Question 1

Human capital is defined as the

Accepted Answer

A) amount of machinery human beings have. 
B) number of factories built for human beings. 
C) accumulated skill and knowledge of human beings. 
D) accumulated amount of machinery and factories human beings own. 
E) skills that people are born with. 
A) amount of machinery human beings have. 
B) number of factories built for human beings. 
C) accumulated skill and knowledge of human beings. 
D) accumulated amount of machinery and factories human beings own. 
E) skills that people are born with.

Question 2

Encouraging international trade will

Accepted Answer

A) slow economic growth when a country is forced to specialize and trade with other countries. 
B) slow economic growth as many workers lose their jobs to foreign workers. 
C) speed economic growth as workers diversify their knowledge and limit trade. 
D) speed economic growth as workers specialize and trade with others. 
E) speed economic growth because international trade limits the harm done by property rights. 
A) slow economic growth when a country is forced to specialize and trade with other countries. 
B) slow economic growth as many workers lose their jobs to foreign workers. 
C) speed economic growth as workers diversify their knowledge and limit trade. 
D) speed economic growth as workers specialize and trade with others. 
E) speed economic growth because international trade limits the harm done by property rights.

Question 3

If real GDP grew 5 percent last year and the population grew 2 percent, then real GDP per person grew by ________ percent.

Accepted Answer

A) 10 
B) 5 
C) 3 
D) 2 
E) 7 
A) 10 
B) 5 
C) 3 
D) 2 
E) 7

Question 4

The production function describes the relationship between

Accepted Answer

A) the real wage and the quantity of labor supplied. 
B) real GDP and the quantity of labor employed. 
C) real and potential GDP. 
D) real and nominal GDP. 
E) potential GDP and the real wage rate. 
A) the real wage and the quantity of labor supplied. 
B) real GDP and the quantity of labor employed. 
C) real and potential GDP. 
D) real and nominal GDP. 
E) potential GDP and the real wage rate.

Question 5

As long as an additional worker hired by a firm produces

Accepted Answer

A) more output than the real wage rate, the firm will hire that worker. 
B) more output than the real wage rate, the firm will not hire that worker. 
C) less output than the real wage rate, the firm will hire that worker. 
D) some output, the firm will hire that worker. 
E) more output than the nominal wage rate, the firm will hire that worker. 
A) more output than the real wage rate, the firm will hire that worker. 
B) more output than the real wage rate, the firm will not hire that worker. 
C) less output than the real wage rate, the firm will hire that worker. 
D) some output, the firm will hire that worker. 
E) more output than the nominal wage rate, the firm will hire that worker.

Question 6

If adding an initial 100 billion labor hours per year increases real GDP by $3 trillion, diminishing returns informs us that an additional 100 billion labor hours per year will increase real GDP by

Accepted Answer

A) exactly $3 trillion. 
B) less than $3 trillion. 
C) more than $3 trillion. 
D) either exactly $3 trillion or by less than $3 trillion, depending on whether the real wage rate remains constant or rises. 
E) some amount, but there is not enough information to tell by how much. 
A) exactly $3 trillion. 
B) less than $3 trillion. 
C) more than $3 trillion. 
D) either exactly $3 trillion or by less than $3 trillion, depending on whether the real wage rate remains constant or rises. 
E) some amount, but there is not enough information to tell by how much.

Question 7

Compared to the U.S. production function, the European production function is

Accepted Answer

A) higher. 
B) lower. 
C) the same. 
D) lower than the U.S. production function at low levels of employment and higher than the U.S. production function at high levels of employment. 
E) higher than the U.S. production function at low levels of employment and lower than the U.S. production function at high levels of employment. 
A) higher. 
B) lower. 
C) the same. 
D) lower than the U.S. production function at low levels of employment and higher than the U.S. production function at high levels of employment. 
E) higher than the U.S. production function at low levels of employment and lower than the U.S. production function at high levels of employment.

Question 8

The benefit to the firm of hiring another worker is

Accepted Answer

A) the nominal wage. 
B) the price level. 
C) the real wage. 
D) the extra output produced by the worker. 
E) measured as the height of the production function. 
A) the nominal wage. 
B) the price level. 
C) the real wage. 
D) the extra output produced by the worker. 
E) measured as the height of the production function.

Question 9

Explain the productivity curve and how the components interact.

Accepted Answer

The productivity curve is a relationship

Question 10

-Using the data in the table above, real GDP per person in 2007 is

Accepted Answer

A) $70,000. 
B) $71,429. 
C) $75,000. 
D) $70 trillion. 
E) 7 percent. 
A) $70,000. 
B) $71,429. 
C) $75,000. 
D) $70 trillion. 
E) 7 percent.

Question 11

The productivity curve

Accepted Answer

A) has a positive slope. 
B) has a negative slope. 
C) is vertical. 
D) is horizontal. 
E) is U-shaped. 
A) has a positive slope. 
B) has a negative slope. 
C) is vertical. 
D) is horizontal. 
E) is U-shaped.

Question 12

When the labor market is in equilibrium so that the quantity of labor supplied equals the quantity demanded,

Accepted Answer

A) there is no unemployment. 
B) the economy is fully employed. 
C) nominal GDP equals real GDP. 
D) there is no inflation. 
E) real GDP might be more than, less than, or equal to potential GDP. 
A) there is no unemployment. 
B) the economy is fully employed. 
C) nominal GDP equals real GDP. 
D) there is no inflation. 
E) real GDP might be more than, less than, or equal to potential GDP.

Question 13

Which of the following statements is (are)true?
I. As the real wage rate increases, the household's income decreases, which influences people to work more hours.
Ii. As the real wage rate increases, the quantity of labor demanded increases.
Iii. As the real wage rate increases, the opportunity cost of not working increases.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i, ii, and iii 
A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i, ii, and iii

Question 14

Why is growth in GDP different from growth in a nation's standard of living?
 Is it possible for a nation's GDP to grow while its standard of living falls?

Accepted Answer

The standard of living is measured by re

Question 15

If the U.S. population grew at a 0.9 percent during 2006 and real GDP grew at a 4.4 percent during the same period, what was the growth rate of real GDP per person?

Accepted Answer

A) 3.5 percent 
B) 5.3 percent 
C) 4.0 percent 
D) -3.5 percent 
E) 4.4 percent 
A) 3.5 percent 
B) 5.3 percent 
C) 4.0 percent 
D) -3.5 percent 
E) 4.4 percent

Question 16

When the labor market is in equilibrium,

Accepted Answer

A) there is excess labor supplied, which keeps real GDP less than potential GDP. 
B) there is full employment, which means that real GDP equals potential GDP. 
C) the real wage rate falls to equal the nominal wage rate because real GDP is greater than potential GDP. 
D) the real wage rate rises to allow real GDP to equal potential GDP. 
E) there is full employment but real GDP might be greater than, less than, or equal to potential GDP. 
A) there is excess labor supplied, which keeps real GDP less than potential GDP. 
B) there is full employment, which means that real GDP equals potential GDP. 
C) the real wage rate falls to equal the nominal wage rate because real GDP is greater than potential GDP. 
D) the real wage rate rises to allow real GDP to equal potential GDP. 
E) there is full employment but real GDP might be greater than, less than, or equal to potential GDP.

Question 17

If the economy is fully employed, which of the following is true?

Accepted Answer

A) The price level equals 100. 
B) Real and nominal GDP are equal. 
C) Real and potential GDP are equal. 
D) The unemployment rate is zero. 
E) Real GDP cannot increase. 
A) The price level equals 100. 
B) Real and nominal GDP are equal. 
C) Real and potential GDP are equal. 
D) The unemployment rate is zero. 
E) Real GDP cannot increase.

Question 18

________ in the United States ________ in most European countries.

Accepted Answer

A) Potential GDP; is greater than potential GDP 
B) Real wages; are greater than real wages 
C) The Okun Gap; is equal to the Okun Gap 
D) The Lucas Wedge; is greater than the Lucas Wedge 
E) Both A and B are true. 
A) Potential GDP; is greater than potential GDP 
B) Real wages; are greater than real wages 
C) The Okun Gap; is equal to the Okun Gap 
D) The Lucas Wedge; is greater than the Lucas Wedge 
E) Both A and B are true.

Question 19

Labor productivity equals

Accepted Answer

A) real GDP divided by the capital stock. 
B) real GDP divided by the population. 
C) total wages divided by real GDP. 
D) real GDP divided by aggregate hours. 
E) aggregate hours divided by employment. 
A) real GDP divided by the capital stock. 
B) real GDP divided by the population. 
C) total wages divided by real GDP. 
D) real GDP divided by aggregate hours. 
E) aggregate hours divided by employment.

Question 20

In order to increase economic growth, a government can ________.

Accepted Answer

A) discourage research and development 
B) decrease funding on education 
C) discourage specialization and trade 
D) establish property rights and a legal system 
E) tax saving in order to encourage more spending 
A) discourage research and development 
B) decrease funding on education 
C) discourage specialization and trade 
D) establish property rights and a legal system 
E) tax saving in order to encourage more spending

Human capital is defined as the

Encouraging international trade will

If real GDP grew 5 percent last year and the population grew 2 percent, then real GDP per person grew by ________ percent.

The production function describes the relationship between

As long as an additional worker hired by a firm produces

If adding an initial 100 billion labor hours per year increases real GDP by $3 trillion, diminishing returns informs us that an additional 100 billion labor hours per year will increase real GDP by

Compared to the U.S. production function, the European production function is

The benefit to the firm of hiring another worker is

Explain the productivity curve and how the components interact.

-Using the data in the table above, real GDP per person in 2007 is

The productivity curve

When the labor market is in equilibrium so that the quantity of labor supplied equals the quantity demanded,

Why is growth in GDP different from growth in a nation's standard of living? Is it possible for a nation's GDP to grow while its standard of living falls?

If the U.S. population grew at a 0.9 percent during 2006 and real GDP grew at a 4.4 percent during the same period, what was the growth rate of real GDP per person?

When the labor market is in equilibrium,

If the economy is fully employed, which of the following is true?

in the United States in most European countries.

Labor productivity equals

In order to increase economic growth, a government can ________.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 17: Potential Gdp and Economic Growth

Human capital is defined as the

Encouraging international trade will

If real GDP grew 5 percent last year and the population grew 2 percent, then real GDP per person grew by ________ percent.

The production function describes the relationship between

As long as an additional worker hired by a firm produces

If adding an initial 100 billion labor hours per year increases real GDP by $3 trillion, diminishing returns informs us that an additional 100 billion labor hours per year will increase real GDP by

Compared to the U.S. production function, the European production function is

The benefit to the firm of hiring another worker is

Explain the productivity curve and how the components interact.

-Using the data in the table above, real GDP per person in 2007 is

The productivity curve

When the labor market is in equilibrium so that the quantity of labor supplied equals the quantity demanded,

Why is growth in GDP different from growth in a nation's standard of living? Is it possible for a nation's GDP to grow while its standard of living falls?

If the U.S. population grew at a 0.9 percent during 2006 and real GDP grew at a 4.4 percent during the same period, what was the growth rate of real GDP per person?

When the labor market is in equilibrium,

If the economy is fully employed, which of the following is true?

________ in the United States ________ in most European countries.

Labor productivity equals

In order to increase economic growth, a government can ________.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

in the United States in most European countries.