Exam 6: Economic Growth

New growth theory economists believe that: I. Economic growth can continue as long as we keep finding new ideas. II) The marginal product of capital diminishes very rapidly,so we must rely upon technological advances to create economic growth.

10 Extended Problems Leisure (hours) Real GDP (2005 dollars) 0 2,000 40 1,920 80 1,680 120 1,280 160 720 200 0 -The people of Palm Island are willing to work 80 hours a day for a real wage rate of $4 an hour.Then each dollar increase in the real wage,they are willing to work 10 additional hours a day.Palm Island's production possibilities are in the table above. a) Draw Palm Island's demand for labor curve. b) Draw Palm Island's supply of labor curve. c) What are the full-employment equilibrium real wage rate and quantity of labor in Palm Island's economy? d) What is Palm Island's potential GDP?

The aggregate production function describes the relationship between

All else equal,an increase in population decreases potential GDP.

If new capital increases labor productivity,the supply of labor ________ and the demand for labor ________.

In addition to saving and investment in capital,making an even larger contribution to long-term economic growth in real GDP per person

Which of the following is TRUE regarding the real wage rate? The real wage rate I. is always greater than the money wage. II. measures the quantity of goods and services an hour's work can buy.

According to new growth theory ________.

An assumption of the neoclassical theory of growth is that

Which of the following is consistent with classical growth theory?

The real wage rate measures the quantity of goods and services an hour's work will buy.

Suppose a nation's population grows by 2 percent and,at the same time,its GDP grows by 5 percent.Approximately how fast will real GDP per person increase?

With no change in labor productivity,what would happen to the real wage rate and potential GDP if the population increased?

How has U.S.real GDP per person changed over the last 100 years?

Suppose real GDP for a country is $13 trillion in 2010,$14 trillion in 2011,$15 trillion in 2012,and $16 trillion in 2013. Over this time period,the real GDP growth rate is

A country would achieve faster growth by ________.

The table below shows data for China. Population Real GDP (yuan, (millions) Nominal GDP (yuan, billions) 2000 1267 4999 9921 2003 1292 6498 13582 2006 1315 8776 21087 The economic growth rate in China between 2000 and 2003 was ________ percent.

"Why India Cannot Sustain High Economic Growth",by Kunal KumarKundu In his article about India's prospects for growth,the author notes that "Per capita availability of food grain is falling as population is growing faster than food grain production.Deplorable rural infrastructure leads to India wasting an amount of food grain ....India's agriculture is still so very highly monsoon dependent..." If the author is suggesting that India's growth prospects are explained by the classical growth theory,we also expect that

A key feature of the new growth theory is the assumption of

-In the figure,when the real wage rate is $10 an hour,________.