Question 1

According to empirical evidence

Accepted Answer

A)  providing international aid to developing nations stimulates economic growth. 
B)  providing international aid to developing nations does not have a positive effect on economic growth. 
C)  international trade stimulates economic growth in richer nations, but actually slows economic growth in developing economies. 
D)  international trade stimulates economic growth in developing economies, but actually slows economic growth in richer nations. 
A)  providing international aid to developing nations stimulates economic growth. 
B)  providing international aid to developing nations does not have a positive effect on economic growth. 
C)  international trade stimulates economic growth in richer nations, but actually slows economic growth in developing economies. 
D)  international trade stimulates economic growth in developing economies, but actually slows economic growth in richer nations.

Question 2

If the price level rises by 3 percent and workers' money wage rates increase by 2 percent, then the

Accepted Answer

A)  quantity of labor demanded will decrease. 
B)  quantity of labor demanded will increase. 
C)  quantity of labor demanded does not change because there is no change in the real wage rate. 
D)  real wage rate increases. 
A)  quantity of labor demanded will decrease. 
B)  quantity of labor demanded will increase. 
C)  quantity of labor demanded does not change because there is no change in the real wage rate. 
D)  real wage rate increases.

Question 3

Which of the following predicts that there can be no sustained rise in real GDP per person above the subsistence level?

Accepted Answer

A)  classical growth theory 
B)  neoclassical growth theory 
C)  new growth theory 
D)  None of the above because all predict that there will be a sustained rise above the subsistence level. 
A)  classical growth theory 
B)  neoclassical growth theory 
C)  new growth theory 
D)  None of the above because all predict that there will be a sustained rise above the subsistence level.

Question 4

________ 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 5

In the neoclassical theory of growth, growth in ________ is the result of luck.

Accepted Answer

A)  saving 
B)  income 
C)  technology 
D)  the real interest rate 
A)  saving 
B)  income 
C)  technology 
D)  the real interest rate

Question 6

The aggregate production function shows that an economy increases its real GDP in the short run by

Accepted Answer

A)  developing new technologies. 
B)  increasing its physical capital stock. 
C)  using more labor. 
D)  exploring for new deposits of natural resources. 
A)  developing new technologies. 
B)  increasing its physical capital stock. 
C)  using more labor. 
D)  exploring for new deposits of natural resources.

Question 7

Workers who pursue an education directly increase their

Accepted Answer

A)  financial capital. 
B)  physical capital. 
C)  human capital. 
D)  saving. 
A)  financial capital. 
B)  physical capital. 
C)  human capital. 
D)  saving.

Question 8

Suppose the President asks you to write him a letter suggesting ways the government might help the economy achieve permanently higher rates of economic growth. Based on your understanding of growth theory and growth accounting, what would you suggest?

Accepted Answer

According to both neoclassical and new g

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 recent article states that "...gains from two centuries of rapid technological innovation are largely exhausted, and new discoveries lack the same revolutionary quality....{Further}, 80 percent of the growth between 1950 and 1993 came from the new application of old ideas, and these old ideas are now mostly wrung dry."
(The Economist, 03/03/2011)
-Neoclassical growth theory assumes that technological progress

Accepted Answer

A)  is determined by investment. 
B)  is determined by saving. 
C)  responds to economic incentives. 
D)  is a purely chance event. 
A)  is determined by investment. 
B)  is determined by saving. 
C)  responds to economic incentives. 
D)  is a purely chance event.

Question 11

Suppose that in 2015 a country has a population of 1 million and real GDP of $1 billion. In 2016, 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 12

An aggregate production function shows the relationship between

Accepted Answer

A)  real GDP and leisure. 
B)  real GDP and the quantity of labor employed. 
C)  leisure and unemployment. 
D)  real GDP and unemployment. 
A)  real GDP and leisure. 
B)  real GDP and the quantity of labor employed. 
C)  leisure and unemployment. 
D)  real GDP and unemployment.

Question 13

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 14

-The first table above gives the labor demand and labor supply schedules for a nation. The second table gives its production function.
a)What are 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 15

If the price level increases, but workers' money wage rates remain constant,which of the following is TRUE?
I.The quantity of labor demanded will increase.
II.The real wage rate will decrease.
III.The demand for labor curve shifts rightward.

Accepted Answer

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

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following will NOT work to increase the rate of economic growth?

Accepted Answer

A)  increase saving 
B)  limit competition from international trade 
C)  improve the quality of education 
D)  All of the above will work to increase the rate of economic growth. 
A)  increase saving 
B)  limit competition from international trade 
C)  improve the quality of education 
D)  All of the above will work to increase the rate of economic growth.

Question 19

The supply of labor curve

Accepted Answer

A)  has a negative slope. 
B)  is independent of the wage rate. 
C)  shows how much labor workers are willing to supply at various real wage rates. 
D)  is usually vertical. 
A)  has a negative slope. 
B)  is independent of the wage rate. 
C)  shows how much labor workers are willing to supply at various real wage rates. 
D)  is usually vertical.

Question 20

A recent survey by India's central bank reported that spending plans by firms on large new projects
Fell by 46 percent in the year ending March 2012, compared with the prior year. This decrease will most directly impact

Accepted Answer

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

According to empirical evidence

If the price level rises by 3 percent and workers' money wage rates increase by 2 percent, then the

Which of the following predicts that there can be no sustained rise in real GDP per person above the subsistence level?

________ predicts that real GDP per person can grow indefinitely.

In the neoclassical theory of growth, growth in ________ is the result of luck.

The aggregate production function shows that an economy increases its real GDP in the short run by

Workers who pursue an education directly increase their

Suppose the President asks you to write him a letter suggesting ways the government might help the economy achieve permanently higher rates of economic growth. Based on your understanding of growth theory and growth accounting, what would you suggest?

An increase in a nation's population results in

Suppose that in 2015 a country has a population of 1 million and real GDP of $1 billion. In 2016, the population is 1.1 million and the real GDP is $1.1 billion. The real GDP per person growth rate is

An aggregate production function shows the relationship between

Neoclassical growth theory predicts that

If the price level increases, but workers' money wage rates remain constant,which of the following is TRUE? I.The quantity of labor demanded will increase. II.The real wage rate will decrease. III.The demand for labor curve shifts rightward.

If a nation's population grows, then

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

Which of the following will NOT work to increase the rate of economic growth?

The supply of labor curve

A recent survey by India's central bank reported that spending plans by firms on large new projects Fell by 46 percent in the year ending March 2012, compared with the prior year. This decrease will most directly impact

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

According to empirical evidence

If the price level rises by 3 percent and workers' money wage rates increase by 2 percent, then the

Which of the following predicts that there can be no sustained rise in real GDP per person above the subsistence level?

________ predicts that real GDP per person can grow indefinitely.

In the neoclassical theory of growth, growth in ________ is the result of luck.

The aggregate production function shows that an economy increases its real GDP in the short run by

Workers who pursue an education directly increase their

Suppose the President asks you to write him a letter suggesting ways the government might help the economy achieve permanently higher rates of economic growth. Based on your understanding of growth theory and growth accounting, what would you suggest?

An increase in a nation's population results in

Suppose that in 2015 a country has a population of 1 million and real GDP of $1 billion. In 2016, the population is 1.1 million and the real GDP is $1.1 billion. The real GDP per person growth rate is

An aggregate production function shows the relationship between

Neoclassical growth theory predicts that

If the price level increases, but workers' money wage rates remain constant,which of the following is TRUE? I.The quantity of labor demanded will increase. II.The real wage rate will decrease. III.The demand for labor curve shifts rightward.

If a nation's population grows, then

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

Which of the following will NOT work to increase the rate of economic growth?

The supply of labor curve

A recent survey by India's central bank reported that spending plans by firms on large new projects Fell by 46 percent in the year ending March 2012, compared with the prior year. This decrease will most directly impact

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