Question 1

Neoclassical growth theory predicts that

Accepted Answer

A)  advances in technology increase the productivity of capital, which leads to an increase in investment and rising real GDP per person. 
B)  advances in technology are a result of discoveries motivated by the pursuit of profits. 
C)  growth in real GDP can increase without any increase in investment. 
D)  growth in real GDP can continue indefinitely. 
A)  advances in technology increase the productivity of capital, which leads to an increase in investment and rising real GDP per person. 
B)  advances in technology are a result of discoveries motivated by the pursuit of profits. 
C)  growth in real GDP can increase without any increase in investment. 
D)  growth in real GDP can continue indefinitely.

Question 2

A key assumption of new growth theory is that

Accepted Answer

A)  all technological change is the result of luck. 
B)  higher incomes lead to a higher birth rate. 
C)  a successful innovator has the opportunity to earn a temporary, above-average profit. 
D)  the population growth rate is lower than the real interest rate. 
A)  all technological change is the result of luck. 
B)  higher incomes lead to a higher birth rate. 
C)  a successful innovator has the opportunity to earn a temporary, above-average profit. 
D)  the population growth rate is lower than the real interest rate.

Question 3

The notion that technological change is not random but instead is driven by the pursuit of profits is an essential element of

Accepted Answer

A)  classical growth theory. 
B)  neoclassical growth theory. 
C)  the new growth theory. 
D)  perpetual growth theory. 
A)  classical growth theory. 
B)  neoclassical growth theory. 
C)  the new growth theory. 
D)  perpetual growth theory.

Question 4

If real GDP is $800 million and aggregate labor hours are 20 million,labor productivity is ________.

Accepted Answer

A)  $40 per hour 
B)  $16,000 million 
C)  $40 million 
D)  $160 per hour 
A)  $40 per hour 
B)  $16,000 million 
C)  $40 million 
D)  $160 per hour

Question 5

Over the past 100 years,real GDP per person in the United States has grown at an average of ________ percent a year.

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 6

If the price level rises by 3 percent and workers' money wage rate increase by 1 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)  real wage rate increases. 
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)  real wage rate increases.

Question 7

Economic growth is measured by

Accepted Answer

A)  changes in real GDP. 
B)  changes in nominal GDP. 
C)  changes in the employment rate. 
D)  All of the above are used to measure economic growth. 
A)  changes in real GDP. 
B)  changes in nominal GDP. 
C)  changes in the employment rate. 
D)  All of the above are used to measure economic growth.

Question 8

-In the above figure,the equilibrium level of labor is

Accepted Answer

A)  100 billion hours. 
B)  150 billion hours. 
C)  200 billion hours. 
D)  none of the above 
A)  100 billion hours. 
B)  150 billion hours. 
C)  200 billion hours. 
D)  none of the above

Question 9

What is the main difference between classical economists' ideas about economic growth versus what modern evidence suggests?

Accepted Answer

Classical economists assumed that as rea

Question 10

To achieve faster growth,economies can increase income tax rates in order to increase saving rates.

Accepted Answer

A) True 
 B)False

Question 11

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Real wage rate } \
\text { (2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Labor demand } \
\text { (billions of } \
\text { hours per } \
\text { year) }
\end{array} & \begin{array} { c } 
\text { Labor supply } \
\text { (billions of } \
\text { hours per } \
\text { year) }
\end{array} \
\hline 5 & 360 & 260 \
\hline 10 & 325 & 275 \
\hline 15 & 300 & 300 \
\hline 20 & 280 & 330 \
\hline
\end{array}$$ 
 $$\begin{array} { |c | c | } 
\begin{array} { c } 
\text { Employment } \
\text { (billions of } \
\text { hours per } \
\text { year) }
\end{array} & \begin{array} { c } 
\text { Real GDP } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 100 & 2.0 \
\hline 200 & 3.0 \
\hline 300 & 3.8 \
\hline 400 & 4.4 \
\hline
\end{array}$$
-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?
If you cannot determine a precise amount,give the range in which potential GDP must lie.

Accepted Answer

a)The equilibrium real wage rate is $15

Question 12

Which of the following ideas apply to the neoclassical growth theory?
I. The rate of technological change influences the rate of economic growth.
II. Technological change promotes saving and investment.
III. Convergence of economic growth rates across countries.

Accepted Answer

A)  I only 
B)  III only 
C)  I and II 
D)  I, II and III 
A)  I only 
B)  III only 
C)  I and II 
D)  I, II and III

Question 13

If real GDP per person is growing at 4 percent per year,approximately how many years will it take to double?

Accepted Answer

A)  17.5 
B)  25 
C)  4 
D)  8 
A)  17.5 
B)  25 
C)  4 
D)  8

Question 14

Over the past 100 years real GDP per person in the United States,on average,has

Accepted Answer

A)  decreased by about 5 percent per year. 
B)  increased by about 2 percent per year. 
C)  increased by about 5 percent per year. 
D)  increased by about 10 percent per year. 
A)  decreased by about 5 percent per year. 
B)  increased by about 2 percent per year. 
C)  increased by about 5 percent per year. 
D)  increased by about 10 percent per year.

Question 15

New growth theory

Accepted Answer

A)  dates from the 18th century. 
B)  concludes that economic growth is temporary. 
C)  states that economic growth arises from people's choices. 
D)  asserts that population growth is the source of economic growth. 
A)  dates from the 18th century. 
B)  concludes that economic growth is temporary. 
C)  states that economic growth arises from people's choices. 
D)  asserts that population growth is the source of economic growth.

Question 16

All of the following contribute to labor productivity growth EXCEPT:

Accepted Answer

A)  population growth. 
B)  physical capital growth. 
C)  human capital growth. 
D)  technological advancements. 
A)  population growth. 
B)  physical capital growth. 
C)  human capital growth. 
D)  technological advancements.

Question 17

During World War II,the increasing productivity of workers who built ships was due primarily to

Accepted Answer

A)  human capital accumulation through schooling and training. 
B)  human capital accumulation by repeatedly doing the same tasks. 
C)  discoveries of new and better technologies. 
D)  investments by shipyards in new capital equipment. 
A)  human capital accumulation through schooling and training. 
B)  human capital accumulation by repeatedly doing the same tasks. 
C)  discoveries of new and better technologies. 
D)  investments by shipyards in new capital equipment.

Question 18

Which of the following is NOT associated with the new growth theory?

Accepted Answer

A)  natural resources 
B)  research 
C)  technology 
D)  innovation 
A)  natural resources 
B)  research 
C)  technology 
D)  innovation

Question 19

Classical growth theory asserts that

Accepted Answer

A)  an increase in the labor supply raises real wage rates. 
B)  the economy can grow indefinitely. 
C)  real wage rates fall over time and, as they fall, they increase the population growth rate. 
D)  population growth is determined by the level of real GDP per person. 
A)  an increase in the labor supply raises real wage rates. 
B)  the economy can grow indefinitely. 
C)  real wage rates fall over time and, as they fall, they increase the population growth rate. 
D)  population growth is determined by the level of real GDP per person.

Question 20

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

Neoclassical growth theory predicts that

A key assumption of new growth theory is that

The notion that technological change is not random but instead is driven by the pursuit of profits is an essential element of

If real GDP is $800 million and aggregate labor hours are 20 million,labor productivity is ________.

Over the past 100 years,real GDP per person in the United States has grown at an average of ________ percent a year.

If the price level rises by 3 percent and workers' money wage rate increase by 1 percent,then the

Economic growth is measured by

-In the above figure,the equilibrium level of labor is

What is the main difference between classical economists' ideas about economic growth versus what modern evidence suggests?

To achieve faster growth,economies can increase income tax rates in order to increase saving rates.

Which of the following ideas apply to the neoclassical growth theory? I. The rate of technological change influences the rate of economic growth. II. Technological change promotes saving and investment. III. Convergence of economic growth rates across countries.

If real GDP per person is growing at 4 percent per year,approximately how many years will it take to double?

Over the past 100 years real GDP per person in the United States,on average,has

New growth theory

All of the following contribute to labor productivity growth EXCEPT:

During World War II,the increasing productivity of workers who built ships was due primarily to

Which of the following is NOT associated with the new growth theory?

Classical growth theory asserts that

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?

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

Neoclassical growth theory predicts that

A key assumption of new growth theory is that

The notion that technological change is not random but instead is driven by the pursuit of profits is an essential element of

If real GDP is $800 million and aggregate labor hours are 20 million,labor productivity is ________.

Over the past 100 years,real GDP per person in the United States has grown at an average of ________ percent a year.

If the price level rises by 3 percent and workers' money wage rate increase by 1 percent,then the

Economic growth is measured by

-In the above figure,the equilibrium level of labor is

What is the main difference between classical economists' ideas about economic growth versus what modern evidence suggests?

To achieve faster growth,economies can increase income tax rates in order to increase saving rates.

Which of the following ideas apply to the neoclassical growth theory? I. The rate of technological change influences the rate of economic growth. II. Technological change promotes saving and investment. III. Convergence of economic growth rates across countries.

If real GDP per person is growing at 4 percent per year,approximately how many years will it take to double?

Over the past 100 years real GDP per person in the United States,on average,has

New growth theory

All of the following contribute to labor productivity growth EXCEPT:

During World War II,the increasing productivity of workers who built ships was due primarily to

Which of the following is NOT associated with the new growth theory?

Classical growth theory asserts that

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?

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