Deck 17: Growth and Productivity: Long-Run Possibilities

Question 1

In the short run,movement toward a fixed production possibilities curve comes from

A)Expansion of the production possibilities curve.
B)Shifting the aggregate demand curve to the left.
C)Increased use of our productive capabilities.
D)An increase in population.

Answer 1

C

Question 2

Long-run economic growth can occur as the result of

A)A rightward shift in aggregate demand.
B)The employment of more of the available resources.
C)A technological advance.
D)An increase in the price level.

Answer 2

C

Question 3

Long-run economic growth can be achieved with

A)A rightward shift in the long-run aggregate supply curve.
B)Contractionary fiscal policy.
C)Neutral monetary policy.
D)A rightward shift in the aggregate demand curve.

Answer 3

A

Question 4

Long-run macroeconomic growth

A)Shifts the production possibilities curve outward.
B)Shifts the aggregate demand curve to the right.
C)Shifts the aggregate supply curve to the left.
D)Moves the economy closer to the production possibilities curve.

Question 5

Economic growth implies a

A)Rightward shift of the aggregate demand curve.
B)Rightward shift of the short-run aggregate supply curve.
C)Leftward shift of the long-run aggregate supply curve.
D)Rightward shift of the long-run aggregate supply curve.

Question 6

If a country currently produces a mix of output that lies inside its production possibilities curve,then macro stabilization policies try to

A)Shift the aggregate demand curve to the right.
B)Shift the aggregate demand curve to the left.
C)Shift the short-run aggregate supply curve to the left.
D)Move the economy to the right down the existing aggregate demand curve.

Question 7

An economy experiences economic growth whenever

A)Nominal GDP rises.
B)Long-run real GDP rises.
C)Base-year GDP rises.
D)The unemployment rate falls.

Question 8

In order to shift the current production possibilities curve outward,an economy

A)Must use more of the existing resources.
B)Can raise the prices of goods and services to encourage firms to produce more.
C)Must find additional resources or better technology.
D)Will never be able to produce a combination of goods and services outside the current production possibilities curve.

Question 9

Which of the following must occur to achieve large and lasting increases in output?

A)An increase in potential GDP.
B)An increase in the use of existing capacity.
C)A shift in aggregate supply to the left.
D)A commitment to contractionary fiscal policy.

Question 10

Which of the following is a major goal of short-run macroeconomic policy?

A)Shift the production possibilities curve outward.
B)Move toward the production possibilities curve.
C)Shift the aggregate supply curve to the left.
D)None of the choices are correct.

Question 11

A short-run increase in capacity utilization

A)Shifts the production possibilities curve rightward.
B)Shifts the production possibilities curve leftward.
C)Moves the economy to a point closer to its existing production possibilities curve.
D)Moves the economy upward to the left along its existing production possibilities curve.

Question 12

Economic growth

A)Is measured using real GDP.
B)Shifts the production possibilities curve inward.
C)Involves reduced capacity in the short run.
D)Shifts the aggregate supply curve to the left in the long run.

Question 13

Better short-run use of current capacity

A)Moves the economy closer to the production possibilities curve,while long-run growth shifts that curve outward.
B)Increases capacity,while long-run economic growth increases capacity utilization.
C)Shifts the aggregate supply curve outward,while long-run economic growth moves the economy up the aggregate supply curve.
D)And long-run growth both shift the aggregate supply curve outwarD.In the short run,the production possibilities curve is fixed,but in the long run,it can shift outward with economic growth.

Question 14

If a country moves from a point below the production possibilities curve to a point on the curve,it is experiencing

A)Increased capacity utilization.
B)Expanded capacity.
C)Long-run growth.
D)Economic growth.

Question 15

A sustained increase in total output is possible only if the aggregate

A)Supply curve shifts to the left.
B)Demand curve shifts to the left.
C)Supply curve shifts to the right.
D)Demand curve shifts to the right.

Question 16

A long-run increase in capacity

A)Shifts the production possibilities curve rightward.
B)Shifts the production possibilities curve leftward.
C)Moves the economy to a point closer to its existing production possibilities curve.
D)Moves the economy upward to the left along its existing production possibilities curve.

Question 17

Which of the following also occurs as the production possibilities curve shifts outward?

A)Long-run aggregate supply increases.
B)GDP per capita remains constant.
C)Output decrease.
D)The unemployment rate rises.

Question 18

Economists define economic growth in terms of changes in

A)Potential GDP.
B)Current GDP or actual production.
C)Population.
D)Living standards.

Question 19

If nominal GDP rises from $550 billion to $600 billion,then

A)The economy has definitely experienced economic growth.
B)The economy has definitely not experienced economic growth.
C)The economy has definitely experienced inflation.
D)It is not possible to determine if the economy has experienced economic growth or inflation.

Question 20

The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology are known as

A)Consumption possibilities.
B)Production possibilities.
C)Real GDP.
D)Nominal GDP.

Question 21

The best measure of living standards is

A)The ratio of current GDP to GDP in the base period.
B)Investment as a percentage of GDP.
C)GDP per capita.
D)GDP per worker.

Question 22

Using the rule of 72,determine how long it would take for real GDP to double if it grew at a constant growth rate of 8 percent.

A)576 years.
B)72 years.
C)8 years.
D)9 years.

Question 23

If real GDP rises from $500 billion to $510 billion,the economic growth rate is

A)10 percent.
B)1.96 percent.
C)2 percent.
D)-2 percent.

Question 24

Which measurement is most useful for comparing the standard of living in different countries?

A)GDP per worker.
B)The growth rate of the labor force.
C)The growth rate of real GDP.
D)GDP per capita.

Question 25

Using the rule of 72,determine how long it would take for real GDP to double if it grew at a constant growth rate of 4 percent.

A)4 years.
B)18 years.
C)72 years.
D)144 years.

Question 26

The number of years it takes for GDP to double is found by

A)Dividing 72 by the growth rate.
B)Multiplying 72 by per capita GDP.
C)Multiplying 72 by the growth rate.
D)Dividing the growth rate by 72.

Question 27

Approximately how long would it take for real GDP to double if it grew at a constant annual rate of 2 percent?

A)Approximately 72 years.
B)Approximately 36 years.
C)Approximately 2 years.
D)Approximately 20 years.

Question 28

The rule of 72

A)Refers to the base year from which growth rates are measured.
B)Shows the number of years it takes for productivity to triple.
C)Is the procedure for calculating percentage increases in the growth rate.
D)Can be used to determine how long it will take for GDP to double.

Question 29

Assume the real U.S.GDP in 1998 was $7,552 billion and the U.S.population was 270 million,and the real U.S.GDP in 2000 was $10 trillion and the U.S.population was 280 million.From 1998 to 2000,the per capita real GDP

A)Increased.
B)Decreased.
C)Remained unchanged.
D)Increased then decreaseD.By using the formula real GDP ÷ population,we can calculate the GDP per capita in each year and then determine the change from 1998 to 2000.The 1998 real GDP per capita was $27,970 and the 2000 real GDP per capita was $35,714,which indicates an increase.

Question 30

The process of economic growth is

A)Not affected by previous year's growth.
B)Cumulative,whereby gains made in one year accumulate in future years.
C)Not important to economists.
D)Constantly occurring in the United States.

Question 31

Which of the following measures the growth rate of an economy?

A)The percentage change in real GDP from one period to another.
B)Investment as a percentage of GDP.
C)Real GDP divided by nominal GDP.
D)GDP per worker.

Question 32

Assume the real U.S.GDP in 1997 was $7,269 billion and the U.S.population was 268 million,and the real U.S.GDP in 1998 was $7,552 billion and the U.S.population was 270 million.From 1997 to 1998,the per capita real GDP

A)Remained unchanged.
B)Decreased.
C)Increased.
D)Cannot be determined from the information given.

Question 33

The percentage change in real GDP from one period to another is called

A)Real GDP.
B)Nominal GDP.
C)The growth rate.
D)GDP per capita.

Question 34

If the real U.S.GDP was $10 trillion in 2000 and the U.S.population was 280 million,the per capita real GDP would have been closest to

A)$2,800 per person.
B)$28,000 per person.
C)$35,714 per person.
D)$5,000 per person.

Question 35

Assume the real U.S.GDP in 1929 was $942 billion and the U.S.population was 122 million,and the real U.S.GDP in 1930 was $858 billion and the U.S.population was 123 million.From 1929 to 1930,the per capita real GDP

A)Remained unchanged.
B)Decreased.
C)Increased.
D)Cannot be determined from the information given.

Question 36

If real GDP rises from $700 billion to $704 billion,the economic growth rate is

A)($704 billion/$700 billion)/100.
B)($704 billion - $700 billion)/$700 billion.
C)$700 billion/$704 billion.
D)($704 billion - $700 billion)/$704 billion.

Question 37

The rapid acceleration of the economic growth rate in the late 1990s

A)Was so unusual that observers believed it was an abnormality.
B)Has been sustained into the 2000s.
C)Led observers to think that faster growth would be the norm.
D)Did not really occur but was due to inaccurate measurements.

Question 38

Growth in GDP per capita is attained when

A)There is growth in population.
B)There is growth in output.
C)The growth of output exceeds population growth.
D)Population is held constant.

Question 39

GDP per capita is

A)The population divided by total GDP.
B)Investment as a percentage of GDP.
C)Total GDP divided by total population.
D)The same as GDP per worker.

Question 40

The base period is usually a year

A)From which changes in relative prices are computed.
B)From which data were first collected.
C)Used for comparing the data for other years.
D)In which a series of data reaches an extreme (high or low)point.

Question 41

If total output is $1,000 and total labor-hours are 20,labor productivity is

A)$20,000.
B)$50.
C)$20.
D)$2,000.

Question 42

For much of the 1970s and 1980s,the average yearly change in productivity

A)Increased geometrically.
B)Increased arithmetically.
C)Was significantly less than the average yearly change in productivity for 1995-2000.
D)Was similar to the average yearly change in productivity for 1995-2000.

Question 43

Ceteris paribus,rising employment rates imply

A)Falling per capita GDP.
B)Rising per capita GDP.
C)Higher labor force participation rates.
D)Lower labor force participation rates.

Question 44

The employment rate is measured as the percentage of the

A)Workforce that is employed.
B)Adult population that is employed.
C)Total population that is employed.
D)Nonmilitary population that is employeD.The employment rate is the fraction of the adult population with jobs,expressed as a percent.

Question 45

The most common measure of productivity is output per

A)GDP.
B)Capita.
C)Labor-hour.
D)Human capital.

Question 46

The entry of baby boomers into the labor force and increased labor force participation of women

A)Increased the employment rate and caused per capita GDP to rise.
B)Increased the employment rate and caused per capita GDP to fall.
C)Decreased the employment rate and caused per capita GDP to rise.
D)Decreased the employment rate and caused per capita GDP to fall.

Question 47

If the growth rate of the labor force is 2 percent and the growth rate of productivity is 1.5 percent,the growth rate of total output is

A)3.5 percent.
B)0.5 percent.
C)0.75 percent.
D)1.33 percent.

Question 48

Since 1975,the employment rate in the United States has been

A)Increasing each year.
B)Decreasing each year.
C)Remaining unchanged.
D)Both increasing and decreasing with an overall upward trenD.Although there have been fluctuations,both up and down,in the employment rate,the entry of baby boomers into the workforce and the rising labor force attachment of women have caused the ratio of workers to total population (the employment rate)to rise.

Question 49

The growth rate of total output equals

A)Gross investment minus depreciation.
B)Real GDP per capita growth rate.
C)The growth rate of the labor force plus the growth rate of productivity.
D)Real GDP per worker.

Question 50

Which of the following measures productivity?

A)The ratio of current GDP to GDP in the base period.
B)Percentage increase in GDP.
C)GDP per capita.
D)GDP per worker.

Question 51

If the number employed grows faster than the population,then the

A)Living standard will fall.
B)Growth rate of GDP will fall.
C)Living standard will rise.
D)Growth rate of GDP will not be affecteD.Living standards will rise because a greater share of the population is working,thereby producing more goods and services and a higher GDP per capita.

Question 52

If the real GDP in Haiti grew at an annual rate of 2 percent and the country's population grew at an annual rate of 4 percent,how long will it take for GDP per capita to double?

A)Approximately 36 years.
B)Approximately 18 years.
C)Approximately 72 years.
D)It will never double because population is increasing more rapidly than real GDP.

Question 53

Which of the following is not a source of productivity gain?

A)Higher skills.
B)Technological advance.
C)Economic growth.
D)Improved management.

Question 54

If the real GDP in Afghanistan grew at an annual rate of 1.5 percent and the country's population grew at an annual rate of 2.5 percent,how long would it take for GDP per capita to double?

A)Approximately 36 years.
B)Approximately 14 years.
C)Approximately 72 years because real GDP is growing at a very low rate.
D)It will never double because population is increasing more rapidly than real GDP.

Question 55

The labor force includes

A)All persons over the age 16 who are either working for pay or actively seeking paid employment.
B)All persons over the age 16 who are working for pay.
C)All persons over the age 21 who are either working for pay or actively seeking paid employment.
D)All persons over the age 21 who are working for pay.

Question 56

Labor productivity is measured as the

A)Dollar value of output per unit of labor.
B)Output per labor-hour.
C)Hourly wage rate divided by output per labor-hour.
D)Dollar value of inputs per unit of output.

Question 57

Ceteris paribus,if the employment rate is rising,the GDP per capita is

A)Rising.
B)Falling.
C)Not changing.
D)It is impossible to determine because the employment rate is not related to GDP per capita.

Question 58

If the average worker's productivity is $20 of output per hour and the labor force is employed for 500 billion hours,GDP is equal to

A)$25 billion.
B)$250 billion.
C)$10 trillion.
D)$4 trillion.

Question 59

In recent decades,a primary source of growth in U.S.output has been

A)Increased productivity per worker.
B)A reduction in structural unemployment.
C)Increased capacity utilization.
D)Rapid growth of the money supply.

Question 60

If the average worker's productivity is $12 per hour and the labor force is employed for 600 billion hours,GDP is equal to

A)$7.2 trillion.
B)$50 billion.
C)$588 billion.
D)$612 billion.

Question 61

Which of the following might reduce labor productivity?

A)Rising ratios of labor to capital.
B)Rising literacy.
C)Rising human capital.
D)Larger capital stock.

Question 62

As the baby boomers reached their prime working years,there was

A)No change in productivity.
B)A decrease in average productivity.
C)An increase in average productivity.
D)A decrease in total productivity.

Question 63

From the long-run perspective of economic growth,saving

A)Threatens growth because of the paradox of thrift.
B)Causes the long-run aggregate supply curve to shift to the left.
C)Is a basic source of investment financing.
D)Shifts the production possibilities curve inwarD.Investment,which is critical to capital formation,is funded through savings.

Question 64

Which of the following would not increase labor productivity,ceteris paribus?

A)An increase in the quality of capital.
B)An increase in the number of participants in the labor force.
C)Human capital investment.
D)Management training.

Question 65

When a large number of teenagers enter the workforce,there should be

A)No change in productivity.
B)A decrease in average productivity.
C)An increase in average productivity.
D)A decrease in total productivity.

Question 66

Research and development include all of the following except for

A)Foreign investment in current machinery.
B)Scientific research.
C)New production techniques.
D)Development of management improvements.

Question 67

The best measure of net investment is

A)Gross investment per capita.
B)Real GDP per worker.
C)Gross investment less depreciation.
D)Real GDP growth rate.

Question 68

Which of the following is a potential source of increased productivity?

A)Growth as envisioned by Malthus.
B)Environmental changes as described by doomsday forecasters.
C)Improved management.
D)Crowding out.

Question 69

Additional capital makes its best contribution to economic growth by

A)Replacing labor.
B)Enhancing labor productivity.
C)Allowing service industries to replace manufacturing industries as primary employers.
D)Giving savers more money to put into investment.

Question 70

Improvements in output per worker

A)Depend only on increases in the quantity of capital equipment.
B)Depend only on increases in the quality of capital equipment.
C)Depend in large part on increases in the quality of capital equipment and the quantity of capital equipment per worker.
D)Do not depend on increases in the quantity of capital equipment or the quality of capital equipment.

Question 71

Human capital is

A)The knowledge and skills possessed by the labor force.
B)Able to increase only if the labor force grows.
C)Insignificant in productivity advances.
D)The ratio of labor to capital.

Question 72

Which of the following situations would cause the greatest increase in labor productivity?

A)The employment rate increases and capital remains the same.
B)The increase in the employment rate is greater than the increase in capital.
C)The increase in capital is greater than the increase in the employment rate.
D)The employment rate remains the same and capital decreases.

Question 73

Which of the following would increase labor productivity,ceteris paribus?

A)An increase in the number of participants in the labor force.
B)An increase in the quality of capital.
C)Crowding out.
D)A decrease in the quantity of capital.

Question 74

Which of the following could impede productivity improvements?

A)Lack of savings.
B)Higher ratios of capital to labor.
C)Technological advances.
D)Management training.

Question 75

Corporations in the United States spend a lot of money to familiarize management with global markets.This should

A)Have no effect on the economy's production possibilities curve.
B)Move the economy from a point on the production possibilities curve to a point inside it.
C)Shift the economy's production possibilities curve inward.
D)Shift the economy's production possibilities curve outwarD.The goal is to have management focus more on long-term productivity gains than shorter-term profit.

Question 76

Which of the following has made the greatest contribution to economic growth over time?

A)Improved management techniques.
B)Higher ratios of capital to labor.
C)Research and development.
D)Improved human capital.

Question 77

To increase productivity,

A)The labor force must grow faster than capital spending increases.
B)Capital spending must be greater than zero.
C)Capital spending must increase faster than the labor force expands.
D)Capital spending must increase at the same pace as the labor force expands.

Question 78

Countries that have higher saving rates are likely to have

A)A higher investment rate as a percentage of GDP and a lower growth rate of real GDP.
B)A higher investment rate as a percentage of GDP and a higher growth rate of real GDP.
C)A lower investment rate as a percentage of GDP and a lower growth rate of real GDP.
D)A lower investment rate as a percentage of GDP and a higher growth rate of real GDP.

Question 79

If lower profits in foreign countries result in decreased investment from foreign countries into the United States,continued investment growth from saving will have to rely more on

A)U.S.household saving.
B)Local government saving from deficit spending.
C)Federal government saving from deficit spending.
D)Stock market investment.

Question 80

Which of the following has made the greatest contribution to advances in productivity in recent years?

A)Improvement in management.
B)Spending on research and development.
C)Increases in capital per worker.
D)Improvements in the quality of labor.