Download Week 11 Holding all else constant, a country`s standard of living will

Week 11
Holding all else constant, a country's standard of living will rise if its
A.nominal GDP grows at a faster rate than real GDP.
B.nominal GDP grows at a slower rate than real GDP.
C.the rate of population growth exceeds the rate of growth of real GDP.
D.the rate of population growth is less than the rate of growth of real GDP.
Economic growth is an exponential process. What does this mean?
A.It means that the returns to huge capital investments made today will diminish at an increasing rate
over time.
B.It means that small differences in sustained growth rates have significant effects on a nation's real
income over long periods of time.
C.It means that countries must allocate increasing amounts of resources to capital goods to see constant
increases in the growth rate of potential output.
D.It means that if a country allocates a fixed amount of resources to capital goods, its potential output
will increase at an increasing rate over long periods of time.
Economic growth occurs when
A.nominal GDP increases.
B.GDP per capita in the short run increases.
C.a nation's capacity to produce increases.
D.there is a movement along the production possibility curve resulting in increased personal
consumption expenditures.
Which of the following is prerequisite of successful market economies?
A.the existence and enforcement of property rights
B.a tax system that redistributes income from the rich to the poor
C.the ability of the government to appropriate economic profits beyond a certain amount to ensure
equality in income distribution
D.a military presence to ensure political freedom
For economic growth to take place, we must consume more and save less. True or False?
A country's rate of real GDP growth is 3% per year. Its population is growing 4% per year. At what rate is
its real GDP per capita changing?
A.Real GDP per capita is increasing by 0.75%.
B.Real GDP per capita is increasing by 7%.
C.Real GDP per capita is decreasing by 1.33%.
D.Real GDP per capita is decreasing by 1%.
Week 11
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?
A.The rightward shift in the labor demand curve was greater than the rightward shift of the labor supply
curve.
B.The rightward shift in the labor supply curve was greater than the rightward shift of the labor demand
curve.
C.The rightward shift in the labor demand curve was greater than the leftward shift of the labor supply
curve.
D.The leftward shift in the labor supply curve was greater than the rightward shift of the labor demand
curve.
Market economies with legal systems that provide for the reliable protection of property rights and
enforcement of contracts tend to promote economic growth. True or False?
The theory of economic growth focuses on the
A.growth of real income equality in the long run; not on the growth of real income in the short run.
B.growth of resources in the long run, not on the efficiency of resource use in the short run.
C.growth of potential output over the long run, not on fluctuations in the level of economic activity in
the short run.
D.advancements in technology over the long run, not on short-run increases in real GDP.
Diminishing marginal returns occurs when
A.each additional unit of a variable factor adds less to total output than the previous unit, given constant
quantities of other factors.
B.each additional unit of a variable factor adds more to total output than the previous unit, given
constant quantities of other factors.
C.each additional unit of a variable factor diminishes total output, given constant quantities of other
factors.
D.each additional unit of a variable factor adds a constant amount to total output than the previous unit,
given diminishing quantities of other factors.
The determinants of economic growth include all of the following except
A.technological improvement.
B.growth in physical capital.
C.growth in human capital.
D.growth in money supply.
What is the difference between economic growth and economic development?
A.Economic growth examines qualitative changes in the processes by which potential output increases
over time, whereas economic development examines how a country moves from one point on its
production possibility curve to another point on the curve.
B.Economic growth implies qualitative changes in productive processes whereas economic development
requires quantitative change in virtually every aspect of life.
C.Economic growth implies quantitative changes in productive processes whereas economic
development requires widespread structural changes in the way people live.
D.There is no difference between the two terms.
Week 11
If real GDP grows at 3% and population grows at 1.2%, then real GDP per capita grows by 4.2%. T or F?
Which of the following is an example of an investment in human capital?
A.enrolling in a course to improve your computer skills
B.purchasing a computer to increase the productivity of your workers
C.installing a new piece of software on your computer which enables you to read documents online
D.accepting a job in the computer industry
Which of the following occurs in the long run neoclassical growth model without technological change?
A.Capital deepening ceases.
B.Real wages stop growing.
C.The return to capital is constant.
D.Real interest rates are constant.
E.All of the above.
Which of the following factors contribute to economic growth?
A.growth in physical capital
B.an increase in the availability of natural resources
C.an increase in the productivity of labor
D.all of the above
A necessary condition for successful economic development is democracy. True or False?
A factor critical to economic growth is
A.increased saving rates.
B.increases in human consumption.
C.reduced dependence on imports.
D.technological change that increases labor productivity.
All else constant, if a nation's potential output doubles in 36 years, its average annual growth rate is
A.approximately 1%
B.approximately 2%
C.approximately 3%
D.approximately 4%
Economic growth is best measured by the increase in
A.nominal GDP.
B.potential output.
C.disposable personal income in current dollars.
D.disposable personal income in real dollars.
What is the opportunity cost of allocating more and more resources to the production of capital goods?
A.a decrease in real income
B.the amount of consumption goods that could have been produced
C.the increase in pollution
D.the environmental goods foregone
Week 11
All of the following are sources of economic growth except
A.increases in human capital.
B.an increase in the savings rate.
C.an increase in consumption spending to stimulate production.
D.increases in physical capital.
Suppose real GDPs in Hauck and Meran are identical at $10 trillion in 2000. Suppose Hauck's economic
growth rate is 2% and Meran's is 4% and the rates remain constant over time. Calculate the percentage
difference in their levels of potential output in 2036.
A.There will be no difference in their levels of potential output.
B.Meran's potential output will be 50% higher than that of Hauck's.
C.Hauck's potential output will be 100% higher than that of Meran's.
D.Meran's potential output will be 100% higher than that of Hauck's.
All other things unchanged, higher saving rates contribute to higher rates of capital formation. T or F?
Which of the following is a flaw in Malthus' population theory?
A.His belief that growth in real GDP cannot exceed population growth real GDP despite technological
advancements.
B.His belief that any increase in income would boost population growth failed to take into account the
fact that higher incomes increase this opportunity cost and therefore reduces the number of children
people want.
C.Rising incomes makes it more affordable for families to have more children and to educate their
children so that they become productive members of society.
D.He failed to take into account that over time, as countries develop, the agricultural shrinks, reducing
the need for people to have large families to help out in the family farm.
All of the following contributes to economic development except
A.high saving and investment rates.
B.low population growth rate.
C.the existence of a market economy.
D.abundant exportable natural resources.
The Malthusian population theory
A.was eventually dismissed for its pessimism and failure to take into account technological advances in
agriculture and food production.
B.failed because contrary to Malthus' argument, agricultural production is not subject to diminishing
returns.
C.was not borne out in low-income countries because "population checks" (war, famine, etc.) kept
population growth down while real GDP growth increased.
D.states that the root cause of underdevelopment is unchecked population growth.
Week 11
An increase in the capital stock would shift the production function _______ and the long-run aggregate
supply curve to the _______.
A.upward; right
B.upward; left
C.downward; left
D.to the right; right
An increase in saving
A.decreases the amount of resources available for investment.
B.increases the amount of resources that can be devoted to the purchase of capital goods.
C.reduces real GDP by decreasing consumption.
D.increases a country's present standard of living.
In the long run, economic growth will lead to
the opportunity to produce more consumer goods.
the opportunity to produce more capital goods.
a higher material standard of living.
a more equitable distribution of income.
A.III and IV only
B.I, II, and III only
C.I, III, and IV only
D.I, II, III, and IV
The skills, training, and education possessed by workers contribute to economic growth
A.by increasing saving.
B.by increasing the quality of labor.
C.by increasing the quantity of labor.
D.by increasing real wages.
The present discounted value of $100 payable 1 year from now, assuming a market rate of interest of 10
percent, is:
A.$100.
B.$10.
C.$90.
D.slightly less than $90.
E.slightly more than $90.
Towards the end of the twentieth century, some of the world's more affluent countries experience
robust growth while others experienced growth slowdown or even stagnation. Which of the following is
not a reason for the divergent growth trend?
A.disparities in the rate of accumulation of human capital
B.unwillingness to enforce property rights
C.disparities in the employment rate
D.differences in macroeconomic policymaking that allow producers to take a long-term view
Week 11
Which of the following will not increase labor's productivity?
A.education
B.technology
C.new capital
D.growth in output
Roads, telephone lines, power facilities, and schools are examples of a nation's
A.technostructure.
B.infrastructure.
C.physiostructur
D.sociostructure.
Real GDP tends to fluctuate around potential output. True or False?
Over the past century, the average household income in the United States
A.has increased in nominal terms but has decreased in real terms.
B.has increased in nominal terms but has remained constant in real terms.
C.has increased in real terms.
D.has increased only marginally both in real and nominal terms.
In his An Essay on Population Growth, Thomas Malthus argued that population would increase at a
geometric rate and the food supply at an arithmetic rate and that this disharmony would lead to forced
return to subsistence-level conditions. True or False?
A curve that relates an economy's total output to the total amount of labor employed, holding all other
determinants of output constant, is called
A.an input-output matrix.
B.an average output function.
C.a marginal product function.
D.an aggregate production function.
When calculating the factors which have led to economic growth over the last century, technological
change is calculated as:
A.the rate of change of the capital-output ratio.
B.the increased productivity of capital.
C.a residual, inferred as the leftover growth after accounting for the contributions of other factors.
D.the ratio of the marginal products of capital and labor.
E.the rate of growth of the output to land ratio.
Data from most industrialized countries show that countries with high investment rates (as a percentage
of GDP) tend to be countries
A.with the highest rates of inflation.
B.with the most unequal income distribution.
C.with high rates of economic growth.
D.with the lowest rate of national saving.
Week 11
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?
A.2
B.4
C.6
D.8
A change in the supply of labor will shift the long-run aggregate supply curve. True or False?
Economic growth can be achieved through
A.a decrease in the supply of labor.
B.a decrease in the labor force participation rate..
C.an increase in the production of capital goods.
D.a reduction in expenditures on research and development.
Investment in human capital
A.shifts the aggregate production function downward.
B.shifts the LRAS to the left.
C.shifts the aggregate production function upward.
D.decreases the aggregate demand for labor.
What is the fundamental argument in Malthus' An Essay on the Principle of Population?
A.Ultimately, population growth rate would outpace growth in real GDP leading to declining standards
of living.
B.Population growth tends to undermine global stability which is a stimulus for future wars and
conflicts.
C.Population would increase at a geometric rate and the food supply at an arithmetic rate and that this
disharmony would lead to forced return to subsistence-level conditions.
D.Population growth is the root cause of hunger, poverty, environmental destruction, disease, and social
unrest.
According to the rule of 72, a 12% annual increase in real GDP would lead to a doubling of real GDP in 8
years. True or False?
In 1798, An Essay on the Principle of Population was written by
A.Adam Smith.
B.Thomas Malthus.
C.Karl Marx.
D.David Ricardo.
Which of the following is a cost of economic growth?
A.the sacrifice of current consumption
B.inflation in consumption goods
C.the sacrifice of future consumption
D.excessive depletion of a nation's natural resources
Increases in human capital will promote economic growth. True or False?