Question 1

A decrease in the real wage rate

Accepted Answer

A)  shifts the labor demand curve rightward. 
B)  shifts the labor demand curve leftward. 
C)  shifts the labor supply curve leftward. 
D)  none of the above because a change in the real wage rate does not shift either the labor demand or labor supply curve. 
A)  shifts the labor demand curve rightward. 
B)  shifts the labor demand curve leftward. 
C)  shifts the labor supply curve leftward. 
D)  none of the above because a change in the real wage rate does not shift either the labor demand or labor supply curve. D

Question 2

Technological change

Accepted Answer

A)  lowers the real wage rate. 
B)  decreases labor productivity. 
C)  has no effect on employment. 
D)  increases potential GDP. 
A)  lowers the real wage rate. 
B)  decreases labor productivity. 
C)  has no effect on employment. 
D)  increases potential GDP. D

Question 3

An increase in the working-age population results in a

Accepted Answer

A)  rightward shift of demand for labor curve and an increase in potential GDP. 
B)  rightward shift of the demand for labor curve and no change in potential GDP. 
C)  rightward shift of the supply of labor curve and an increase in potential GDP. 
D)  leftward shift of the supply of labor curve and a decrease in potential GDP. 
A)  rightward shift of demand for labor curve and an increase in potential GDP. 
B)  rightward shift of the demand for labor curve and no change in potential GDP. 
C)  rightward shift of the supply of labor curve and an increase in potential GDP. 
D)  leftward shift of the supply of labor curve and a decrease in potential GDP. C

Question 4

The aggregate production function shows how ________ varies with ________.

Accepted Answer

A)  leisure time; labor 
B)  labor; leisure time 
C)  real GDP; labor 
D)  labor; capital 
A)  leisure time; labor 
B)  labor; leisure time 
C)  real GDP; labor 
D)  labor; capital

Question 5

If the labor and capital grow more quickly, then real GDP will

Accepted Answer

A)  not grow fast enough. 
B)  grow more quickly. 
C)  grow more slowly. 
D)  stay fixed at potential GDP. 
A)  not grow fast enough. 
B)  grow more quickly. 
C)  grow more slowly. 
D)  stay fixed at potential GDP.

Question 6

Which of the following is consistent with the classical theory of growth?

Accepted Answer

A)  permanent increases in real wages 
B)  permanent growth in productivity 
C)  rapid population growth in poor countries 
D)  permanent increases in living standards 
A)  permanent increases in real wages 
B)  permanent growth in productivity 
C)  rapid population growth in poor countries 
D)  permanent increases in living standards

Question 7

According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Based on this story, it is most likely that the slowdown reflects a

Accepted Answer

A)  temporary business cycle slowdown. 
B)  temporary business cycle expansion. 
C)  change to India's long-term economic growth rate. 
D)  shrinkage of India's economy. 
A)  temporary business cycle slowdown. 
B)  temporary business cycle expansion. 
C)  change to India's long-term economic growth rate. 
D)  shrinkage of India's economy.

Question 8

If both the supply of labor and the demand for labor increase, then

Accepted Answer

A)  potential GDP decreases. 
B)  potential GDP increases. 
C)  full employment decreases. 
D)  the impact on potential GDP is uncertain 
A)  potential GDP decreases. 
B)  potential GDP increases. 
C)  full employment decreases. 
D)  the impact on potential GDP is uncertain

Question 9

Neoclassical growth theory predicts that

Accepted Answer

A)  population growth rates slow as employment opportunities for women increase. 
B)  population explosions decrease real GDP per person. 
C)  economic growth leads to technological change. 
D)  the pursuit of profit creates perpetual growth. 
A)  population growth rates slow as employment opportunities for women increase. 
B)  population explosions decrease real GDP per person. 
C)  economic growth leads to technological change. 
D)  the pursuit of profit creates perpetual growth.

Question 10

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 11

How will an increase in physical capital affect labor productivity, labor demand, and potential GDP?

Accepted Answer

An increase in capital increases labor p

Question 12

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?

Accepted Answer

A)  3 percent per year 
B)  2 percent per year 
C)  5 percent per year 
D)  10 percent per year 
A)  3 percent per year 
B)  2 percent per year 
C)  5 percent per year 
D)  10 percent per year

Question 13

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

Accepted Answer

A)  stays the same; increases 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; stays the same 
A)  stays the same; increases 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; stays the same

Question 14

List and explain the factors that can increase labor productivity.

Accepted Answer

The three factors that can increase labo

Question 15

Faster long-term growth can be achieved by discouraging saving and encouraging consumption.

Accepted Answer

A) True 
 B)False

Question 16

-In the above figure, at the real wage rate of $50

Accepted Answer

A)  there is a surplus of 100 billion hours per year. 
B)  there is a shortage of 100 billion hours per year. 
C)  there is a surplus of 60 billion hours per year. 
D)  there is shortage of 20 billion hours per year. 
A)  there is a surplus of 100 billion hours per year. 
B)  there is a shortage of 100 billion hours per year. 
C)  there is a surplus of 60 billion hours per year. 
D)  there is shortage of 20 billion hours per year.

Question 17

If the saving rate increases, a country's growth rate of real GDP per hour of labor ________ and capital per hour of labor ________.

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 18

-In the above figure, if the real wage is $20 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

Of the three economic growth theories, which is the most optimistic about the chances of real GDP per person growing indefinitely? Which is the most pessimistic? What accounts for the differences?

Accepted Answer

The most optimistic is the new growth th

Question 20

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

A decrease in the real wage rate

Technological change

An increase in the working-age population results in a

The aggregate production function shows how varies with .

If the labor and capital grow more quickly, then real GDP will

Which of the following is consistent with the classical theory of growth?

If both the supply of labor and the demand for labor increase, then

Neoclassical growth theory predicts that

Classical growth theory asserts that

How will an increase in physical capital affect labor productivity, labor demand, and potential GDP?

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?

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

List and explain the factors that can increase labor productivity.

Faster long-term growth can be achieved by discouraging saving and encouraging consumption.

-In the above figure, at the real wage rate of $50

If the saving rate increases, a country's growth rate of real GDP per hour of labor and capital per hour of labor .

-In the above figure, if the real wage is $20 per hour, a labor

Of the three economic growth theories, which is the most optimistic about the chances of real GDP per person growing indefinitely? Which is the most pessimistic? What accounts for the differences?

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?

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 6: Economic Growth

A decrease in the real wage rate

Technological change

An increase in the working-age population results in a

The aggregate production function shows how ________ varies with ________.

If the labor and capital grow more quickly, then real GDP will

Which of the following is consistent with the classical theory of growth?

If both the supply of labor and the demand for labor increase, then

Neoclassical growth theory predicts that

Classical growth theory asserts that

How will an increase in physical capital affect labor productivity, labor demand, and potential GDP?

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?

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

List and explain the factors that can increase labor productivity.

Faster long-term growth can be achieved by discouraging saving and encouraging consumption.

-In the above figure, at the real wage rate of $50

If the saving rate increases, a country's growth rate of real GDP per hour of labor ________ and capital per hour of labor ________.

-In the above figure, if the real wage is $20 per hour, a labor

Of the three economic growth theories, which is the most optimistic about the chances of real GDP per person growing indefinitely? Which is the most pessimistic? What accounts for the differences?

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?

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The aggregate production function shows how varies with .

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

If the saving rate increases, a country's growth rate of real GDP per hour of labor and capital per hour of labor .