percent. If labor and capital are the only inputs and labor contributes 40 percent to GDP, then the stock of capital must have _____.

Accepted Answer

A)  fallen by 5 % 
B)  fallen by 3.33 % 
C)  fallen by 2.33 % 
D)  risen by 3 % 
E)  risen by 1.8 % 
A)  fallen by 5 % 
B)  fallen by 3.33 % 
C)  fallen by 2.33 % 
D)  risen by 3 % 
E)  risen by 1.8 %

Question 7

We can say that the potential level of real GDP is fixed because the long-run aggregate supply curve is a vertical line.

Accepted Answer

A) True 
 B)False

Question 8

According to the rule of 72, if you have $15,000 in an account that grows at the rate of 12 percent annually, it will take approximately six years for the $15,000 to double to $30,000.

Accepted Answer

A) True 
 B)False

Question 9

Contrary to popular belief, U.S. productivity growth did not actually improve in the mid 1990s despite the massive growth in technological innovation.

Accepted Answer

A) True 
 B)False

Question 10

Assume that an economy grows at compounding rates. Then, over a period of 40 years, an economy that grows at 6.5% each year will have an output level approximately ____ times larger than an economy that grows at 2.5%.

Accepted Answer

A)  two 
B)  three 
C)  five 
D)  six 
E)  ten 
A)  two 
B)  three 
C)  five 
D)  six 
E)  ten

Question 11

If the real GDP of a developed country doubles in 48 years, the average annual growth rate in real GDP must be _____.

Accepted Answer

A)  1.5 % 
B)  3.5 % 
C)  0.67 % 
D)  0.012 % 
E)  24 % 
A)  1.5 % 
B)  3.5 % 
C)  0.67 % 
D)  0.012 % 
E)  24 %

Question 12

The income of the town of Kennebunkport has been growing by 2 percent per year. If this growth continues into the future, how long will it take until the town's income has doubled?

Accepted Answer

A)  About 36 years 
B)  About 24 years 
C)  About 96 years 
D)  About 50 years 
E)  About 144 years 
A)  About 36 years 
B)  About 24 years 
C)  About 96 years 
D)  About 50 years 
E)  About 144 years

Question 13

Productivity in the services industry may be underestimated because measurements of productivity do not take into account the quality of the service provided.

Accepted Answer

A) True 
 B)False

Question 14

Technological advancement is defined as:

Accepted Answer

A)  the increase in the quantity of inputs needed to produce a given quantity of output. 
B)  the reduction in the quantity of inputs needed to produce a given quantity of output. 
C)  the reduction in the productivity of a sector of the economy that has become obsolete. 
D)  an increase in the labor to capital ratio in any production process. 
E)  the growth in the natural resource endowment. 
A)  the increase in the quantity of inputs needed to produce a given quantity of output. 
B)  the reduction in the quantity of inputs needed to produce a given quantity of output. 
C)  the reduction in the productivity of a sector of the economy that has become obsolete. 
D)  an increase in the labor to capital ratio in any production process. 
E)  the growth in the natural resource endowment.

Question 15

Per capita real GDP is a questionable indicator of the state of the economy because it does not account for:

Accepted Answer

A)  growth of national income. 
B)  changes in inflation. 
C)  income distribution. 
D)  changes in the size of the population. 
E)  changes in the level of output. 
A)  growth of national income. 
B)  changes in inflation. 
C)  income distribution. 
D)  changes in the size of the population. 
E)  changes in the level of output.

Question 16

Assume that you invest $550 in a certificate of deposit that has an annual interest rate of 4.5 percent. According to the rule of 72, what will your investment be worth after 16 years?

Accepted Answer

A)  $550 
B)  $3,960 
C)  $1,100 
D)  $797.5 
E)  $1,200 
A)  $550 
B)  $3,960 
C)  $1,100 
D)  $797.5 
E)  $1,200

Question 17

The labor force typically grows faster in developing countries than in industrial ones because mortality rates are higher in low-income countries.

Accepted Answer

A) True 
 B)False

Question 18

Because fewer people are now needed to perform an average job, it is said that the information technology revolution has played an important role in slowing down productivity in the United States.

Accepted Answer

A) True 
 B)False

Question 19

What will be a nation's real GDP after seven years if the average annual growth rate is 5 percent and initial real output is $10 billion?

Accepted Answer

A)  $14.07 billion 
B)  $14.57 billion 
C)  $11.27 billion 
D)  $9.74 billion 
E)  $13.44 billion 
A)  $14.07 billion 
B)  $14.57 billion 
C)  $11.27 billion 
D)  $9.74 billion 
E)  $13.44 billion

Question 20

A country with a low living standard can save easily.

Accepted Answer

A) True 
 B)False

Exam 16: Economic Growth

If you invest $1,000 in a savings account and the annual interest rate is 3.6 percent, your account balance will double in value in approximately _____ years.

Total factor productivity is the ratio of a:

Economic growth measured in terms of an increase in per capita real GDP is not a good measure of the distribution of income in a nation.

Poor countries grow faster than rich countries because of rapid growth in the labor force.

If Korea's average annual growth rate is 9 percent and that of the United States is 4 percent, the time required for Korea's real GDP to double will be ____ less than the time required for the GDP of the United States to double.

Suppose that the economy grows by 4 percent, total factor productivity grows by 3 percent, and the labor force increases by 6 percent. If labor and capital are the only inputs and labor contributes 40 percent to GDP, then the stock of capital must have _____.

We can say that the potential level of real GDP is fixed because the long-run aggregate supply curve is a vertical line.

According to the rule of 72, if you have $15,000 in an account that grows at the rate of 12 percent annually, it will take approximately six years for the $15,000 to double to $30,000.

Contrary to popular belief, U.S. productivity growth did not actually improve in the mid 1990s despite the massive growth in technological innovation.

Assume that an economy grows at compounding rates. Then, over a period of 40 years, an economy that grows at 6.5% each year will have an output level approximately ____ times larger than an economy that grows at 2.5%.

If the real GDP of a developed country doubles in 48 years, the average annual growth rate in real GDP must be _____.

The income of the town of Kennebunkport has been growing by 2 percent per year. If this growth continues into the future, how long will it take until the town's income has doubled?

Productivity in the services industry may be underestimated because measurements of productivity do not take into account the quality of the service provided.

Technological advancement is defined as:

Per capita real GDP is a questionable indicator of the state of the economy because it does not account for:

Assume that you invest $550 in a certificate of deposit that has an annual interest rate of 4.5 percent. According to the rule of 72, what will your investment be worth after 16 years?

The labor force typically grows faster in developing countries than in industrial ones because mortality rates are higher in low-income countries.

Because fewer people are now needed to perform an average job, it is said that the information technology revolution has played an important role in slowing down productivity in the United States.

What will be a nation's real GDP after seven years if the average annual growth rate is 5 percent and initial real output is $10 billion?

A country with a low living standard can save easily.

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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