Question 1

Small differences in the annual rate of economic growth can make substantial differences in living standards a few decades later because

Accepted Answer

A)  each year the increase in output is added to a larger base, thus compounding its impact. 
B)  increases in output create surplus labor, keeping costs low. 
C)  the more rapid the rate of growth, the higher the rate of inflation. 
D)  increases in output lead to greater increases in population, lowering overall standards of living. 
E)  expanding economies use up national resources at a rapid rate and create substantial amounts of pollution. 
A)  each year the increase in output is added to a larger base, thus compounding its impact. 
B)  increases in output create surplus labor, keeping costs low. 
C)  the more rapid the rate of growth, the higher the rate of inflation. 
D)  increases in output lead to greater increases in population, lowering overall standards of living. 
E)  expanding economies use up national resources at a rapid rate and create substantial amounts of pollution. A

Question 2

Significant government involvement in stimulating economic growth became more common

Accepted Answer

A)  before the Civil War. 
B)  between the Civil War and World War I. 
C)  during the 1920s. 
D)  during the 1930s. 
E)  after World War II. 
A)  before the Civil War. 
B)  between the Civil War and World War I. 
C)  during the 1920s. 
D)  during the 1930s. 
E)  after World War II. E

Question 3

The Club of Rome study was concerned primarily with the ________ growth.

Accepted Answer

A)  benefits of 
B)  costs of 
C)  sources of 
D)  limits to 
E)  rates of 
A)  benefits of 
B)  costs of 
C)  sources of 
D)  limits to 
E)  rates of D

Question 4

According to the Harrod-Domar growth model,an economy with a capital-output ratio of four that saves and invests 12 percent of its GDP will grow annually at a rate of ________ percent.

Accepted Answer

A)  1 
B)  3 
C)  4 
D)  8 
E)  16 
A)  1 
B)  3 
C)  4 
D)  8 
E)  16

Question 5

A major reason why Henry Ford was able to sell the Model T for as little as $360 per car was

Accepted Answer

A)  advertising. 
B)  an increase in the capital-labor ratio at Ford. 
C)  an expanded number of versions of the car (for example, convertible, hardtop, sedan, and so on). 
D)  cheap immigrant labor. 
E)  longer workdays. 
A)  advertising. 
B)  an increase in the capital-labor ratio at Ford. 
C)  an expanded number of versions of the car (for example, convertible, hardtop, sedan, and so on). 
D)  cheap immigrant labor. 
E)  longer workdays.

Question 6

Human capital formation refers to

Accepted Answer

A)  expenditures by society on formal education, on-the-job training, and health programs. 
B)  acquiring machines that do not displace existing workers. 
C)  maintaining a full-employment level of GDP. 
D)  the development of humanlike robots (androids). 
E)  cloning humans. 
A)  expenditures by society on formal education, on-the-job training, and health programs. 
B)  acquiring machines that do not displace existing workers. 
C)  maintaining a full-employment level of GDP. 
D)  the development of humanlike robots (androids). 
E)  cloning humans.

Question 7

The standard of living in the industrialized nations has improved dramatically over the past two centuries despite Malthus's dismal predictions.Malthus's most important mistake was to

Accepted Answer

A)  underestimate the extent of technological change. 
B)  ignore the benefits of free trade between nations, as witnessed by his advocacy of the Corn Laws. 
C)  believe that the capital stock would remain at a constant level due to a lack of incentives for expansion. 
D)  ignore the potential for expanding actual output to the level of full-employment output. 
E)  ignore the effects of population increase. 
A)  underestimate the extent of technological change. 
B)  ignore the benefits of free trade between nations, as witnessed by his advocacy of the Corn Laws. 
C)  believe that the capital stock would remain at a constant level due to a lack of incentives for expansion. 
D)  ignore the potential for expanding actual output to the level of full-employment output. 
E)  ignore the effects of population increase.

Question 8

A subsistence standard of living coupled with periods of starvation was the prospect for humanity according to the views of

Accepted Answer

A)  Adam Smith. 
B)  David Ricardo. 
C)  Joseph Schumpeter. 
D)  Karl Marx. 
E)  Thomas Malthus. 
A)  Adam Smith. 
B)  David Ricardo. 
C)  Joseph Schumpeter. 
D)  Karl Marx. 
E)  Thomas Malthus.

Question 9

One popular measure of the rate of technological change is the rate

Accepted Answer

A)  of profit from research and development. 
B)  of increase in the capital-output ratio. 
C)  of investment in human capital. 
D)  at which the gap between actual and potential output is narrowed. 
E)  of growth in output per worker. 
A)  of profit from research and development. 
B)  of increase in the capital-output ratio. 
C)  of investment in human capital. 
D)  at which the gap between actual and potential output is narrowed. 
E)  of growth in output per worker.

Question 10

An important endogenous factor influencing a country's rate of technological change is

Accepted Answer

A)  the nature and extent of its scientific capabilities. 
B)  an absence of research and development. 
C)  a large gap between actual and potential output. 
D)  the presence of high levels of consumption with little or no household saving. 
E)  its capital-output ratio. 
A)  the nature and extent of its scientific capabilities. 
B)  an absence of research and development. 
C)  a large gap between actual and potential output. 
D)  the presence of high levels of consumption with little or no household saving. 
E)  its capital-output ratio.

Question 11

The next question is based on the following table:
  
-According to Malthus,if subsistence is 150 bushels of wheat per worker,the equilibrium labor force would be ________ million.

Accepted Answer

A)  0.5 
B)  1.0 
C)  1.5 
D)  2.0 
E)  2.5 
A)  0.5 
B)  1.0 
C)  1.5 
D)  2.0 
E)  2.5

Question 12

Many of the basic innovations introduced into the U.S.economy during the twentieth century are attributed to the fact that our culture has been able to nurture a great many

Accepted Answer

A)  economists. 
B)  educators. 
C)  engineers. 
D)  entrepreneurs. 
E)  equestrians. 
A)  economists. 
B)  educators. 
C)  engineers. 
D)  entrepreneurs. 
E)  equestrians.

Question 13

The term marginal product of labor refers to the

Accepted Answer

A)  change in the average product of labor as output increases. 
B)  decreasing value of labor's total output. 
C)  additional output that could be produced at full employment. 
D)  subsistence output per worker. 
E)  additional output resulting from an extra unit of labor. 
A)  change in the average product of labor as output increases. 
B)  decreasing value of labor's total output. 
C)  additional output that could be produced at full employment. 
D)  subsistence output per worker. 
E)  additional output resulting from an extra unit of labor.

Question 14

The rate of economic growth and the rate of technological change are linked by the

Accepted Answer

A)  rate of substitution of labor for capital. 
B)  diminishing marginal product of labor that induces greater capital investment. 
C)  rate of inflation, since rapid price changes induce the application of new techniques. 
D)  gap between actual and potential output, since massive unemployment can induce labor-utilizing technological changes. 
E)  rate of innovation, since technological change must be applied to have an effect on economic growth. 
A)  rate of substitution of labor for capital. 
B)  diminishing marginal product of labor that induces greater capital investment. 
C)  rate of inflation, since rapid price changes induce the application of new techniques. 
D)  gap between actual and potential output, since massive unemployment can induce labor-utilizing technological changes. 
E)  rate of innovation, since technological change must be applied to have an effect on economic growth.

Question 15

Malthus believed that maintaining or improving humanity's standard of living would be possible only with

Accepted Answer

A)  technological change. 
B)  war, famine, or the universal adoption of birth control measures. 
C)  the introduction of widespread public assistance programs. 
D)  an expansion of the Corn Laws limiting imports. 
E)  an accumulation of capital. 
A)  technological change. 
B)  war, famine, or the universal adoption of birth control measures. 
C)  the introduction of widespread public assistance programs. 
D)  an expansion of the Corn Laws limiting imports. 
E)  an accumulation of capital.

Question 16

An element of economic welfare that is NOT effectively captured in growth measurement of real per capita GDP is

Accepted Answer

A)  population growth. 
B)  output growth. 
C)  the rate of inflation. 
D)  income distribution. 
E)  a change in the price level. 
A)  population growth. 
B)  output growth. 
C)  the rate of inflation. 
D)  income distribution. 
E)  a change in the price level.

Question 17

The rate of growth in real per capita GDP is deficient as a measure of the rate of economic growth because

Accepted Answer

A)  it does not account for the rate of inflation. 
B)  per capita GDP has no relation to per capita income. 
C)  the rate of increase of per capita GDP does not measure the degree of inequality in output distribution. 
D)  large differences in the rate of increase of current per capita GDP make little difference in living standards in the future. 
E)  it underestimates the rate of growth in real GDP. 
A)  it does not account for the rate of inflation. 
B)  per capita GDP has no relation to per capita income. 
C)  the rate of increase of per capita GDP does not measure the degree of inequality in output distribution. 
D)  large differences in the rate of increase of current per capita GDP make little difference in living standards in the future. 
E)  it underestimates the rate of growth in real GDP.

Question 18

The law of diminishing marginal returns

Accepted Answer

A)  requires that all inputs be varied proportionately. 
B)  states that as an input is increased (all other inputs held constant), total output falls after some point. 
C)  is relevant only when there is significant unemployment in the economy. 
D)  states that if more and more of a resource is used (the quantities of other resources being held constant), after some point, the average, marginal, and total products all become equal. 
E)  states that as a variable input is increased (with other inputs remaining constant), beyond some point the marginal product of the variable input falls. 
A)  requires that all inputs be varied proportionately. 
B)  states that as an input is increased (all other inputs held constant), total output falls after some point. 
C)  is relevant only when there is significant unemployment in the economy. 
D)  states that if more and more of a resource is used (the quantities of other resources being held constant), after some point, the average, marginal, and total products all become equal. 
E)  states that as a variable input is increased (with other inputs remaining constant), beyond some point the marginal product of the variable input falls.

Question 19

The following question are based on the following diagram:
  
-If,with this shift,the amount of labor does NOT change,

Accepted Answer

A)  total output will not change. 
B)  total output will fall. 
C)  total output will rise. 
D)  marginal product of labor will not change. 
E)  unemployment must result. 
A)  total output will not change. 
B)  total output will fall. 
C)  total output will rise. 
D)  marginal product of labor will not change. 
E)  unemployment must result.

Question 20

Holding technology constant,increases in investment in plant and equipment

Accepted Answer

A)  raise the rate of return. 
B)  reduce the ratio of capital to output. 
C)  raise the average product of capital. 
D)  reduce the marginal product of capital. 
E)  raise the profitability of investment. 
A)  raise the rate of return. 
B)  reduce the ratio of capital to output. 
C)  raise the average product of capital. 
D)  reduce the marginal product of capital. 
E)  raise the profitability of investment.

Exam 13: Economic Growth

Small differences in the annual rate of economic growth can make substantial differences in living standards a few decades later because

Significant government involvement in stimulating economic growth became more common

The Club of Rome study was concerned primarily with the ________ growth.

According to the Harrod-Domar growth model,an economy with a capital-output ratio of four that saves and invests 12 percent of its GDP will grow annually at a rate of ________ percent.

A major reason why Henry Ford was able to sell the Model T for as little as $360 per car was

Human capital formation refers to

The standard of living in the industrialized nations has improved dramatically over the past two centuries despite Malthus's dismal predictions.Malthus's most important mistake was to

A subsistence standard of living coupled with periods of starvation was the prospect for humanity according to the views of

One popular measure of the rate of technological change is the rate

An important endogenous factor influencing a country's rate of technological change is

The next question is based on the following table: -According to Malthus,if subsistence is 150 bushels of wheat per worker,the equilibrium labor force would be ________ million.

Many of the basic innovations introduced into the U.S.economy during the twentieth century are attributed to the fact that our culture has been able to nurture a great many

The term marginal product of labor refers to the

The rate of economic growth and the rate of technological change are linked by the

Malthus believed that maintaining or improving humanity's standard of living would be possible only with

An element of economic welfare that is NOT effectively captured in growth measurement of real per capita GDP is

The rate of growth in real per capita GDP is deficient as a measure of the rate of economic growth because

The law of diminishing marginal returns

The following question are based on the following diagram: -If,with this shift,the amount of labor does NOT change,

Holding technology constant,increases in investment in plant and equipment

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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