Question 1

According to the new growth theory

Accepted Answer

A)  the rate of technological progress is determined by chance. 
B)  knowledge is not subject to diminishing returns. 
C)  the labor demand curve does not shift rightward over time. 
D)  the concept of a labor market is not necessary. 
A)  the rate of technological progress is determined by chance. 
B)  knowledge is not subject to diminishing returns. 
C)  the labor demand curve does not shift rightward over time. 
D)  the concept of a labor market is not necessary.

Question 2

-As a result of the rightward shift in the demand curve for labor from LD₀ to LD₁,the equilibrium level of employment ________ and potential GDP ________.

Accepted Answer

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

Question 3

Cuba spends the highest percentage of GDP (18.7 percent) on education while the United States is the 38th highest spender with 5.7 percent of GDP. If spending on education is important for economic growth,which of the following statements explain why Cuba's economic growth rate is lower than the U.S.economic growth rate?
(data from United Nations Human Development Programme)

Accepted Answer

A)  Cuba trades with many more countries than does the United States. 
B)  Cuba doesn't offer property rights that promote innovation. 
C)  Cuba's population is smaller than the U.S. population. 
D)  all of the above explain why Cuba's economic growth rate is lower than the U.S. economic growth rate. 
A)  Cuba trades with many more countries than does the United States. 
B)  Cuba doesn't offer property rights that promote innovation. 
C)  Cuba's population is smaller than the U.S. population. 
D)  all of the above explain why Cuba's economic growth rate is lower than the U.S. economic growth rate.

Question 4

A problem with the neoclassical growth theory is its

Accepted Answer

A)  prediction that population growth lowers the real wage rate. 
B)  inability to explain persistent differences between countries' GDP growth rates. 
C)  prediction that population growth raises the real wage rate. 
D)  comparison of the economy to a perpetual motion machine. 
A)  prediction that population growth lowers the real wage rate. 
B)  inability to explain persistent differences between countries' GDP growth rates. 
C)  prediction that population growth raises the real wage rate. 
D)  comparison of the economy to a perpetual motion machine.

Question 5

If the price level rises relative to the money wage rate,firms ________ the quantity of labor they demand and workers ________ the quantity of labor they supply.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 6

The neoclassical growth theory is based on a subsistence real wage rate.

Accepted Answer

A) True 
 B)False

Question 7

The historical record for the United States over the last 100 years shows

Accepted Answer

A)  mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP. 
B)  economic growth for about half the years and economic decline for the other half. 
C)  growth until 1970 and then a period of constant per person real GDP. 
D)  continuous economic growth for each year, although at different rates, throughout the entire century. 
A)  mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP. 
B)  economic growth for about half the years and economic decline for the other half. 
C)  growth until 1970 and then a period of constant per person real GDP. 
D)  continuous economic growth for each year, although at different rates, throughout the entire century.

Question 8

The supply of labor curve is

Accepted Answer

A)  vertical at potential GDP. 
B)  upward sloping. 
C)  downward sloping. 
D)  horizontal at the equilibrium wage rate. 
A)  vertical at potential GDP. 
B)  upward sloping. 
C)  downward sloping. 
D)  horizontal at the equilibrium wage rate.

Question 9

An increase in a nation's population results in

Accepted Answer

A)  a rightward shift in the labor demand curve. 
B)  a movement along the nation's production function. 
C)  a decrease in the full-employment quantity of labor. 
D)  an upward shift of the nation's production function. 
A)  a rightward shift in the labor demand curve. 
B)  a movement along the nation's production function. 
C)  a decrease in the full-employment quantity of labor. 
D)  an upward shift of the nation's production function.

Question 10

A higher savings rate that leads to an increase in the capital stock

Accepted Answer

A)  leads to higher interest rates. 
B)  leads to increases in labor productivity. 
C)  immediately decreases investment. 
D)  is associated with a decrease in the rate of growth of the population. 
A)  leads to higher interest rates. 
B)  leads to increases in labor productivity. 
C)  immediately decreases investment. 
D)  is associated with a decrease in the rate of growth of the population.

Question 11

If the price level rises faster than the money wage rate,the real wage rate falls.

Accepted Answer

A) True 
 B)False

Question 12

According to new growth theory,technological change is driven by

Accepted Answer

A)  random chance. 
B)  government policies. 
C)  foreign firms' attempts to increase their sales in the domestic market. 
D)  firms' attempts to increase their profit. 
A)  random chance. 
B)  government policies. 
C)  foreign firms' attempts to increase their sales in the domestic market. 
D)  firms' attempts to increase their profit.

Question 13

The aggregate production function relating real GDP to labor hours

Accepted Answer

A)  has a constant slope. 
B)  has a negative slope. 
C)  has a positive slope and becomes steeper as employment increases. 
D)  has a positive slope and becomes less steep as employment increases. 
A)  has a constant slope. 
B)  has a negative slope. 
C)  has a positive slope and becomes steeper as employment increases. 
D)  has a positive slope and becomes less steep as employment increases.

Question 14

One policy that would increase the saving rate would be

Accepted Answer

A)  raising taxes on the returns to saving. 
B)  raising taxes on the returns to investment. 
C)  taxing consumption. 
D)  raising taxes on saving. 
A)  raising taxes on the returns to saving. 
B)  raising taxes on the returns to investment. 
C)  taxing consumption. 
D)  raising taxes on saving.

Question 15

Which of the following policies improves prospects for more rapid economic growth?

Accepted Answer

A)  policies to increase government expenditure 
B)  limitations on international trade 
C)  policies to increase the educational attainment of the labor force 
D)  encouragement of political instability 
A)  policies to increase government expenditure 
B)  limitations on international trade 
C)  policies to increase the educational attainment of the labor force 
D)  encouragement of political instability

Question 16

During the last 50 years,which of the following had the lowest level of real GDP per person?

Accepted Answer

A)  Africa 
B)  Central and South America 
C)  United States 
D)  Central Europe 
A)  Africa 
B)  Central and South America 
C)  United States 
D)  Central Europe

Question 17

Slowdonia's current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person?

Accepted Answer

A)  half a year 
B)  approximately 10 years 
C)  28.6 years 
D)  35 years 
A)  half a year 
B)  approximately 10 years 
C)  28.6 years 
D)  35 years

Question 18

If a nation's population grows,then,

Accepted Answer

A)  growth in real GDP per person will be less than the growth of real GDP. 
B)  there can be no economic growth. 
C)  growth in real GDP per person will be greater than the growth of real GDP. 
D)  there must be an increase in real GDP per person. 
A)  growth in real GDP per person will be less than the growth of real GDP. 
B)  there can be no economic growth. 
C)  growth in real GDP per person will be greater than the growth of real GDP. 
D)  there must be an increase in real GDP per person.

Question 19

Moving along the aggregate production function shows the relationship between ________,holding all else constant.

Accepted Answer

A)  capital input and real GDP 
B)  labor input and real GDP 
C)  labor input, capital input and real GDP 
D)  technology and real GDP 
A)  capital input and real GDP 
B)  labor input and real GDP 
C)  labor input, capital input and real GDP 
D)  technology and real GDP

Question 20

Neoclassical growth theory proposes that

Accepted Answer

A)  technological progress increases the population growth rate and drives down real wages. 
B)  real GDP per person grows because technological change increases profit opportunities. 
C)  real GDP growth is caused by growth in the population. 
D)  discoveries result from choices that increase profits. 
A)  technological progress increases the population growth rate and drives down real wages. 
B)  real GDP per person grows because technological change increases profit opportunities. 
C)  real GDP growth is caused by growth in the population. 
D)  discoveries result from choices that increase profits.

According to the new growth theory

-As a result of the rightward shift in the demand curve for labor from LD₀ to LD₁,the equilibrium level of employment and potential GDP .

A problem with the neoclassical growth theory is its

If the price level rises relative to the money wage rate,firms the quantity of labor they demand and workers the quantity of labor they supply.

The neoclassical growth theory is based on a subsistence real wage rate.

The historical record for the United States over the last 100 years shows

The supply of labor curve is

An increase in a nation's population results in

A higher savings rate that leads to an increase in the capital stock

If the price level rises faster than the money wage rate,the real wage rate falls.

According to new growth theory,technological change is driven by

The aggregate production function relating real GDP to labor hours

One policy that would increase the saving rate would be

Which of the following policies improves prospects for more rapid economic growth?

During the last 50 years,which of the following had the lowest level of real GDP per person?

Slowdonia's current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person?

If a nation's population grows,then,

Moving along the aggregate production function shows the relationship between ________,holding all else constant.

Neoclassical growth theory proposes that

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

According to the new growth theory

-As a result of the rightward shift in the demand curve for labor from LD₀ to LD₁,the equilibrium level of employment ________ and potential GDP ________.

A problem with the neoclassical growth theory is its

If the price level rises relative to the money wage rate,firms ________ the quantity of labor they demand and workers ________ the quantity of labor they supply.

The neoclassical growth theory is based on a subsistence real wage rate.

The historical record for the United States over the last 100 years shows

The supply of labor curve is

An increase in a nation's population results in

A higher savings rate that leads to an increase in the capital stock

If the price level rises faster than the money wage rate,the real wage rate falls.

According to new growth theory,technological change is driven by

The aggregate production function relating real GDP to labor hours

One policy that would increase the saving rate would be

Which of the following policies improves prospects for more rapid economic growth?

During the last 50 years,which of the following had the lowest level of real GDP per person?

Slowdonia's current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person?

If a nation's population grows,then,

Moving along the aggregate production function shows the relationship between ________,holding all else constant.

Neoclassical growth theory proposes that

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

-As a result of the rightward shift in the demand curve for labor from LD₀ to LD₁,the equilibrium level of employment and potential GDP .

If the price level rises relative to the money wage rate,firms the quantity of labor they demand and workers the quantity of labor they supply.