Question 1

Real GDP is $700 billion, average hours worked per week is 42 and aggregate hours 150 billion hours. What is the economy's labor productivity?

Accepted Answer

A) $1.80 per hour 
B) $3.75 per hour 
C) $16.67 per hour 
D) $46.67 per hour 
E) $4.50 per hour 
A) $1.80 per hour 
B) $3.75 per hour 
C) $16.67 per hour 
D) $46.67 per hour 
E) $4.50 per hour

Question 2

The growth rate of real GDP is measured by the following formula:

Accepted Answer

A) real GDP in the current year minus real GDP in the previous year. 
B) real GDP in the previous year minus real GDP in the current year. 
C)    × 100. 
D) (real GDP in the current year + real GDP in the previous year)÷ 2. 
E) (real GDP in the current year minus real GDP in the previous year)× 100. 
A) real GDP in the current year minus real GDP in the previous year. 
B) real GDP in the previous year minus real GDP in the current year. 
C)    × 100. 
D) (real GDP in the current year + real GDP in the previous year)÷ 2. 
E) (real GDP in the current year minus real GDP in the previous year)× 100.

Question 3

Potential GDP is the level of

Accepted Answer

A) GDP that is impossible to achieve. 
B) real GDP that the economy could produce at full employment. 
C) nominal GDP that is smaller than the real GDP. 
D) GDP that fluctuates around actual GDP. 
E) GDP that would be produced if all workers were fully employed and there was no unemployment. 
A) GDP that is impossible to achieve. 
B) real GDP that the economy could produce at full employment. 
C) nominal GDP that is smaller than the real GDP. 
D) GDP that fluctuates around actual GDP. 
E) GDP that would be produced if all workers were fully employed and there was no unemployment.

Question 4

The Lucas Wedge shows

Accepted Answer

A) the negative impact a slowdown in real GDP growth has on potential GDP. 
B) the increased impact of government spending on real GDP. 
C) the negative impact inflation has on consumer spending. 
D) the positive impact lower taxes have on real GDP. 
E) whether a country needs to slow its real GDP growth rate. 
A) the negative impact a slowdown in real GDP growth has on potential GDP. 
B) the increased impact of government spending on real GDP. 
C) the negative impact inflation has on consumer spending. 
D) the positive impact lower taxes have on real GDP. 
E) whether a country needs to slow its real GDP growth rate.

Question 5

________ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy.

Accepted Answer

A) Classical macroeconomics 
B) Keynesian economics 
C) The new macroeconomics 
D) The Lucas Wedge 
E) The Okun Gap 
A) Classical macroeconomics 
B) Keynesian economics 
C) The new macroeconomics 
D) The Lucas Wedge 
E) The Okun Gap

Question 6

Economic freedom means that

Accepted Answer

A) firms are regulated by the government. 
B) some goods and services are free. 
C) people are able to make personal choices and their property is protected. 
D) the rule of law does not apply. 
E) the nation's government is a democracy. 
A) firms are regulated by the government. 
B) some goods and services are free. 
C) people are able to make personal choices and their property is protected. 
D) the rule of law does not apply. 
E) the nation's government is a democracy.

Question 7

If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80 billion, labor productivity is

Accepted Answer

A) $5.00 an hour. 
B) $6.67 an hour. 
C) $15.00 an hour. 
D) $20,000. 
E) $150 an hour. 
A) $5.00 an hour. 
B) $6.67 an hour. 
C) $15.00 an hour. 
D) $20,000. 
E) $150 an hour.

Question 8

For economic freedom to exist,

Accepted Answer

A) copyright laws must be abolished and markets supervised by the government. 
B) democracy must exist. 
C) property rights must be protected and markets must be free. 
D) human capital must be given away free. 
E) money must be free. 
A) copyright laws must be abolished and markets supervised by the government. 
B) democracy must exist. 
C) property rights must be protected and markets must be free. 
D) human capital must be given away free. 
E) money must be free.

Question 9

The law of diminishing marginal returns states that

Accepted Answer

A) output increases at a constant rate as more capital is added. 
B) output decreases at a constant rate as more capital is added. 
C) as both labor and capital are increased, output does not change. 
D) as both labor and capital are increased, output increases at a decreasing rate. 
E) output increases at a decreasing rate as more capital is added. 
A) output increases at a constant rate as more capital is added. 
B) output decreases at a constant rate as more capital is added. 
C) as both labor and capital are increased, output does not change. 
D) as both labor and capital are increased, output increases at a decreasing rate. 
E) output increases at a decreasing rate as more capital is added.

Question 10

Suppose Germany's economy is experiencing full employment. This means that, in Germany,

Accepted Answer

A) the unemployment rate is equal to zero. 
B) real GDP is equal to potential GDP. 
C) real GDP is greater than potential GDP. 
D) potential GDP is greater than real GDP. 
E) real GDP equals nominal GDP. 
A) the unemployment rate is equal to zero. 
B) real GDP is equal to potential GDP. 
C) real GDP is greater than potential GDP. 
D) potential GDP is greater than real GDP. 
E) real GDP equals nominal GDP.

Question 11

A surplus in the labor market indicates that the

Accepted Answer

A) real wage rate is above the equilibrium wage rate but it is too low to eliminate the surplus of labor. 
B) quantity of labor demanded is less than the quantity of labor supplied. 
C) real wage rate has to rise before the labor market will reach equilibrium. 
D) workers are not looking for work because they enjoy their leisure time. 
E) real wage rate is less than the equilibrium wage rate. 
A) real wage rate is above the equilibrium wage rate but it is too low to eliminate the surplus of labor. 
B) quantity of labor demanded is less than the quantity of labor supplied. 
C) real wage rate has to rise before the labor market will reach equilibrium. 
D) workers are not looking for work because they enjoy their leisure time. 
E) real wage rate is less than the equilibrium wage rate.

Question 12

Retirement savings accounts, such as IRAs, help increase economic growth because

Accepted Answer

A) people have an incentive to work harder and longer hours to save for the future. 
B) they keep the interest rates high. 
C) savings finances investment. 
D) government invests them. 
E) they encourage international trade. 
A) people have an incentive to work harder and longer hours to save for the future. 
B) they keep the interest rates high. 
C) savings finances investment. 
D) government invests them. 
E) they encourage international trade.

Question 13

Which of the following lists gives factors that increase labor productivity?

Accepted Answer

A) saving and investment in physical capital, and wage increases 
B) expansion of human capital, labor force increases, and discovery of new technologies 
C) expansion of human capital, population growth, and discovery of new technologies 
D) saving and investment in physical capital, expansion of human capital, and discovery of new technologies 
E) labor force increases and wage increases 
A) saving and investment in physical capital, and wage increases 
B) expansion of human capital, labor force increases, and discovery of new technologies 
C) expansion of human capital, population growth, and discovery of new technologies 
D) saving and investment in physical capital, expansion of human capital, and discovery of new technologies 
E) labor force increases and wage increases

Question 14

The production function shows that potential GDP increases when the

Accepted Answer

A) price level rises. 
B) price level falls. 
C) inflation rate falls. 
D) quantity of labor employed increases. 
E) the wage rate falls. 
A) price level rises. 
B) price level falls. 
C) inflation rate falls. 
D) quantity of labor employed increases. 
E) the wage rate falls.

Question 15

$$\begin{array} { l c c } 
\text { Year } & \begin{array} { c } 
\text { Real GDP } \
\text { (millions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Population } \
\text { (millions of people) }
\end{array} \
\hline \text { Year 1 } & 500 & 10 \
\text { Year 2 } & 550 & 11 \
\hline
\end{array}$$
-According to the data in the table above,

Accepted Answer

A) the standard of living improved between year 1 and year 2. 
B) the standard of living worsened between year 1 and year 2. 
C) as measured by real GDP per person, the standard of living remained the same between year 1 and year 2. 
D) real GDP grew more rapidly than population between year 1 and year 2. 
E) real GDP grew more slowly than population between year 1 and year 2. 
A) the standard of living improved between year 1 and year 2. 
B) the standard of living worsened between year 1 and year 2. 
C) as measured by real GDP per person, the standard of living remained the same between year 1 and year 2. 
D) real GDP grew more rapidly than population between year 1 and year 2. 
E) real GDP grew more slowly than population between year 1 and year 2.

Question 16

If Turkey wants to promote faster economic growth, it will need to

Accepted Answer

A) promote incentive systems to encourage saving, research and development, increased trade and improved education. 
B) restrict economic freedom so the government has better control of markets. 
C) restrict international trade to protects its own workers. 
D) promote government intervention to help markets determine incentives. 
E) restrict property rights so that individuals can better share inventions. 
A) promote incentive systems to encourage saving, research and development, increased trade and improved education. 
B) restrict economic freedom so the government has better control of markets. 
C) restrict international trade to protects its own workers. 
D) promote government intervention to help markets determine incentives. 
E) restrict property rights so that individuals can better share inventions.

Question 17

Belgium's real GDP per person is $33,000 and Austria's is $34,700. The population growth rate in Belgium is 0.13 percent and the growth rate of real GDP is 3.0 percent. The population growth rate in Austria is 0.08 percent and the growth rate of real GDP is 3.3 percent. If these growth rates continue, how many years will it take for Belgium's real GDP per person to equal Austria's real GDP per person?

Accepted Answer

A) Belgium's standard of living will never equal Austria's. 
B) Just over 23 years 
C) Just over 24 years 
D) Just over 21 years 
E) Over 230 years 
A) Belgium's standard of living will never equal Austria's. 
B) Just over 23 years 
C) Just over 24 years 
D) Just over 21 years 
E) Over 230 years

Question 18

Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

Accepted Answer

A) labor is not very productive. 
B) extra labor produces more output. 
C) all other factors are held fixed. 
D) the price level rises as more workers are employed. 
E) additional workers are paid higher wage rates. 
A) labor is not very productive. 
B) extra labor produces more output. 
C) all other factors are held fixed. 
D) the price level rises as more workers are employed. 
E) additional workers are paid higher wage rates.

Question 19

List and explain the three factors that can increase labor productivity.

Accepted Answer

The three factors that can increase labo

Question 20

As the real wage rate rises, the opportunity cost of

Accepted Answer

A) working rises. 
B) saving rises. 
C) leisure rises. 
D) leisure falls. 
E) buying goods and services rises. 
A) working rises. 
B) saving rises. 
C) leisure rises. 
D) leisure falls. 
E) buying goods and services rises.

Real GDP is $700 billion, average hours worked per week is 42 and aggregate hours 150 billion hours. What is the economy's labor productivity?

The growth rate of real GDP is measured by the following formula:

Potential GDP is the level of

The Lucas Wedge shows

________ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy.

Economic freedom means that

If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80 billion, labor productivity is

For economic freedom to exist,

The law of diminishing marginal returns states that

Suppose Germany's economy is experiencing full employment. This means that, in Germany,

A surplus in the labor market indicates that the

Retirement savings accounts, such as IRAs, help increase economic growth because

Which of the following lists gives factors that increase labor productivity?

The production function shows that potential GDP increases when the

Year Real GDP (millions of 2005 dollars) Population (millions of people) Year 1 500 10 Year 2 550 11 -According to the data in the table above,

If Turkey wants to promote faster economic growth, it will need to

Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

List and explain the three factors that can increase labor productivity.

As the real wage rate rises, the opportunity cost of

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

Real GDP is $700 billion, average hours worked per week is 42 and aggregate hours 150 billion hours. What is the economy's labor productivity?

The growth rate of real GDP is measured by the following formula:

Potential GDP is the level of

The Lucas Wedge shows

________ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy.

Economic freedom means that

If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80 billion, labor productivity is

For economic freedom to exist,

The law of diminishing marginal returns states that

Suppose Germany's economy is experiencing full employment. This means that, in Germany,

A surplus in the labor market indicates that the

Retirement savings accounts, such as IRAs, help increase economic growth because

Which of the following lists gives factors that increase labor productivity?

The production function shows that potential GDP increases when the

Year Real GDP (millions of 2005 dollars) Population (millions of people) Year 1 500 10 Year 2 550 11 -According to the data in the table above,

If Turkey wants to promote faster economic growth, it will need to

Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

List and explain the three factors that can increase labor productivity.

As the real wage rate rises, the opportunity cost of

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