Deck 15: Economic Growth

Question 1

An increase in our production possibilities is known as:

A) Inflation.
B) Crowding out.
C) GDP per capita.
D) Economic growth.

Answer 1

D

Question 2

Over the last decade,the world has experienced:

A) Decreased living standards in some of the poorest countries.
B) Increased living standards in all countries.
C) Growth in output for all countries.
D) Improvements in technology but little change in output.

Answer 2

A

Question 3

Which of the following is definitely true when nominal GDP increases?

A) The standard of living improves.
B) The amount of output increases.
C) The value of output increases.
D) The production possibilities curve shifts outwarD.

Answer 3

C

Question 4

Long-run economic growth policies focus on:

A) Shifting the aggregate demand curve to the left.
B) Moving the economy along the production possibilities curve.
C) Shifting the production possibilities curve outward.
D) Moving the economy onto the production possibilities curve.

Question 5

Long-run economic growth is consistent with:

A) Expanding the aggregate demand curve.
B) Expanding the production possibilities curve.
C) An increase in government spending.
D) An increase in GDP per capita.

Question 6

The production possibilities curve represents the:

A) Actual GDP that is being produced.
B) Potential output that could be produced.
C) Potential GDP per capita that could be attained.
D) Actual population growth that is occurring.

Question 7

If an economy moves from a point inside the production possibilities curve to a point on the curve:

A) There is increased use of the productive capacity.
B) The level of unemployment has increased.
C) The available resources must have increased.
D) The level of technology must have increaseD.

Question 8

To produce a combination of goods and services beyond the current production possibilities curve,an economy must:

A) Use more of the available resources and technology.
B) Raise the prices of goods and services so that firms will produce more.
C) Find more resources or develop new technology.
D) Experience population growth.

Question 9

Long-run macroeconomic policy focuses on shifting the:

A) Aggregate supply curve to the left.
B) Production possibilities curve outward.
C) Aggregate demand curve to the left.
D) Money supply curve to the right.

Question 10

Short-run economic growth comes from:

A) Expanding the production possibilities curve.
B) A rightward shift of aggregate supply.
C) Increased or more efficient use of existing resources.
D) A population decrease which increases output per person.

Question 11

Which of the following is definitely true if the production possibilities curve shifts outward?

A) Aggregate supply has increased.
B) Population has increased.
C) GDP per capita has increased.
D) Inflation has increaseD.

Question 12

A major goal of short-run macroeconomic policy is to move to a point on the _____ curve.

A) Investment demand
B) Production function
C) Production possibilities
D) Aggregate supply

Question 13

When an economy experiences long-run growth there will be:

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

Question 14

Fiscal and monetary policies are used to shift the:

A) Aggregate demand curve.
B) Aggregate supply curve.
C) Production possibilities curve.
D) Real GDP curve.

Question 15

A sustained increase in total output is possible only if the aggregate _____ curve shifts to the ____.

A) Supply;left
B) Supply;right
C) Demand;left
D) Demand;right

Question 16

The alternative combinations of goods and services that could be produced with all available resources and technology is the:

A) GDP per capita.
B) Real GDP.
C) Aggregate supply curve.
D) Production possibilities.

Question 17

Short-run economic growth focuses on:

A) Using all the available resources and technology.
B) Increasing the amount of available resources.
C) Improving the level of technology.
D) Holding the population level constant while growing GDP.

Question 18

A major goal of long-run economic policy is to:

A) Increase food production.
B) Reduce transfer programs.
C) Increase potential GDP.
D) Increase population.

Question 19

Which of the following is true if an economy is producing inside its production possibilities curve?

A) There are not enough resources available to reach the curve.
B) More output can be produced with existing resources.
C) The available technology is limiting the level of production.
D) The economy is producing the maximum potential output.

Question 20

By using all available resources and technology the economy will:

A) Shift aggregate supply to the right.
B) Shift the production possibilities curve to the right.
C) Experience long-run economic growth.
D) Produce at a point on the production possibilities curve.

Question 21

In addition to generating more output,economic growth can also contribute to:

A) Improved health for workers.
B) Increased unemployment for workers.
C) Decreased productivity.
D) A more equitable distribution of output.

Question 22

Economic growth is a(n)_______ process.

A) Constant
B) Exponential
C) Arithmetic
D) Linear

Question 23

Real GDP is the most effective measure for determining the:

A) Income level per household.
B) Change in the price level.
C) Standard of living across countries.
D) Growth rate of the economy over time.

Question 24

GDP per capita is the best measurement for determining the:

A) Impact of the marginal tax rate on AS.
B) Rule of 72.
C) Standard of living.
D) Productivity of the work force.

Question 25

Which of the following is the best measure of the actual quantity of goods and services produced by an economy?

A) Nominal GDP.
B) Real GDP.
C) Real GDP per capita.
D) GDP per worker.

Question 26

Which of the following measures the actual quantity of goods and services produced in the United States?

A) Nominal GDP.
B) GDP per worker.
C) Real GDP per capita.
D) Real GDP.

Question 27

If real GDP was $7,700 billion in 2004 and $8,200 billion in 2005,the economic growth rate was approximately ___ percent.

A) 6.1
B) 6.3
C) 6.5
D) 9.

Question 28

Small differences in annual growth rates accumulate into:

A) Small differences in GDP.
B) Large differences in GDP.
C) A leftward shift of the aggregate demand curve.
D) An increase in population.

Question 29

The best measurement for comparing the standard of living between two countries is:

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

Question 30

Which of the following is the best measure of the growth rate of the economy?

A) The percentage change in real GDP.
B) Investment as a percentage of real GDP.
C) Real GDP per capita.
D) Real GDP per worker.

Question 31

Growth in GDP per capita is only possible if growth in _______ exceeds growth in ______.

A) Employment;output
B) Output;prices
C) Prices;employment
D) Output;population

Question 32

GDP per capita is the best measurement for:

A) Determining the distribution of output within a country.
B) Determining the growth rate of the economy over time.
C) Finding the impact of population on GDP.
D) Comparing living standards between countries.

Question 33

Which of the following is the best measure of living standards for an economy?

A) GDP per worker.
B) Nominal GDP.
C) GDP per capita.
D) Population growth.

Question 34

The change in real output between two time periods divided by total output in the base period is the formula for:

A) Level of productivity.
B) Growth rate.
C) Production possibilities.
D) Net investment.

Question 35

Real GDP measures the:

A) Market value of goods and services produced.
B) Standard of living.
C) Actual quantity of goods and services produced.
D) Level of productivity.

Question 36

Which of the following statements about long-run economic growth is true?

A) Growth is compounded from one year to the next.
B) Growth is always occurring for rich countries.
C) Growth this year does not impact growth next year.
D) Poor countries are incapable of growth.

Question 37

If real GDP was $750 billion in 2006 and $800 billion in 2007,the economic growth rate was approximately ___ percent.

A) 6.7
B) 6.3
C) 5.0
D) 3.

Question 38

If real GDP was $600 billion in 2006 and $660 billion in 2007,the economic growth rate was approximately ___ percent.

A) 11.2
B) 10.0
C) 9.5
D) 9.

Question 39

GDP per capita is:

A) Total GDP multiplied by total population.
B) Total GDP divided by total population.
C) Total output divided by total labor force.
D) The percentage change in real GDP from one period to another.

Question 40

The growth rate refers to the change in _______ from one period to another.

A) Standard of living.
B) Population.
C) Nominal GDP.
D) Real GDP.

Question 41

Growth in GDP per capita can only occur if the growth in:

A) Output is greater than the growth in population.
B) Employment is greater than the growth in prices.
C) Population is greater than the growth in unemployment.
D) Prices is greater than the growth in output.

Question 42

Which of the following is used to measure labor productivity?

A) Labor input divided by total output.
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 43

If GDP was $8,400 billion in 2005 and the population was 330 million,then GDP per capita was approximately:

A) $8,070.
B) $25,455.
C) $39,286.
D) $84,000.

Question 44

If GDP was $7,500 billion in 2007 and the population was 250 million,then GDP per capita was approximately:

A) $33,333.
B) $32,042.
C) $30,000.
D) $28,000.

Question 45

If real GDP grows at a constant rate of 2 percent per year,using the "rule of 72" it will take approximately ___ years for real GDP to double.

A) 10
B) 15
C) 20
D) 36

Question 46

Which of the following explains why GDP per capita is likely to decline in less developed countries?

A) Unemployment growth is greater than population growth.
B) Population growth is greater than inflation.
C) GDP growth is greater than capital investment growth.
D) Population growth is greater than GDP growth.

Question 47

Continual increases in GDP per capita are most likely to come from:

A) Increases in output per worker.
B) Increases in the employment rate.
C) Decreases in population growth.
D) Increases in inflation.

Question 48

If GDP was $7,552 billion in 2006 and the population was 270 million,then GDP per capita was approximately:

A) $3,575.
B) $20,390.
C) $27,970.
D) $37,798.

Question 49

All persons over age 16 who are either working for pay or actively seeking paid employment defines:

A) Labor force.
B) Employment rate.
C) GDP per capita.
D) Productivity rate.

Question 50

If the total output for an economy is equal to $750 billion and the total number of labor hours is 20 billion,then labor productivity is equal to:

A) $15.00 per hour.
B) $20.00 per hour.
C) $37.50 per hour.
D) $75.

Question 51

If the total output for an economy is equal to $840 billion and the total number of labor hours is 24 billion,then labor productivity is equal to:

A) $201.60 per hour.
B) $35.00 per hour.
C) $24.00 per hour.
D) $18.

Question 52

If GDP per capita grows at a constant rate of 6 percent per year,using the "rule of 72" it will take approximately ___ years for GDP per capita to double.

A) 6
B) 10
C) 12
D) 72

Question 53

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

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

Question 54

The proportion of the adult population that is employed is the:

A) Unemployment rate.
B) Employment rate.
C) GDP per capita.
D) Productivity rate.

Question 55

If GDP was $7,300 billion in 2006 and the population was 200 million,then GDP per capita was approximately:

A) $27,397.
B) $36,500.
C) $54,621.
D) $71,000.

Question 56

Which of the following does not contribute to an increase in productivity?

A) Research and development.
B) Income transfers.
C) Capital investment.
D) Improvements in the quality of labor.

Question 57

Output per labor hour is used to measure:

A) Production possibilities.
B) Nominal GDP.
C) Employment rate.
D) Productivity.

Question 58

If GDP per capita grows at a constant rate of 9 percent per year,using the "rule of 72" it will take approximately ___ years for GDP per capita to double.

A) 7
B) 8
C) 9
D) 16

Question 59

Using the "rule of 72" approximately how long will it take for productivity to double with a constant productivity growth rate of 1.5 percent per year?

A) 18 years.
B) 48 years.
C) 72 years.
D) 108 years.

Question 60

If real GDP per capita grows at a constant rate of 4 percent per year,using the "rule of 72" it will take approximately ___ years for real GDP to double.

A) 4
B) 9
C) 18
D) 288

Question 61

Dollars spent on education and training:

A) Increase short-run growth but not long-run growth.
B) Increase both short-run and long-run growth.
C) Increase long-run growth but not short-run growth.
D) Affect the level of productivity but do not affect growth.

Question 62

Which of the following has historically made the greatest contribution to U.S.economic growth?

A) Research and development.
B) Improved management training.
C) Increased worker productivity.
D) Better education and training for workers.

Question 63

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

A) An increase in population.
B) An increase in the ratio of capital to labor.
C) Development of better capital equipment and products.
D) Better use of resources in the production process.

Question 64

Government policies that support education and job training cause:

A) A decrease in GDP per capita,since dollars are not being spent on output.
B) An increase in the size of the labor force.
C) An increase in productivity.
D) An increase in the ratio of capital to labor.

Question 65

In order to maximize the potential of workers,managers should:

A) Watch workers closely so they don't become lazy.
B) Offer incentives to workers.
C) Require a certain level of productivity from each worker.
D) Limit coffee breaks and shorten lunch hours.

Question 66

Which of the following can reduce the level of long-run economic growth?

A) A decrease in deficit spending by the government.
B) An increase in government safety regulations.
C) An increase in the savings rate.
D) Government enforced property rights.

Question 67

Improved labor skills contribute to growth of the economy by:

A) Increasing productivity.
B) Raising savings rates.
C) Raising investment rates.
D) Replacing capital.

Question 68

Which of the following government policies will shift aggregate supply to the right?

A) Setting immigration preferences based on potential productivity.
B) Increasing transfer payments to the unemployed.
C) Eliminating government-funded training programs for the structurally unemployed.
D) Eliminating job-search assistance.

Question 69

Which of the following is credited with making the greatest contribution to economic growth over time for the United States?

A) Improved management techniques.
B) Investment in capital.
C) Research and development.
D) Increased education.

Question 70

Additional capital contributes to economic growth by:

A) Replacing labor and increasing unemployment.
B) Enhancing labor productivity.
C) Replacing manufacturing industries with service industries.
D) Giving savers more money to put into investment.

Question 71

Sources of productivity growth include all of the following except:

A) An increase in the ratio of capital to labor.
B) An increase in the price level.
C) Better use of available resources in the production process.
D) An increase in labor skills.

Question 72

Productivity is definitely enhanced by:

A) Higher taxes.
B) More government regulation.
C) Education and training activities.
D) Limits on immigration.

Question 73

Ceteris paribus,when new immigrants enter a country:

A) Production possibilities decrease.
B) Aggregate supply shifts to the left.
C) The size of the labor force increases.
D) Crowding in occurs.

Question 74

Which of the following will reduce labor productivity?

A) An increase in the ratio of labor to capital.
B) A higher savings rate.
C) An increase in literacy.
D) An increase in capital stock.

Question 75

More technically advanced capital makes its contribution to productivity by:

A) Replacing labor and increasing unemployment.
B) Enhancing labor productivity.
C) Increasing profits for producers.
D) Increasing nominal GDP.

Question 76

Which of the following is not likely to contribute to gains in productivity?

A) Greater expenditures on training and education.
B) Improved management.
C) Greater expenditures on research and development.
D) Increased unemployment benefits.

Question 77

Increases in productivity in the United States since 1929 are mostly due to:

A) Increases in the quantity of labor.
B) Increases in the number of U.S.firms.
C) Research and development.
D) The high salaries paid to workers.

Question 78

Which of the following policies does not shift the aggregate supply curve to the right?

A) Education and training programs.
B) Government budget deficits.
C) Tax incentives to increase exploration for natural resources.
D) Increased immigration.

Question 79

Government policies that shift aggregate supply to the right include:

A) Immigration preferences based on potential productivity.
B) Increased transfer payments to the unemployed.
C) Elimination of training programs for the structurally unemployed.
D) Reduction in job search assistance.

Question 80

Which of the following policies does not shift the aggregate supply curve to the right?

A) Deregulation.
B) Tax cuts.
C) Job training programs.
D) Minimum-wage laws.