Exam 8: Economic Growth

Investment in human capital

If population increases at an average rate of 2% per year and output increases at an average rate of 5% per year, then output per capita will double in

Suppose a country's potential level of real GDP grows at a rate of 6% per year. Use the rule of 72 to calculate how long it takes for the country's potential output to double.

Why is the long-run aggregate supply curve vertical? Explain the factors that determine the position of the long-run aggregate supply curve.

Which of the following statements is true? I. Small differences in rates of economic growth can lead to large differences in levels of potential output over time. II. From the perspective of the rule of 72, small differences in rates of economic growth between two countries will not significantly affect their respective standards of living. III. Countries that have higher population growth rates are likely to see higher economic growth rates because increases in population lead to increases in the size of the labor force.

Which of the following occurred during the industrial revolution in the United States? I. More and more firms shifted toward mass production and automation. II. More and more firms substituted capital investment and technology for labor, leading to a decrease in the demand for labor. III. Technological change and capital investment displaced workers in some industries, although for the economy as a whole, the demand for labor increased.

If the rate of growth of output is 8% and the rate of growth of population is 2%, what is the rate of growth of output per capita?

Economists do not use actual values of real GDP to measure economic growth because

Real GDP tends to fluctuate around potential output.

Holding all else constant, a country's standard of living will rise if its

Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS -(Exhibit: Aggregate Production Function, Labor Market, and LRAS) If a change in technology moves the aggregate production function in Panel (a) upwards, what happens to the economy's potential output?

During the industrial revolution, the United States saw increases in the demand for labor and increases in the supply of labor. The increase in real wages rose during this period is consistent with which of the following statements?

Define economic growth. Why is it described as a process rather than an event?

Use the following to answer questions . Exhibit: Economic Growth, AD and AS Analysis -(Exhibit: Economic Growth, AD and AS Analysis) Assume that the economy is initially in long-run equilibrium. What happens if investment spending increases?

Use the following to answer question . Exhibit: Economics Growth and the LRAS Curve -(Exhibit: Economics Growth and the LRAS Curve) Exponential economic growth can be depicted by

To assess changes in average standards of living,

If the rate of growth of output is 10% and the rate of growth of per capita real GDP is 6%, what is the rate of growth of population?

For economic growth to occur, the citizens of an economy must

The position of the long-run aggregate supply curve is determined by I. the aggregate production function II. the labor demand curve III. the labor supply curve IV. the prevailing average price level

In the long run, economic growth will lead to I. the opportunity to produce more consumer goods. II. the opportunity to produce more capital goods. III. a higher material standard of living. IV. a more equitable distribution of income.