Question 1

Suppose that real GDP grows at 3 percent per year.What is the growth rate of real GDP per person if the population grows at:
a.2 percent? What happens to the standard of living?
b.3 percent? What happens to the standard of living?
c.4 percent? What happens to the standard of living?

Accepted Answer

The answer of Suppose that real GDP grows at 3...

Question 2

-The table above gives information about the economy of Spain.If the growth rate in 1998 is maintained,real GDP will double in ________ years.

Accepted Answer

A) 4 
B) 19 
C) 10 
D) 18 
E) 25

Question 3

The growth rate of real GDP per person equals the

Accepted Answer

A) population growth rate plus the growth rate of real GDP. 
B) change in the economic growth rate divided by the change in the population growth rate. 
C) the economic growth rate per person divided by the change in the population growth rate. 
D) growth rate of real GDP minus the growth rate of the population. 
E) population growth rate plus the growth rate of real GDP then divided by the initial level of real GDP.

Question 4

During 2005,real GDP in Ireland grew 9.8 percent.If Ireland maintains this level of growth in the future,real GDP will double in approximately how many years?

Accepted Answer

The answer of During 2005,real GDP in Ireland grew 9.8...

Question 5

Which of the following policies encourages economic growth?

Accepted Answer

A) Increased taxes on income and business profits 
B) Reduction of government support of higher education 
C) High tariffs and strict import quotas on foreign-made products 
D) Creation of tax-free savings accounts 
E) Limiting the years people spend in education so that they can start productive work

Question 6

-The figure above shows the U.S.supply of labor curve.What was the affect of the decline in birth rates during the 1960s and 1970s on the supply of labor curve in the 1980s?

Accepted Answer

A) a rightward shift of the supply of labor curve 
B) the supply of labor curve became steeper 
C) a movement downward along the supply of labor curve from a point such as A to a point such as B 
D) a leftward shift of the supply of labor curve 
E) None of the above answers is correct because there was no change in the supply of labor curve.

Question 7

If the government increases unemployment benefits,then the labor

Accepted Answer

A) demand curve shifts rightward. 
B) demand curve shifts leftward. 
C) supply curve shifts rightward. 
D) supply curve shifts leftward. 
E) Both answers B and D are correct.

Question 8

Labor productivity is $20 per hour and aggregate hours are 400 billion hours.
a.What does real GDP equal?
b.Because of technological advances,labor productivity doubles to $40 per hour.Furthermore,assume that aggregate hours decrease to 300 billion hours.What does real GDP equal?

Accepted Answer

The answer of Labor productivity is $20 per hour and...

Question 9

The Bubby Gum factory produces bubble gum.Joanne is one of the employees,and she produces 10 packs of bubble gum per hour.Joanne's money wage rate is $12 per hour.Based on this information,the Bubby Gum company should

Accepted Answer

A) keep Joanne because she creates a profit for the firm. 
B) fire Joanne because she creates a loss for the firm. 
C) decrease Joanne's wage rate because she is paid too much. 
D) increase its demand for labor. 
E) None of the above answers is correct because more information about Joanne's real wage is needed to decide what to do.

Question 10

-The figure above shows the U.S.demand for labor curve.If there is a simultaneous increase in the nominal wage rate of 10 percent and a 10 percent increase in the price level,there will be a

Accepted Answer

A) rightward shift of the demand for labor curve. 
B) leftward shift of the demand for labor curve. 
C) movement downward along the demand for labor curve from a point such as A to a point such as B. 
D) movement upward along the demand for labor curve from a point such as C to a point such as B. 
E) None of the above answers is correct because there is no change in the demand for labor curve.

Question 11

Economic growth is defined as

Accepted Answer

A) a decrease in the rate of inflation. 
B) an increase in employment. 
C) a sustained expansion of production possibilities. 
D) an increase in the wage rate. 
E) an increase in the nation's population.

Question 12

One way to achieve faster growth in GDP per person is to increase the

Accepted Answer

A) number of women working in the home rather than in the workforce. 
B) growth rate of the quantity of money. 
C) growth rate of human capital. 
D) growth rate of the population. 
E) limits on international trade in order to keep more of total spending on domestically produced goods.

Question 13

Over the past 110 years,real GDP per person in the United States has grown at an average rate of about ________ per year.

Accepted Answer

A) 1 percent 
B) 2 percent 
C) 5 percent 
D) 10 percent 
E) 7.5 percent

Question 14

-The figure above shows the U.S.production function.How would an increase in income taxes be shown in the figure?

Accepted Answer

A) a movement from point C to point B 
B) a movement from point A to point B 
C) an upward shift or rotation of the production function 
D) a downward shift or rotation of the production function 
E) None of the above because the effects of an increase in taxes cannot be shown in the figure.

Question 15

The widespread adoption of computers in the workplace has likely led to

Accepted Answer

A) no change in the quantity of labor hours. 
B) an increase in labor productivity because computers are a capital good. 
C) a decrease in labor productivity because computers are a capital good. 
D) a decrease in human capital because computers are physical capital. 
E) an increase in the supply of labor because people are needed to operate the computers.

Question 16

Real GDP is $9 trillion in the current year and $8.6 trillion in the previous year.The economic growth rate between these years has been

Accepted Answer

A) 10.31 percent. 
B) 4.65 percent. 
C) 5.67 percent. 
D) 7.67 percent. 
E) $0.4 trillion.

Question 17

If the economy is fully employed,which of the following is true?

Accepted Answer

A) The price level equals 100. 
B) Real and nominal GDP are equal. 
C) Real and potential GDP are equal. 
D) The unemployment rate is zero. 
E) Real GDP cannot increase.

Question 18

Suppose that Australia has fully employed all of its resources.This situation means that Australia

Accepted Answer

A) is operating at its potential GDP. 
B) is growing at a faster rate than the United States. 
C) has a negative Okun Gap. 
D) has a positive Lucas Wedge. 
E) is experiencing zero unemployment.

Question 19

The labor force participation rate

Accepted Answer

A) increases as the real wage increases. 
B) decreases as the real wage increases. 
C) has nothing to do with the real wage rate. 
D) increases as the opportunity cost of working increases. 
E) is one of the major reasons that firms pay efficiency wages.

Question 20

Which of the following statements is true?

Accepted Answer

A) According to the labor supply curve,as the real wage rises,employers are willing to provide more jobs. 
B) According to the labor supply curve,as the real wage rises,workers are willing to provide more hours of labor. 
C) According to the labor supply curve,as the real wage rises,employers are willing to provide fewer jobs. 
D) According to the labor supply curve,as the real wage rises,workers are willing to provide fewer hours of labor. 
E) According to the labor supply curve,as the real wage rises,more workers leave the labor force.

Exam 17: Potential Gdp and Economic Growth

Suppose that real GDP grows at 3 percent per year.What is the growth rate of real GDP per person if the population grows at: a.2 percent? What happens to the standard of living? b.3 percent? What happens to the standard of living? c.4 percent? What happens to the standard of living?