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An increase in which of the following is consistent with an outward shift of the production possibilities curve?
(A)Transfer payments
(B)Aggregate demand
(C)Long-run aggregate supply
(D)Income tax rates
(E)Exports
An increase in which of the following is most likely to increase long-run economic growth?
(A)Interest rate
(B)Income tax rate
(C)Marginal propensity to consume
(D)Investment in human capital
(E)Money demand
Assuming no change in the nominal wage and a significant increase in human capital, the output per worker will
(A)increase and the real wage will decrease
(B)increase and the real wage will increase
(C)decrease and the real wage will decrease
(D)decrease and the real wage will increase
(E)increase and the real wage will remain unchanged
In the aggregate model, economic growth can best be represented by a
(A)leftward shift of the long-run aggregate supply curve
(B)rightward shift of the long-run aggregate supply curve
(C)rightward shift of the short-run aggregate supply curve
(D)rightward shift of the aggregate demand curve
(E)leftward shift of the aggregate demand curve
Which of the following will most likely cause an increase in real output in the long run?
(A)A decrease in the labor force participation rate
(B)An increase in the velocity of money
(C)An open-market sale of government bonds by the central bank
(D)An increase in immigration from abroad
(E)An increase in the price level
Which of the following would directly increase the capital stock of an economy?
(A)An individual purchases shares of corporate stock.
(B)An individual purchases high-risk corporate bonds.
(C)A business firm expands its production facilities.
(D)A bank uses cash reserves to purchase short-term and long-term government securities.
(E)The government implements a spending program to cover prescription drugs for Medicare recipients.
An increase in net investment leads to faster economic growth because capital per worker and output per worker will
change in which of the following ways?
(A)Capital per Worker = Increase ; Output per Worker = Increase
(B)Capital per Worker = Increase ; Output per Worker = Decrease
(C)Capital per Worker = No change ; Output per Worker = Increase
(D)Capital per Worker = Decrease ; Output per Worker = Increase
(E)Capital per Worker = Decrease ; Output per Worker = Decrease
An increase in which of the following would be most likely to increase long-run growth?
(A)Pension payments
(B)Unemployment compensation
(C)Subsidies to businesses for purchases of capital goods
(D)Tariffs on imported capital goods
(E)Tariffs on imported oil
An increase in which of the following would LEAST likely increase labor productivity?
(A)Physical capital
(B)Human capital
(C)Technological improvements
(D)Educational achievement
(E)The labor force
Which of the following statements concerning economic growth is true?
(A)If the population is growing faster than potential output, real gross domestic product per capita will definitely
increase.
(B)With long-run economic growth, there is an increase in aggregate supply.
(C)The gap between rich and poor must widen with long-run economic growth.
(D)Increasing potential output necessarily increases the economic welfare of the average citizen.
(E)Long-run economic growth is only possible with demand management policies.
Which of the following would most likely stimulate economic growth?
(A)Decreased savings
(B)Decreased wages
(C)Increased transfer payments
(D)Increased personal income taxes
(E)Technological progress
Which of the following would indicate that economic growth has occurred?
(A)The production possibilities curve shifts to the left.
(B)The long-run aggregate supply curve shifts to the right.
(C)The aggregate demand curve shifts to the right.
(D)The Phillips curve becomes flatter.
(E)Business cycles no longer exist.
An advance in technology will cause the
(A)aggregate demand curve to shift to the right
(B)aggregate demand curve to shift to the left
(C)short-run aggregate supply curve to shift to the left
(D)long-run aggregate supply curve to shift to the left
(E)long-run aggregate supply curve to shift to the right
If AD and AS represent aggregate demand and aggregate supply curves, respectively, and the arrows indicate the
movement of the curves, which of the following graphs best illustrates long-run economic growth?
(A)
(B)
(C)
(D)
(E)
The long-run growth rate of an economy will be increased by an increase in all of the following EXCEPT
(A)capital stock
(B)labor supply
(C)real interest rate
(D)rate of technological change
(E)spending on education and training
Which of the following would best explain a decline in potential gross domestic product?
(A)Negative net investment
(B)The discovery of vast new oil deposits
(C)A lower price level
(D)A decrease in the infant mortality rate
(E)A decrease in wages and profits
The shifting of a country’s production possibilities curve to the right will most likely cause
(A)net exports to decline
(B)inflation to increase
(C)the aggregate demand curve to shift to the left
(D)the long-run aggregate supply curve to shift to the left
(E)the long-run aggregate supply curve to shift to the right
Potential gross domestic product will decrease under which of the following conditions?
(A)The growth rate of the population increases more rapidly than the growth rate of gross domestic product.
(B)Nominal gross domestic product increases more than real gross domestic product.
(C)The natural rate of unemployment decreases.
(D)The country’s annual depreciation is greater than its annual gross investment.
(E)The monetary authorities adopt an easy monetary policy.
An increase in which of the following is most likely to promote economic growth?
(A)Consumption spending
(B)Investment tax credits
(C)The natural rate of unemployment
(D)The trade deficit
(E)Real Interest Rates