Question 1

Which of the following variables is used to determine a country's economic growth?
I.real GDP
Ii.wages
Iii.inflation

Accepted Answer

A) i and ii only 
B) i,ii and iii 
C) ii and iii 
D) i only 
E) i and iii

Question 2

A diagram of a productivity curve has

Accepted Answer

A) real GDP per hour of labor on the y-axis and capital per hour of labor on the x-axis. 
B) real GDP per hour of labor on the y-axis and hours of labor on the x-axis. 
C) capital per hour of labor on the y-axis and real GDP per hour of labor on the x-axis. 
D) real wages per hour on the y-axis and real GDP per hour of labor on the x-axis. 
E) real GDP per hour of labor on the y-axis and real wages per hour on the x-axis.

Question 3

The quantity of labor supplied increases as the real wage rises because

Accepted Answer

A) higher real wages mean that nominal wages have increased. 
B) the opportunity cost of working increases. 
C) the quantity of labor demanded increases. 
D) the opportunity cost of leisure rises. 
E) labor force participation decreases so that only serious workers are left in the labor force.

Question 4

The Rule of 70 can be used to calculate the

Accepted Answer

A) economic growth rate per month. 
B) population growth rate per year. 
C) number of years it would take for the level of any variable to double. 
D) 70 percent level of the economic growth rate. 
E) economic growth rate per year.

Question 5

Firms hire more labor as long as

Accepted Answer

A) the real wage rate is less than the additional output the labor produces. 
B) the real wage rate is greater than the additional output the labor produces. 
C) extra labor will produce more output. 
D) the nominal wage rate exceeds the real wage rate. 
E) the nominal wage rate is less than the real wage rate.

Question 6

Which of the following statements is (are)true?
I.As the real wage rate increases,the household's income decreases,which influences people to work more hours.
Ii.As the real wage rate increases,the quantity of labor demanded increases.
Iii.As the real wage rate increases,the opportunity cost of not working increases.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i,ii,and iii

Question 7

The productivity curve

Accepted Answer

A) has a positive slope. 
B) has a negative slope. 
C) is vertical. 
D) is horizontal. 
E) is U-shaped.

Question 8

When the labor market is in equilibrium so that the quantity of labor supplied equals the quantity demanded,

Accepted Answer

A) there is no unemployment. 
B) the economy is at full employment. 
C) nominal GDP equals real GDP. 
D) there is no inflation. 
E) real GDP might be more than,less than,or equal to potential GDP.

Question 9

At full employment,actual ________ equals ________.

Accepted Answer

A) nominal GDP;potential GDP 
B) real GDP;potential GDP 
C) real GDP;nominal GDP 
D) potential GDP;nominal GDP 
E) unemployment;zero

Question 10

The real wage rate is $35 an hour.At this wage rate there are 100 billion labor hours supplied and 200 billion labor hours demanded.There is a

Accepted Answer

A) shortage of 300 billion hours of labor. 
B) shortage of 100 billion hours of labor. 
C) surplus of 100 billion hours of labor. 
D) surplus of 300 billion hours of labor. 
E) shortage of 200 billion hours of labor.

Question 11

Explain how the labor market and the production function determine potential GDP.

Accepted Answer

The answer of Explain how the labor market and the...

Question 12

If a country experiences a real GDP growth rate of 4 percent,real GDP will double in

Accepted Answer

A) 14 years. 
B) 17.5 years. 
C) 23.3 years. 
D) 35 years. 
E) 25 years.

Question 13

Discuss the production function.How does the production function relate to the labor market and potential GDP?

Accepted Answer

The answer of Discuss the production function.How does the production...

Question 14

In a labor market without an efficiency wage,minimum wage,or union wage,when the real wage rate exceeds the equilibrium real wage rate,there is a ________ of labor and the real wage rate will ________.

Accepted Answer

A) surplus;fall 
B) shortage;fall 
C) shortage;rise 
D) surplus;rise 
E) surplus;not change because only efficiency wages or union wages can change.

Question 15

A country's leadership believes that the neoclassical growth theory is correct.The country already has the necessary preconditions for growth,so suggest policy changes the government might enact to help speed economic growth.

Accepted Answer

The answer of A country's leadership believes that the neoclassical...

Question 16

At any given time,which factor of production is NOT fixed?

Accepted Answer

A) labor 
B) technology 
C) entrepreneurship 
D) land 
E) money

Question 17

If aggregate hours are 100 billion hours and labor productivity is $40 an hour,than real GDP equals

Accepted Answer

A) $100 billion. 
B) $40 billion. 
C) $100 trillion. 
D) $2.5 trillion. 
E) $4 trillion.

Question 18

Labor productivity is calculated as

Accepted Answer

A) (real GDP ÷ aggregate hours). 
B) (real GDP ÷ aggregate hours × number of workers). 
C) (real GDP ÷ number of workers × ratio of capital per worker). 
D) (real GDP ÷ technology level). 
E) (real GDP ÷ aggregate hours × number of workers)× 100.

Question 19

________ in the United States ________ in most European countries.

Accepted Answer

A) GDP per hour;is greater than GDP per hour 
B) Average weekly hours;are greater than average weekly hours 
C) The Okun Gap;is equal to the Okun Gap 
D) The Lucas Wedge;is greater than the Lucas Wedge 
E) Both A and B are true.

Question 20

The Rule of ________ can be used to calculate the number of years that it takes for the level of a variable to ________.

Accepted Answer

A) 20;double 
B) 70;triple 
C) 70;double 
D) 20;triple 
E) thumb;double

Exam 17: Potential Gdp and Economic Growth

Which of the following variables is used to determine a country's economic growth? I.real GDP Ii.wages Iii.inflation