Question 1

When labour productivity decreases, there is ________ the production function and ________ in potential GDP.

Accepted Answer

A) a movement down along; no change 
B) a movement down along; a decrease 
C) a downward shift of; no change 
D) a downward shift of; a decrease 
E) neither a movement along nor a shift of; no change 
A) a movement down along; no change 
B) a movement down along; a decrease 
C) a downward shift of; no change 
D) a downward shift of; a decrease 
E) neither a movement along nor a shift of; no change

Question 2

Labour productivity rises when

Accepted Answer

A) technological progress is stagnant. 
B) firms invest more in hiring workers than in replacing worn-out capital. 
C) the amount of capital per worker decreases. 
D) the real wage rate falls. 
E) the amount of capital per worker increases. 
A) technological progress is stagnant. 
B) firms invest more in hiring workers than in replacing worn-out capital. 
C) the amount of capital per worker decreases. 
D) the real wage rate falls. 
E) the amount of capital per worker increases.

Question 3

Use the figure below to answer the following question.
   
Figure 22.3.1
-Refer to Figure 22.3.1. The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will

Accepted Answer

A) move to point such as Y. 
B) remain at point W. 
C) move to point such as X. 
D) move to point such as Z. 
E) either remain at point W or move to point X. 
A) move to point such as Y. 
B) remain at point W. 
C) move to point such as X. 
D) move to point such as Z. 
E) either remain at point W or move to point X.

Question 4

Ceteris paribus, an increase in labour productivity results in a

Accepted Answer

A) higher real wage rate and higher potential GDP per hour of labour. 
B) lower real wage rate and higher potential GDP per hour of labour. 
C) higher real wage rate and lower potential GDP per hour of labour. 
D) lower real wage rate and lower potential GDP per hour of labour. 
E) constant real wage rate in the long run. 
A) higher real wage rate and higher potential GDP per hour of labour. 
B) lower real wage rate and higher potential GDP per hour of labour. 
C) higher real wage rate and lower potential GDP per hour of labour. 
D) lower real wage rate and lower potential GDP per hour of labour. 
E) constant real wage rate in the long run.

Question 5

Growth eventually stops in neoclassical growth theory when

Accepted Answer

A) technology stops advancing. 
B) saving increases. 
C) discoveries are replicated. 
D) the return on capital increases. 
E) population growth lowers the real wage rate. 
A) technology stops advancing. 
B) saving increases. 
C) discoveries are replicated. 
D) the return on capital increases. 
E) population growth lowers the real wage rate.

Question 6

Use the figure below to answer the following questions.
   
Figure 22.3.2
-Refer to Figure 22.3.2. The equilibrium quantity of labour is

Accepted Answer

A) 100 billion hours. 
B) 150 billion hours. 
C) 200 billion hours. 
D) 50 billion hours. 
E) 250 billion hours. 
A) 100 billion hours. 
B) 150 billion hours. 
C) 200 billion hours. 
D) 50 billion hours. 
E) 250 billion hours.

Question 7

The new growth theory holds that growth can persist indefinitely based on the major assumption that

Accepted Answer

A) discoveries result from regulations. 
B) knowledge capital does not experience diminishing returns. 
C) knowledge is a public capital good. 
D) discoveries bring profit. 
E) knowledge destroys profit. 
A) discoveries result from regulations. 
B) knowledge capital does not experience diminishing returns. 
C) knowledge is a public capital good. 
D) discoveries bring profit. 
E) knowledge destroys profit.

Question 8

Use the figure below to answer the following questions.
   
Figure 22.3.2
-Refer to Figure 22.3.2. The equilibrium real wage rate is

Accepted Answer

A) $10 an hour. 
B) $15 an hour. 
C) $20 an hour. 
D) any wage rate above $15 an hour. 
E) any wage rate below $15 an hour. 
A) $10 an hour. 
B) $15 an hour. 
C) $20 an hour. 
D) any wage rate above $15 an hour. 
E) any wage rate below $15 an hour.

Question 9

For three years, there was no technological change in Longland but capital per hour of labour increased from $10 to $20 to $30 and real GDP per hour of labour increased from $3.80 to $5.70 to $7.13. Then in the fourth year, capital per hour of labour remained constant but real GDP per hour of labour increased to $10. Longland ________ experience diminishing returns because ________.

Accepted Answer

A) does; in the fourth year capital per hour of labour does not change 
B) does; as capital per hour of labour increases, real GDP per hour of labour increases but by smaller amounts 
C) does not; as capital per hour of labour increases, real GDP per hour of labour also increases 
D) does not; in the fourth year capital per hour of labour does not change 
E) does; all countries experience diminishing returns 
A) does; in the fourth year capital per hour of labour does not change 
B) does; as capital per hour of labour increases, real GDP per hour of labour increases but by smaller amounts 
C) does not; as capital per hour of labour increases, real GDP per hour of labour also increases 
D) does not; in the fourth year capital per hour of labour does not change 
E) does; all countries experience diminishing returns

Question 10

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

Accepted Answer

A) 14 
B) 7 
C) 4 
D) 30 
E) 3.5 
A) 14 
B) 7 
C) 4 
D) 30 
E) 3.5

Question 11

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

Accepted Answer

A) in 2 years 
B) in 15 years 
C) never 
D) in 10 years 
E) in 7 years 
A) in 2 years 
B) in 15 years 
C) never 
D) in 10 years 
E) in 7 years

Question 12

Between 1926 and 2014 real GDP per person in Canada grew at an average rate of

Accepted Answer

A) 2.8 percent a year. 
B) 1.7 percent a year. 
C) 2.0 percent a year. 
D) 3.6 percent a year. 
E) 4.3 percent a year. 
A) 2.8 percent a year. 
B) 1.7 percent a year. 
C) 2.0 percent a year. 
D) 3.6 percent a year. 
E) 4.3 percent a year.

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

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

Question 15

Convergence between real GDP per person in Canada and Japan was relatively ________ during the 1960s; convergence has recently been ________.

Accepted Answer

A) slow; increasing 
B) rapid; decreasing 
C) rapid; increasing at an even faster rate 
D) slow; decreasing 
E) rapidly; continuing at the 1960s pace 
A) slow; increasing 
B) rapid; decreasing 
C) rapid; increasing at an even faster rate 
D) slow; decreasing 
E) rapidly; continuing at the 1960s pace

Question 16

An increase in population results in

Accepted Answer

A) an upward shift in the production function. 
B) a movement along the production function. 
C) a leftward shift of the labour supply curve. 
D) a rightward shift of the labour demand curve. 
E) a rise in the real wage rate. 
A) an upward shift in the production function. 
B) a movement along the production function. 
C) a leftward shift of the labour supply curve. 
D) a rightward shift of the labour demand curve. 
E) a rise in the real wage rate.

Question 17

Growthland's real GDP per person was $112,000 in 2013 and $117,000 in 2014. What is the growth rate of Growthland's real GDP per person in 2014?

Accepted Answer

A) 4.3 percent 
B) 4.5 percent 
C) 5 percent 
D) 12 percent 
E) 17 percent 
A) 4.3 percent 
B) 4.5 percent 
C) 5 percent 
D) 12 percent 
E) 17 percent

Question 18

During 2014, the country of Economia had real GDP of $115 billion and the population was 0.9 billion. In 2015, real GDP was $105 billion and the population was 0.85 billion. In 2014, real GDP per person was

Accepted Answer

A) $124. 
B) $135. 
C) $117. 
D) $12,778. 
E) $128. 
A) $124. 
B) $135. 
C) $117. 
D) $12,778. 
E) $128.

Question 19

Use the information below to answer the following questions.
Fact 22.2.1
China was the largest economy for centuries because everyone had the same type of economy-subsistence-and so the country with the most people would be economically biggest. Then the Industrial Revolution sent the West on a more prosperous path. Now the world is returning to a common economy, this time technology- and information-based, so once again population triumphs.
-Consider Fact 22.2.1. China's was the world's largest economy until 1890 because

Accepted Answer

A) people in all countries had approximately the same subsistence level of income. 
B) the Industrial Revolution gave the greatest growth to the countries with the largest populations. 
C) it was the country with the largest land mass. 
D) it was a large exporter of goods and services. 
E) it had a diverse climate. 
A) people in all countries had approximately the same subsistence level of income. 
B) the Industrial Revolution gave the greatest growth to the countries with the largest populations. 
C) it was the country with the largest land mass. 
D) it was a large exporter of goods and services. 
E) it had a diverse climate.

Question 20

If capital per worker decreases, real GDP per hour of labour

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. 
E) none of the above 
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. 
E) none of the above

Exam 22: Economic Growth

When labour productivity decreases, there is ________ the production function and ________ in potential GDP.

Labour productivity rises when

Use the figure below to answer the following question. Figure 22.3.1 -Refer to Figure 22.3.1. The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will

Ceteris paribus, an increase in labour productivity results in a

Growth eventually stops in neoclassical growth theory when

Use the figure below to answer the following questions. Figure 22.3.2 -Refer to Figure 22.3.2. The equilibrium quantity of labour is

The new growth theory holds that growth can persist indefinitely based on the major assumption that

Use the figure below to answer the following questions. Figure 22.3.2 -Refer to Figure 22.3.2. The equilibrium real wage rate is

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

Between 1926 and 2014 real GDP per person in Canada grew at an average rate of

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

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

Convergence between real GDP per person in Canada and Japan was relatively ________ during the 1960s; convergence has recently been ________.

An increase in population results in

Growthland's real GDP per person was $112,000 in 2013 and $117,000 in 2014. What is the growth rate of Growthland's real GDP per person in 2014?

During 2014, the country of Economia had real GDP of $115 billion and the population was 0.9 billion. In 2015, real GDP was $105 billion and the population was 0.85 billion. In 2014, real GDP per person was

If capital per worker decreases, real GDP per hour of labour

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

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

Macro Only: International Trade Policy

Filters

When labour productivity decreases, there is the production function and in potential GDP.

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

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

Convergence between real GDP per person in Canada and Japan was relatively during the 1960s; convergence has recently been .