Question 1

All else constant, if real GDP doubles in 12 years, its average annual growth rate is

Accepted Answer

A)  approximately 6%
B)  approximately 5%
C)  approximately 4%
D)  approximately 3%

Question 2

Suppose a country's real GDP increases.At the same time, its population also increases.What happens to its standard of living?

Accepted Answer

A)  Its standard of living remains the same.
B)  Its standard of living depends on the price level.
C)  Its standard of living could rise if population growth exceeds output growth.
D)  Its standard of living could rise if population growth is smaller than output growth.

Question 3

Economic growth
I.is represented by an outward shift of the production possibilities curve.
II.is defined in terms of a series of events that increase the economy's ability to produce goods and services.
III.refers to a process that increases potential output.
IV.occurs when the economy operates on its production possibilities frontier.

Accepted Answer

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

Question 4

Holding all else constant, a country's standard of living will decline if its

Accepted Answer

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.

Question 5

Which of the following statements is true?

Accepted Answer

A)  Technological gains tend to reduce the demand for labor because producers substitute technology and capital for labor.
B)  Technological change and capital investment tend to increase real wages because labor productivity increases.
C)  Technological change and capital investment tend to reduce the quantity of labor employed, and reduce real wages.
D)  Technological change and capital investment tend to reduce the demand for labor and increase the supply of labor leading to an indeterminate effect on real wages.

Question 6

All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?

Accepted Answer

A)  Its labor force participation rate decreases by 5% per year compared to 3% per year.
B)  Its saving rate falls from 8% to 1% per year.
C)  Government expenditures on basic research increases by 10% per year.
D)  The number of students completing college education falls.

Question 7

-Refer to Figure 8-5.The labor market represented in Panel (b) is in long-run equilibrium

Accepted Answer

A)  if it is operating at the natural level of employment.
B)  if unemployment rate equals zero.
C)  if the macroeconomy is in equilibrium.
D)  if there are no diminishing marginal returns.

Question 8

If output per capita doubles in 24 years and the population doubles in 18 years, what is the growth rate of output?

Accepted Answer

A)  4% per year
B)  5% per year
C)  6% per year
D)  7% per year

Question 9

Which of the following applies to economic growth?
I.Economic growth allows people to buy more goods and services.
II.Economic growth is the expansion of the economy's production possibilities.
III.Economic growth is represented by a movement from a point inside the production possibilities curve to a point on the curve.

Accepted Answer

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

Question 10

Which of the following events will shift the long-run aggregate supply curve?

Accepted Answer

A)  a decrease in participation by women in the labor force
B)  an increase in the economy's general price level
C)  a liberal immigration policy that welcomes foreign workers
D)  a decrease in the average work week from 40 hours to 36 hours

Question 11

A change in the availability of natural resources will shift the aggregate production function.

Accepted Answer

A) True 
 B)False

Question 12

The determinants of economic growth include all of the following except

Accepted Answer

A)  technological improvement.
B)  improvements in the quality of factors of production.
C)  a stable price level.
D)  increases in the quantity of factors of production.

Question 13

-Refer to Figure 8-5.The real wage is the ratio of

Accepted Answer

A)  the price level to the nominal wage.
B)  the nominal wage to the quantity of labor employed.
C)  the nominal wage to the price level.
D)  real GDP to the nominal wage.

Question 14

If the production possibilities curve shifts outward, the long-run aggregate supply curve will shift rightward.

Accepted Answer

A) True 
 B)False

Question 15

According to the rule of 72, a 12% annual increase in real GDP would lead to a doubling of real GDP in 8 years.

Accepted Answer

A) True 
 B)False

Question 16

An increase in technology will shift the long-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 17

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.

Accepted Answer

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.

Question 18

-Refer to Figure 8-6.Assume that the economy is initially in long-run equilibrium.What happens if investment spending increases?

Accepted Answer

A)  The short-run aggregate supply curve shifts right and the price level decreases.
B)  The long-run aggregate supply curve shifts right and the price level decreases.
C)  The long-run aggregate supply curve and the short-run aggregate supply curve shift right and the price level decreases.
D)  The aggregate demand curve shifts right and the price level increases.

Question 19

Data from most industrialized countries show that countries with high investment rates (as a percentage of GDP) tend to be countries

Accepted Answer

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.

Question 20

-Refer to Figure 8-5.In Panel (c) , the position of the long-run aggregate supply curve is determined by

Accepted Answer

A)  the economy's potential output and its aggregate production function.
B)  the economy's potential output and the demand and supply curves for labor.
C)  the price level and potential output.
D)  the price level and the demand and supply curves for labor.

Exam 23: Economic Growth

All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?

Correct Answer
verified

According to the rule of 72, a 12% annual increase in real GDP would lead to a doubling of real GDP in 8 years.

Correct Answer
verified

If the production possibilities curve shifts outward, the long-run aggregate supply curve will shift rightward.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

-Refer to Figure 8-5.The real wage is the ratio of

Correct Answer
verified

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.

Correct Answer
verified

The determinants of economic growth include all of the following except

Correct Answer
verified

If output per capita doubles in 24 years and the population doubles in 18 years, what is the growth rate of output?

Correct Answer
verified

An increase in technology will shift the long-run aggregate supply curve to the left.

Correct Answer
verified

-Refer to Figure 8-6.Assume that the economy is initially in long-run equilibrium.What happens if investment spending increases?

Correct Answer
verified

Data from most industrialized countries show that countries with high investment rates (as a percentage of GDP) tend to be countries

Correct Answer
verified

-Refer to Figure 8-5.In Panel (c) , the position of the long-run aggregate supply curve is determined by

Correct Answer
verified

Correct Answer
verified

Holding all else constant, a country's standard of living will decline if its

Correct Answer
verified

Which of the following events will shift the long-run aggregate supply curve?

Correct Answer
verified

All else constant, if real GDP doubles in 12 years, its average annual growth rate is

Correct Answer
verified

-Refer to Figure 8-5.The labor market represented in Panel (b) is in long-run equilibrium

Correct Answer
verified

Correct Answer
verified

Suppose a country's real GDP increases.At the same time, its population also increases.What happens to its standard of living?

Correct Answer
verified

A change in the availability of natural resources will shift the aggregate production function.

Correct Answer
verified

Exam 23: Economic Growth

All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?

Correct AnswerverifiedShow Answer

According to the rule of 72, a 12% annual increase in real GDP would lead to a doubling of real GDP in 8 years.

Correct AnswerverifiedShow Answer

If the production possibilities curve shifts outward, the long-run aggregate supply curve will shift rightward.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

-Refer to Figure 8-5.The real wage is the ratio of

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The determinants of economic growth include all of the following except

Correct AnswerverifiedShow Answer

If output per capita doubles in 24 years and the population doubles in 18 years, what is the growth rate of output?

Correct AnswerverifiedShow Answer

An increase in technology will shift the long-run aggregate supply curve to the left.

Correct AnswerverifiedShow Answer

-Refer to Figure 8-6.Assume that the economy is initially in long-run equilibrium.What happens if investment spending increases?

Correct AnswerverifiedShow Answer

Data from most industrialized countries show that countries with high investment rates (as a percentage of GDP) tend to be countries

Correct AnswerverifiedShow Answer

-Refer to Figure 8-5.In Panel (c) , the position of the long-run aggregate supply curve is determined by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Holding all else constant, a country's standard of living will decline if its

Correct AnswerverifiedShow Answer

Which of the following events will shift the long-run aggregate supply curve?

Correct AnswerverifiedShow Answer

All else constant, if real GDP doubles in 12 years, its average annual growth rate is

Correct AnswerverifiedShow Answer

-Refer to Figure 8-5.The labor market represented in Panel (b) is in long-run equilibrium

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a country's real GDP increases.At the same time, its population also increases.What happens to its standard of living?

Correct AnswerverifiedShow Answer

A change in the availability of natural resources will shift the aggregate production function.

Correct AnswerverifiedShow Answer

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