Question 1

Higher productivity is the most direct route to higher living standards.

Accepted Answer

A) True 
 B)False

Question 2

While tax cuts may increase productivity,the government is forced to redistribute the tax burden or cut its own spending.

Accepted Answer

A) True 
 B)False

Question 3

An investment tax credit will lead to

Accepted Answer

A)  a lower equilibrium interest rate in equilibrium 
B)  a decrease in household consumption spending in equilibrium 
C)  slower economic growth 
D)  lower equilibrium investment in physical capital 
E)  a increase in household consumption spending 
A)  a lower equilibrium interest rate in equilibrium 
B)  a decrease in household consumption spending in equilibrium 
C)  slower economic growth 
D)  lower equilibrium investment in physical capital 
E)  a increase in household consumption spending

Question 4

An increase in the supply of labor will,everything else equal,

Accepted Answer

A)  increase the real wage rate and increase employment 
B)  increase the real wage rate and decrease employment 
C)  reduce the real wage rate and increase employment 
D)  reduce the real wage rate and decrease employment 
E)  increase the demand for labor and increase employment 
A)  increase the real wage rate and increase employment 
B)  increase the real wage rate and decrease employment 
C)  reduce the real wage rate and increase employment 
D)  reduce the real wage rate and decrease employment 
E)  increase the demand for labor and increase employment

Question 5

Which of the following could shift the labor supply curve and increase employment?

Accepted Answer

A)  An increase in the number of firms 
B)  An increase in income tax rates 
C)  Increased spending on welfare programs 
D)  Increased federal funding for education 
E)  A decrease in income tax rates 
A)  An increase in the number of firms 
B)  An increase in income tax rates 
C)  Increased spending on welfare programs 
D)  Increased federal funding for education 
E)  A decrease in income tax rates

Question 6

Which of the following is the main reason why many countries with low living standards remain in that state?

Accepted Answer

A)  The citizens of these countries often spend all of their resources on consumption goods instead of capital goods 
B)  The citizens of these countries often spend all their resources on capital goods instead of consumption goods 
C)  The citizens of these countries often spend all their resources on exported goods 
D)  Insufficient population growth 
E)  Lack of foreign aid. 
A)  The citizens of these countries often spend all of their resources on consumption goods instead of capital goods 
B)  The citizens of these countries often spend all their resources on capital goods instead of consumption goods 
C)  The citizens of these countries often spend all their resources on exported goods 
D)  Insufficient population growth 
E)  Lack of foreign aid.

Question 7

In the U.S.over the past century,increases in labor

Accepted Answer

A)  supply have outpaced increases in labor demand,causing the average wage rate to fall 
B)  supply have outpaced increases in labor demand,causing the average wage rate to rise 
C)  demand have outpaced increases in labor supply,causing the average wage rate to fall 
D)  demand have outpaced increases in labor supply,causing the average wage rate to rise 
E)  demand have occurred at the same pace as increases in labor supply,so the average wage rate has remained unchanged 
A)  supply have outpaced increases in labor demand,causing the average wage rate to fall 
B)  supply have outpaced increases in labor demand,causing the average wage rate to rise 
C)  demand have outpaced increases in labor supply,causing the average wage rate to fall 
D)  demand have outpaced increases in labor supply,causing the average wage rate to rise 
E)  demand have occurred at the same pace as increases in labor supply,so the average wage rate has remained unchanged

Question 8

Which of the following policies would be most likely to encourage households to save more?

Accepted Answer

A)  Significant reductions in the social safety net 
B)  Increasing social security benefits to all recipients,regardless of their contribution into the system 
C)  Elimination of the tax deduction on individual retirement account (IR
A) contributions 
D)  Replacement of sales and excise taxes with an income tax 
E)  Elimination of government insurance of bank deposits 
A)  Significant reductions in the social safety net 
B)  Increasing social security benefits to all recipients,regardless of their contribution into the system 
C)  Elimination of the tax deduction on individual retirement account (IR
A) contributions 
D)  Replacement of sales and excise taxes with an income tax 
E)  Elimination of government insurance of bank deposits

Question 9

-Refer to Figure 9-12.Assume that a nation can slow its population growth rate so that it now requires only N' worth of investment in capital to maintain current capital per worker.If the nation adopts such a policy but maintains investment in capital at N,what would be the likely effect?

Accepted Answer

A)  Economic growth will slow because the nation would not be producing the optimal amount of capital;it would be over-investing. 
B)  The nation would produce inside the production possibilities frontier;that is,there will be inefficiencies in production. 
C)  The production possibilities frontier would shift inward because of the decrease in population. 
D)  The production possibilities frontier would shift outward at the same rate as it would have in the absence of the policy,but the mix of capital and consumer goods produced would change. 
E)  The production possibilities frontier would shift outward more than it would have in the absence of the policy. 
A)  Economic growth will slow because the nation would not be producing the optimal amount of capital;it would be over-investing. 
B)  The nation would produce inside the production possibilities frontier;that is,there will be inefficiencies in production. 
C)  The production possibilities frontier would shift inward because of the decrease in population. 
D)  The production possibilities frontier would shift outward at the same rate as it would have in the absence of the policy,but the mix of capital and consumer goods produced would change. 
E)  The production possibilities frontier would shift outward more than it would have in the absence of the policy.

Question 10

A less developed country can increase its capital stock by

Accepted Answer

A)  raising taxes on purchases of capital goods 
B)  temporarily accepting unusually high unemployment rates 
C)  reducing government spending 
D)  shifting resources away from production of consumer goods and toward production of capital goods 
E)  providing more opportunities for individuals to spend their accumulated savings 
A)  raising taxes on purchases of capital goods 
B)  temporarily accepting unusually high unemployment rates 
C)  reducing government spending 
D)  shifting resources away from production of consumer goods and toward production of capital goods 
E)  providing more opportunities for individuals to spend their accumulated savings

Question 11

If labor supply increases,the wage rate increases.

Accepted Answer

A) True 
 B)False

Question 12

Restructuring social security benefits might stimulate economic growth;however,we must consider the cost of this action,which is

Accepted Answer

A)  adequate benefits for everyone except those who originally needed social security 
B)  an increased burden on other social programs such as food stamps 
C)  a reduction in saving 
D)  a reduction in other governmental programs 
E)  a movement of the production function to the left 
A)  adequate benefits for everyone except those who originally needed social security 
B)  an increased burden on other social programs such as food stamps 
C)  a reduction in saving 
D)  a reduction in other governmental programs 
E)  a movement of the production function to the left

Question 13

Growth in employment can result

Accepted Answer

A)  from an increase in labor supply only 
B)  from an increase in labor demand only 
C)  from changes in technology only 
D)  from an increase in either labor supply or labor demand 
E)  only when the wage rate falls 
A)  from an increase in labor supply only 
B)  from an increase in labor demand only 
C)  from changes in technology only 
D)  from an increase in either labor supply or labor demand 
E)  only when the wage rate falls

Question 14

-Refer to Figure 9-1.If labor supply shifts from S₁ to S₂,what will happen to the real hourly wage rate?

Accepted Answer

A)  It will remain constant and employment will increase to 130 million 
B)  It will fall to $15 and employment will increase to 120 million 
C)  It will fall to $10 and employment will remain at 110 million 
D)  It will fall to $15 and employment will remain at 110 million 
E)  It will fall to $15 and employment will fall to 100 million 
A)  It will remain constant and employment will increase to 130 million 
B)  It will fall to $15 and employment will increase to 120 million 
C)  It will fall to $10 and employment will remain at 110 million 
D)  It will fall to $15 and employment will remain at 110 million 
E)  It will fall to $15 and employment will fall to 100 million

Question 15

Less-developed countries often have low economic growth rates because of

Accepted Answer

A)  low population growth rates and poor infrastructure 
B)  low current output per capita,high population growth rates and good infrastructure 
C)  low current output per capita,high population growth rates and poor infrastructure 
D)  low current output per capita,low population growth rates and poor infrastructure 
E)  low current output per capita and poor infrastructure. 
A)  low population growth rates and poor infrastructure 
B)  low current output per capita,high population growth rates and good infrastructure 
C)  low current output per capita,high population growth rates and poor infrastructure 
D)  low current output per capita,low population growth rates and poor infrastructure 
E)  low current output per capita and poor infrastructure.

Question 16

Which of the following policies would increase the demand for loanable funds and thus investment spending?

Accepted Answer

A)  A reduction in the investment tax credit. 
B)  An increase in the corporate profits tax. 
C)  A reduction in the capital gains tax. 
D)  An increase in the investment tax credit. 
E)  An increase in transfer payments. 
A)  A reduction in the investment tax credit. 
B)  An increase in the corporate profits tax. 
C)  A reduction in the capital gains tax. 
D)  An increase in the investment tax credit. 
E)  An increase in transfer payments.

Question 17

Which of the following is a way in which a government could encourage spending on research and development?

Accepted Answer

A)  Increase the tax rate on capital gains 
B)  Enhance patent protection 
C)  Decrease funding to universities 
D)  Increase the tax on corporate profits 
E)  Increase the budget deficit 
A)  Increase the tax rate on capital gains 
B)  Enhance patent protection 
C)  Decrease funding to universities 
D)  Increase the tax on corporate profits 
E)  Increase the budget deficit

Question 18

Any pro-growth policy that increases investment requires

Accepted Answer

A)  an eventual increase in GDP 
B)  increased production of consumption goods 
C)  decreased production of capital goods 
D)  a sacrifice of current consumption spending 
E)  reduced government spending 
A)  an eventual increase in GDP 
B)  increased production of consumption goods 
C)  decreased production of capital goods 
D)  a sacrifice of current consumption spending 
E)  reduced government spending

Question 19

Which of the following would be most likely to encourage households to save a greater proportion of their income?

Accepted Answer

A)  a reduction in the sales tax rate 
B)  an increase in the capital gains tax rate 
C)  an elimination of tariffs (taxes on imported goods) 
D)  changing to a flat income tax (with a single tax rate charged on all income) 
E)  changing from an income tax to a consumption tax 
A)  a reduction in the sales tax rate 
B)  an increase in the capital gains tax rate 
C)  an elimination of tariffs (taxes on imported goods) 
D)  changing to a flat income tax (with a single tax rate charged on all income) 
E)  changing from an income tax to a consumption tax

Question 20

-Refer to Figure 9-7.Everything else equal,which attainable production point will result in the most economic growth?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  all points would promote growth equally 
A)  A 
B)  B 
C)  C 
D)  D 
E)  all points would promote growth equally

Higher productivity is the most direct route to higher living standards.

While tax cuts may increase productivity,the government is forced to redistribute the tax burden or cut its own spending.

An investment tax credit will lead to

An increase in the supply of labor will,everything else equal,

Which of the following could shift the labor supply curve and increase employment?

Which of the following is the main reason why many countries with low living standards remain in that state?

In the U.S.over the past century,increases in labor

Which of the following policies would be most likely to encourage households to save more?

-Refer to Figure 9-12.Assume that a nation can slow its population growth rate so that it now requires only N' worth of investment in capital to maintain current capital per worker.If the nation adopts such a policy but maintains investment in capital at N,what would be the likely effect?

A less developed country can increase its capital stock by

If labor supply increases,the wage rate increases.

Restructuring social security benefits might stimulate economic growth;however,we must consider the cost of this action,which is

Growth in employment can result

-Refer to Figure 9-1.If labor supply shifts from S₁ to S₂,what will happen to the real hourly wage rate?

Less-developed countries often have low economic growth rates because of

Which of the following policies would increase the demand for loanable funds and thus investment spending?

Which of the following is a way in which a government could encourage spending on research and development?

Any pro-growth policy that increases investment requires

Which of the following would be most likely to encourage households to save a greater proportion of their income?

-Refer to Figure 9-7.Everything else equal,which attainable production point will result in the most economic growth?

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 9: Economic Growth and Rising Living Standards

Higher productivity is the most direct route to higher living standards.

While tax cuts may increase productivity,the government is forced to redistribute the tax burden or cut its own spending.

An investment tax credit will lead to

An increase in the supply of labor will,everything else equal,

Which of the following could shift the labor supply curve and increase employment?

Which of the following is the main reason why many countries with low living standards remain in that state?

In the U.S.over the past century,increases in labor

Which of the following policies would be most likely to encourage households to save more?

-Refer to Figure 9-12.Assume that a nation can slow its population growth rate so that it now requires only N' worth of investment in capital to maintain current capital per worker.If the nation adopts such a policy but maintains investment in capital at N,what would be the likely effect?

A less developed country can increase its capital stock by

If labor supply increases,the wage rate increases.

Restructuring social security benefits might stimulate economic growth;however,we must consider the cost of this action,which is

Growth in employment can result

-Refer to Figure 9-1.If labor supply shifts from S₁ to S₂,what will happen to the real hourly wage rate?

Less-developed countries often have low economic growth rates because of

Which of the following policies would increase the demand for loanable funds and thus investment spending?

Which of the following is a way in which a government could encourage spending on research and development?

Any pro-growth policy that increases investment requires

Which of the following would be most likely to encourage households to save a greater proportion of their income?

-Refer to Figure 9-7.Everything else equal,which attainable production point will result in the most economic growth?

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters