Question 1

The classical growth theory shows how technology changes continually generate economic growth.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that in 2013 a country has a population of 1 million and real GDP of $1 billion. In 2014,the population is 1.1 million and the real GDP is $1.1 billion.The real GDP per person growth rate is

Accepted Answer

A)  $1000. 
B)  positive. 
C)  negative. 
D)  zero. 
A)  $1000. 
B)  positive. 
C)  negative. 
D)  zero.

Question 3

In developing nations,microloans

Accepted Answer

A)  have increased the indebtedness of impoverished people, thereby slowing economic growth. 
B)  are primarily used to finance consumption expenditure, thereby leading to economic growth. 
C)  have enabled small businesses with limited access to credit to purchase capital and expand, thus allowing greater economic growth. 
D)  are far too small to have any discernible effect. 
A)  have increased the indebtedness of impoverished people, thereby slowing economic growth. 
B)  are primarily used to finance consumption expenditure, thereby leading to economic growth. 
C)  have enabled small businesses with limited access to credit to purchase capital and expand, thus allowing greater economic growth. 
D)  are far too small to have any discernible effect.

Question 4

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

Question 5

Over the past 100 years,in the United States the average growth rate of ________ grew at a faster rate than ________.

Accepted Answer

A)  real GDP; nominal GDP 
B)  the population; real GDP 
C)  real GDP; the population 
D)  inflation; real GDP 
A)  real GDP; nominal GDP 
B)  the population; real GDP 
C)  real GDP; the population 
D)  inflation; real GDP

Question 6

According to the classical growth theory of Thomas Malthus,

Accepted Answer

A)  labor productivity increases continuously. 
B)  the population growth rate is fixed. 
C)  technological advances lead to permanent increases in real GDP per person. 
D)  increases in real GDP per person are only temporary. 
A)  labor productivity increases continuously. 
B)  the population growth rate is fixed. 
C)  technological advances lead to permanent increases in real GDP per person. 
D)  increases in real GDP per person are only temporary.

Question 7

Because the productivity of labor decreases as the quantity of labor employed increases,

Accepted Answer

A)  the quantity of labor a firm demands increases as the real wage rate decreases. 
B)  the quantity of labor a firm demands increases as the money wage rate decreases. 
C)  the labor demand curve shifts right as the real wage rate decreases. 
D)  the aggregate production function shifts upward as the real wage rate decreases. 
A)  the quantity of labor a firm demands increases as the real wage rate decreases. 
B)  the quantity of labor a firm demands increases as the money wage rate decreases. 
C)  the labor demand curve shifts right as the real wage rate decreases. 
D)  the aggregate production function shifts upward as the real wage rate decreases.

Question 8

At the full-employment equilibrium in the labor market,

Accepted Answer

A)  there is no unemployment. 
B)  there are no job vacancies. 
C)  there is neither a shortage nor a surplus of labor. 
D)  the money wage rate equals the real wage rate. 
A)  there is no unemployment. 
B)  there are no job vacancies. 
C)  there is neither a shortage nor a surplus of labor. 
D)  the money wage rate equals the real wage rate.

Question 9

$\begin{array}{|c|c|c}
\text { Real wage rate } & \begin{array}{c}
\text { Labor demand } \
\text { (billions of } \
\text { hours per } \
\text { year) }
\end{array} & \begin{array}{c}
\text { Labor supply } \
\text { (billions of } \
\text { hours per } \
\text { year) }
\end{array} \
\hline 30 & 100 & 700 \
\hline 25 & 200 & 600 \
\hline 20 & 300 & 500 \
\hline 15 & 400 & 400 \
\hline 10 & 500 & 300 \
\hline
\end{array}$ 
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Employment } \
\text { (billions of } \
\text { hours per } \
\text { year) }
\end{array} & \begin{array} { c } 
\text { Real GDP } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 200 & 3.0 \
\hline 300 & 4.0 \
\hline 400 & 4.8 \
\hline 500 & 5.4 \
\hline 600 & 5.8 \
\hline
\end{array}$$
-The first table above gives the labor demand and labor supply schedules for a nation.The second table gives its production function.
a) What is the equilibrium real wage rate and the level of employment?
b) What is potential GDP?

Accepted Answer

a)The equilibrium real wage rate is $15

Question 10

________ predicts that real GDP per person can grow indefinitely.

Accepted Answer

A)  New growth theory 
B)  Classical growth theory 
C)  Profit growth theory 
D)  Neoclassical growth theory 
A)  New growth theory 
B)  Classical growth theory 
C)  Profit growth theory 
D)  Neoclassical growth theory

Question 11

According to the law of diminishing returns,an additional unit of

Accepted Answer

A)  capital produces more output than an additional unit of labor. 
B)  labor decreases output. 
C)  labor produces more output than the previous unit. 
D)  labor produces less output than the previous unit. 
A)  capital produces more output than an additional unit of labor. 
B)  labor decreases output. 
C)  labor produces more output than the previous unit. 
D)  labor produces less output than the previous unit.

Question 12

In the labor market,an increase in labor productivity ________ the real wage rate and ________ the level of employment.

Accepted Answer

A)  raises; increases 
B)  raises; decreases 
C)  lowers; increases 
D)  lowers; decreases 
A)  raises; increases 
B)  raises; decreases 
C)  lowers; increases 
D)  lowers; decreases

Question 13

Classical growth theory states that

Accepted Answer

A)  growth is maximized when everyone is fully employed. 
B)  growth is followed by increases in the population, eventually leaving real GDP per person unchanged. 
C)  growth in real GDP per person is difficult in the beginning but easier in the later stages. 
D)  advances in technology will always insure a permanent increase in real GDP per person. 
A)  growth is maximized when everyone is fully employed. 
B)  growth is followed by increases in the population, eventually leaving real GDP per person unchanged. 
C)  growth in real GDP per person is difficult in the beginning but easier in the later stages. 
D)  advances in technology will always insure a permanent increase in real GDP per person.

Question 14

Which of the following statements is correct?

Accepted Answer

A)  When workers become more productive, the demand for labor curve shifts rightward. 
B)  When technology decreases, the supply of labor curve shifts leftward. 
C)  When labor force participation increases, the supply of labor curve shifts leftward. 
D)  When human capital increases, the demand for labor curve shifts leftward. 
A)  When workers become more productive, the demand for labor curve shifts rightward. 
B)  When technology decreases, the supply of labor curve shifts leftward. 
C)  When labor force participation increases, the supply of labor curve shifts leftward. 
D)  When human capital increases, the demand for labor curve shifts leftward.

Question 15

Since 1960,which of the following countries had average growth rates in real GDP per person higher than that of the United States?

Accepted Answer

A)  Singapore 
B)  Hong Kong 
C)  South Korea 
D)  All of the above answers are correct. 
A)  Singapore 
B)  Hong Kong 
C)  South Korea 
D)  All of the above answers are correct.

Question 16

If the price level rises by 4 percent and workers' money wage rates increase by 2 percent,then the

Accepted Answer

A)  quantity of labor supplied decreases. 
B)  quantity of labor supplied increases. 
C)  quantity of labor supplied does not change because there is no change in the real wage rate. 
D)  the supply curve of labor shifts rightward. 
A)  quantity of labor supplied decreases. 
B)  quantity of labor supplied increases. 
C)  quantity of labor supplied does not change because there is no change in the real wage rate. 
D)  the supply curve of labor shifts rightward.

Question 17

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Real wage rate } \
\text { (2005 dollars } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { demanded } \
\text { (billions of hours } \
\text { per year) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { supplied (billions } \
\text { of hours per year) }
\end{array} \
\hline 15 & 70 & 10 \
\hline 20 & 60 & 20 \
\hline 25 & 50 & 30 \
\hline 30 & 40 & 40 \
\hline 35 & 30 & 50 \
\hline
\end{array}$$ 
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Real GDP } \
\text { (trillions of 2005 } \
\text { dollars per year) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor } \
\text { (billions of hours } \
\text { per year) }
\end{array} \
\hline 3 & 20 \
\hline 9 & 30 \
\hline 14 & 40 \
\hline 18 & 50 \
\hline 21 & 60 \
\hline
\end{array}$$
-The tables above show the labor market and the production function schedule for the country of Pickett.An increase in population changes the labor supply by 20 billion hours at each real wage rate.Potential GDP ________.

Accepted Answer

A)  does not change 
B)  decreases to $3 trillion 
C)  increases to $50 trillion 
D)  increases to $18 trillion 
A)  does not change 
B)  decreases to $3 trillion 
C)  increases to $50 trillion 
D)  increases to $18 trillion

Question 18

-In the above figure,if the real wage is $10 per hour,a labor

Accepted Answer

A)  shortage will occur and the real wage will rise. 
B)  shortage will occur and the real wage will fall. 
C)  surplus will occur and the real wage will rise. 
D)  surplus will occur and the real wage will fall. 
A)  shortage will occur and the real wage will rise. 
B)  shortage will occur and the real wage will fall. 
C)  surplus will occur and the real wage will rise. 
D)  surplus will occur and the real wage will fall.

Question 19

If the price level rises by 2 percent and workers' money wages increase by 2 percent,then the

Accepted Answer

A)  quantity of labor supply decreases. 
B)  quantity of labor supply increases. 
C)  quantity of labor supplied does not change because there is no change in the real wage rate. 
D)  More information about the dollar change in the price level and money wage rate are needed to answer the question. 
A)  quantity of labor supply decreases. 
B)  quantity of labor supply increases. 
C)  quantity of labor supplied does not change because there is no change in the real wage rate. 
D)  More information about the dollar change in the price level and money wage rate are needed to answer the question.

Question 20

Labor productivity is

Accepted Answer

A)  real GDP per hour of labor times the hours of work. 
B)  real GDP per hour of labor times the number of people. 
C)  real GDP per hour of labor. 
D)  the rate of change in real GDP per hour of labor. 
A)  real GDP per hour of labor times the hours of work. 
B)  real GDP per hour of labor times the number of people. 
C)  real GDP per hour of labor. 
D)  the rate of change in real GDP per hour of labor.

The classical growth theory shows how technology changes continually generate economic growth.

Suppose that in 2013 a country has a population of 1 million and real GDP of $1 billion. In 2014,the population is 1.1 million and the real GDP is $1.1 billion.The real GDP per person growth rate is

In developing nations,microloans

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?

Over the past 100 years,in the United States the average growth rate of grew at a faster rate than .

According to the classical growth theory of Thomas Malthus,

Because the productivity of labor decreases as the quantity of labor employed increases,

At the full-employment equilibrium in the labor market,

________ predicts that real GDP per person can grow indefinitely.

According to the law of diminishing returns,an additional unit of

In the labor market,an increase in labor productivity the real wage rate and the level of employment.

Classical growth theory states that

Which of the following statements is correct?

Since 1960,which of the following countries had average growth rates in real GDP per person higher than that of the United States?

If the price level rises by 4 percent and workers' money wage rates increase by 2 percent,then the

-In the above figure,if the real wage is $10 per hour,a labor

If the price level rises by 2 percent and workers' money wages increase by 2 percent,then the

Labor productivity is

What Is Economics

The Economic Problem

Demand and Supply

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

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 6: Economic Growth

The classical growth theory shows how technology changes continually generate economic growth.

Suppose that in 2013 a country has a population of 1 million and real GDP of $1 billion. In 2014,the population is 1.1 million and the real GDP is $1.1 billion.The real GDP per person growth rate is

In developing nations,microloans

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?

Over the past 100 years,in the United States the average growth rate of ________ grew at a faster rate than ________.

According to the classical growth theory of Thomas Malthus,

Because the productivity of labor decreases as the quantity of labor employed increases,

At the full-employment equilibrium in the labor market,

________ predicts that real GDP per person can grow indefinitely.

According to the law of diminishing returns,an additional unit of

In the labor market,an increase in labor productivity ________ the real wage rate and ________ the level of employment.

Classical growth theory states that

Which of the following statements is correct?

Since 1960,which of the following countries had average growth rates in real GDP per person higher than that of the United States?

If the price level rises by 4 percent and workers' money wage rates increase by 2 percent,then the

-In the above figure,if the real wage is $10 per hour,a labor

If the price level rises by 2 percent and workers' money wages increase by 2 percent,then the

Labor productivity is

What Is Economics

The Economic Problem

Demand and Supply

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

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Over the past 100 years,in the United States the average growth rate of grew at a faster rate than .

In the labor market,an increase in labor productivity the real wage rate and the level of employment.