Deck 6: Economic Growth

Question 1

We are interested in long-term growth primarily because it brings

A) higher price levels.
B) lower price levels.
C) higher standards of living.
D) trade wars with our trading partners.

Answer 1

higher standards of living.

Question 2

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?

A) half a year
B) approximately 10 years
C) 28.6 years
D) 35 years

Answer 2

35 years

Question 3

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. Which of the following is TRUE?

A) India's PPF has been shifting rightward since 1997.
B) India's PPF has been shifting leftward since 1997.
C) India has been moving from a point within its PPF to points beyond its PPF.
D) India's PPF has not shifted since 1997.

Answer 3

India's PPF has been shifting rightward since 1997.

Question 4

Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is

A) increasing.
B) decreasing.
C) constant.
D) negative.

Question 5

Which of the following is used to calculate the standard of living?

A) real GDP/population
B) ((real GDP in the current year - real GDP in previous year)/real GDP in previous year) × 100
C) the one-third rule
D) real GDP/aggregate hours

Question 6

Using the Rule of 70, if China's current growth rate of real GDP per person was 7 percent a year, how long would it take the country's real GDP per person to double?

A) 35 years
B) 14 years
C) 10 years
D) 49 years

Question 7

During 2013, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2012, real GDP was 105 billion and the population was 0.85 billion. Economia's growth rate of real GDP per person is

A) 3.23 percent.
B) 5 percent.
C) 5.88 percent.
D) 9.52 percent.

Question 8

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?

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

Question 9

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

A) $1000.
B) positive.
C) negative.
D) zero.

Question 10

Economic growth is measured by

A) changes in real GDP.
B) changes in nominal GDP.
C) changes in the employment rate.
D) All of the above are used to measure economic growth.

Question 11

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012?

A) 0.38 percent
B) 9.0 percent
C) 3.8 percent
D) 8.3 percent

Question 12

In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2012 was

A) $1,545.
B) $380.
C) $1,413.
D) $132.

Question 13

In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. From 2011 to 2012, Armenia's standard of living ________.

A) increased
B) decreased
C) did not change
D) might have increased, decreased, or remained unchanged but more information is needed to determine which

Question 14

The Rule of 70 is used to

A) estimate how much of an economy's growth rate is due to increases in capital per hour of labor.
B) calculate the standard of living.
C) calculate the economy's growth rate.
D) estimate how long it will take the level of any variable to double.

Question 15

Using the Rule of 70, if the country of Huttodom's current growth rate of real GDP per person was 10 percent a year, how long would it take the country's real GDP per person to double?

A) 0.7 years
B) 20 years
C) 7 years
D) 10 years

Question 16

During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2014, real GDP per person was

A) $128.
B) $124.
C) $135.
D) $117.

Question 17

The best definition for economic growth is

A) a sustained expansion of production possibilities measured as the increase in real GDP over a given period.
B) a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period.
C) a sustained expansion of consumption goods over a given period.
D) a sustained expansion of production goods over a given period.

Question 18

If a nation's population grows, then

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 19

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

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 20

During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2013, real GDP per person was

A) $128.
B) $124.
C) $135.
D) $117.

Question 21

In 2010, of the following which nations had the highest level of real GDP per person?

A) Japan
B) Europe Big 4
C) Canada
D) China

Question 22

Over the past four decades

A) the growth rate of real GDP per person in the United States has been increasing.
B) U.S. real GDP per person has fallen below that of the other rich industrial countries.
C) U.S. real GDP per person has increased.
D) Both answers A and C are correct.

Question 23

Over the past 100 years real GDP per person in the United States, on average, has

A) decreased by about 5 percent per year.
B) increased by about 2 percent per year.
C) increased by about 5 percent per year.
D) increased by about 10 percent per year.

Question 24

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. Which of the following is TRUE?

A) India's PPF has been shifting rightward since 1997.
B) India's PPF has been shifting leftward since 1997.
C) India has been moving from a point within its PPF to points beyond its PPF.
D) India's PPF has not shifted since 1997.

Question 25

Which of following was a period of below-average economic growth in the United States?

A) the 1920s
B) the 1960s
C) the 1930s
D) all of the above

Question 26

The historical record for the United States for the past 100 years shows

A) growth in real GDP per person during most years.
B) economic growth for about half the years and economic decline for the other half.
C) growth until 1970 and then a period of constant per person real GDP.
D) continuous economic growth, although at different rates, throughout the entire century.

Question 27

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

A) 14
B) 7
C) 4
D) 30

Question 28

Which of the following statements are CORRECT?
I.The average economic growth rate in real GDP per person in the United States over the last century was 5 percent per year.
II.The United States has the highest economic growth rate of any nation.

A) I only
B) II only
C) both I and II
D) neither I nor II

Question 29

Over the past 100 years, real GDP per person in the United States has grown at an average of ________ percent a year.

A) 1
B) 2
C) 3
D) 4

Question 30

The historical record for the United States over the last 100 years shows

A) mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP.
B) economic growth for about half the years and economic decline for the other half.
C) growth until 1970 and then a period of constant per person real GDP.
D) continuous economic growth for each year, although at different rates, throughout the entire century.

Question 31

Slowdonia's current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person?

A) 10 years
B) 35 years
C) 70 years
D) 100 years

Question 32

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

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 33

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

A) in 2 years
B) in 15 years
C) never
D) in 10 years

Question 34

Over the past 100 years, in the United States the average growth rate of ________ grew at a faster rate than ________.

A) real GDP; nominal GDP
B) the population; real GDP
C) real GDP; the population
D) inflation; real GDP

Question 35

Which of the following statements regarding U.S. economic growth is NOT correct?

A) Over the past 100 years, on the average real GDP per person grew 2 percent a year.
B) The average annual growth rate of real GDP per person in the United States was rapid during World War II.
C) In the 1930s, real GDP fell well below its trend.
D) The growth rate of real GDP per person accelerated between 1973 to 1984.

Question 36

If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double?

A) 17.5
B) 25
C) 4
D) 8

Question 37

During the last 50 years, which of the following had the lowest level of real GDP per person?

A) Africa
B) Central and South America
C) United States
D) Central Europe

Question 38

Over the last 100 years, the average U.S. growth rate in real GDP per person was about

A) 2 percent per year.
B) 6 percent per year.
C) 12.5 percent per year.
D) 1 percent per year.

Question 39

The growth rate of real GDP per person in the United States has

A) averaged approximately 2 percent per year over the past century.
B) has consistently been 2 percent per decade over the past century.
C) has been the highest in the world over the past 5 decades.
D) has increased every year over the past century.

Question 40

In 2010, of the following ________ had the highest real GDP per person.

A) Japan
B) Canada
C) the Europe Big 4 countries
D) the United States

Question 41

A movement along the aggregate production function is the result of a change in

A) the quantity of labor.
B) technology.
C) capital.
D) interest rates.

Question 42

The aggregate production function shows how ________ varies with ________.

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

Question 43

By measuring ________ we can see that the economies of Hong Kong and Singapore are catching up to the economies of North America but that the economies of Central and South America are not.

A) inflation per person
B) real GDP per person
C) the population
D) real GDP

Question 44

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

A) capital input and real GDP
B) labor input and real GDP
C) labor input, capital input and real GDP
D) technology and real GDP

Question 45

The gaps between the United States and the Asian countries of Honk Kong, Singapore, Korea and China have been

A) decreasing
B) increasing
C) remaining fairly constant
D) there are no gaps between these Asian countries and the United States

Question 46

Convergence of the income gap has been most dramatic between

A) Hong Kong and the United States.
B) the Central European countries and the United States.
C) Africa and the United States.
D) South America and the United States.

Question 47

Between which pair of countries or continents listed below has real GDP per person converged the most since 1960?

A) Canada and Japan
B) United States and Africa
C) United States and South America
D) Canada and South America

Question 48

The aggregate production function describes the relationship between

A) real GDP and the quantity of labor employed.
B) real GDP and the price level.
C) the rate of growth of real GDP and inflation.
D) real GDP and the unemployment rate.

Question 49

Along the aggregate production function, as the quantity of labor rises, real GDP

A) rises.
B) falls.
C) stays the same.
D) may fall, rise, or stay the same.

Question 50

Countries or regions in which real GDP per person has not grown as fast as in the United States since 1960 include

A) Japan.
B) countries in Africa.
C) Hong Kong.
D) Canada.

Question 51

Since 1960

A) in every decade, Japan has experienced faster growth than the United States.
B) growth rates in South American countries have exceeded those in North America.
C) real GDP per person in Hong Kong and Singapore have grown and are approaching or surpassing that in the United States.
D) due to rapid growth, real GDP per person in China is now about 50 percent of that in the United States.

Question 52

The gap between real GDP per person in Africa and real GDP per person in the United States has been

A) increasing.
B) decreasing.
C) remaining fairly constant.
D) there is no gap in real GDP per person between Africa and the United States.

Question 53

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

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

Question 54

An aggregate production function shows the relationship between

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

Question 55

Over the past fifty years, there has been substantial closure of the gap in real GDP per person between which of the following groups of countries?

A) the United States and Central and South America
B) Africa and Western Europe
C) Central and South America and Africa
D) the United States and Japan

Question 56

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

A) Japan
B) The big 4 nations of Europe
C) United States
D) Canada

Question 57

Of the following Asian countries, which has the lowest level of real GDP per person?

A) China
B) Korea
C) Singapore
D) Hong Kong

Question 58

Moving along the aggregate production function, all of the following are held constant EXCEPT

A) labor.
B) capital.
C) human capital.
D) technology.

Question 59

Since 1960, which of the following countries had average growth rates in real GDP per person higher than that of the United States?

A) Singapore
B) Hong Kong
C) South Korea
D) All of the above answers are correct.

Question 60

If a rich country grows at a faster rate than a poor one, then

A) the gap in their standard of living will widen over time.
B) the gap in their standard of living will close over time.
C) the difference in their living standards will not change over time.
D) whether or not the living standards gap widens or closes over time depends on the absolute size of the relative growth rates.

Question 61

The aggregate production function

A) measures the productivity of labor as leisure decreases.
B) increases only with increases in productivity.
C) shows that real GDP can increase because of increased productivity as well as increased labor hours.
D) cannot show the impacts of productivity improvements.

Question 62

According to the law of diminishing returns, an additional unit of

A) capital produces more output than an additional unit of labor.
B) labor decreases output.
C) labor produces more output than the previous unit.
D) labor produces less output than the previous unit.

Question 63

The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will

A) move to point such as Y.
B) remain at point W.
C) move to point such as X.
D) move to point such as Z.

Question 64

Which of the following is TRUE regarding the labor market?
I.The labor supply curve slopes upward because firms maximize profits as they hire more workers.
II.If the real wage rate falls, the quantity of labor firms demand increases.
III.The demand for labor curve slopes downward because as the real wage rate falls, workers demand to work fewer hours.

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

Question 65

The relationship between the labor employed by a firm and the real wage rate is shown by the

A) supply of labor curve.
B) supply of jobs curve.
C) demand for jobs curve.
D) demand for labor curve.

Question 66

The real wage rate equals

A) (money wage rate)/(price level).
B) (price level)/(money wage rate).
C) (money wage rate) × (price level).
D) (money wage) + (number of hours worked)/(price level).

Question 67

The aggregate production function relating real GDP to labor hours

A) has a constant slope.
B) has a negative slope.
C) has a positive slope and becomes steeper as employment increases.
D) has a positive slope and becomes less steep as employment increases.

Question 68

In the illustration above, which figure shows an aggregate production function?

A) Figure A
B) Figure B
C) Figure C
D) Figure D

Question 69

The decreasing slope of a production function reflects

A) diminishing returns.
B) rising unemployment.
C) decreasing costs.
D) increasing aggregate demand.

Question 70

The real wage rate measures the

A) quantity of goods and services that an hour of work will buy.
B) average weekly earnings in dollars of a worker.
C) dollar value of an hour of work.
D) dollar value of what a worker could earn in another job.

Question 71

Which of the following statements are TRUE regarding the demand for labor?
I.The quantity of labor demanded depends on the real wage rate.
II.If the money wage rate increases and the price level remains the same, the quantity of labor demanded decreases.

A) I only
B) II only
C) I and II
D) neither I nor II

Question 72

The quantity of labor demanded depends on the

A) money wage rate not the real wage rate.
B) real wage rate not the money wage rate.
C) price of output not the money wage rate nor the real wage rate.
D) money wage rate AND the real wage rate.

Question 73

Because the productivity of labor decreases as the quantity of labor employed increases

A) the quantity of labor a firm demands increases as the real wage rate decreases.
B) the quantity of labor a firm demands increases as the money wage rate decreases.
C) the labor demand curve shifts right as the real wage rate decreases.
D) the aggregate production function shifts upward as the real wage rate decreases.

Question 74

If the price level falls by 5 percent and workers' money wage rates remain constant, firms'

A) quantity of labor demanded will decrease.
B) quantity of labor demanded will increase.
C) supply of jobs will increase.
D) None of the above answers are correct.

Question 75

The curvature of the production function shows that as employment increases, the productivity of labor

A) remains positive and increases.
B) remains positive but decreases.
C) decreases and becomes negative.
D) remains constant.

Question 76

The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will

A) move to point such as Y.
B) remain at point W.
C) move to point such as X.
D) move to point such as Z.

Question 77

As labor increases, there is a

A) shift of the aggregate production function, but no movement along it.
B) movement along the aggregate production function, but no shift in it.
C) movement along the aggregate production function and real GDP will increase less with each additional increase in labor.
D) movement along the aggregate production function and real GDP will decrease less with each additional increase in labor.

Question 78

The aggregate production function is graphed as

A) a downward sloping curve.
B) an upward sloping straight line.
C) an upward sloping line that becomes flatter as the quantity of labor increases.
D) an upward sloping line that becomes steeper as the quantity of labor increases.

Question 79

An increase in labor hours will lead to

A) a shift of the aggregate production function but no movement along it.
B) a movement along the aggregate production function but no shift in it.
C) both a movement along and a shift in the aggregate production function.
D) neither a movement along nor a shift in the aggregate production function.

Question 80

Which of the following is TRUE regarding the real wage rate? The real wage rate
I.is always greater than the money wage.
II.measures the quantity of goods and services an hour's work can buy.

A) only I
B) only II
C) both I and II
D) neither I nor II