Question 1

The real wage rate is the ________ divided by the ________.

Accepted Answer

A)  quantity of labor demanded; quantity of labor supplied
B)  nominal wage rate; price level
C)  quantity of labor supplied; quantity of labor demanded
D)  nominal wage rate; inflation rate
E)  equilibrium quantity of employment; potential GDP

Question 2

In India last year, the growth rate of real GDP was 3.5 percent and the population grew from 1,000 million people to 1,100 million. Real GDP per person

Accepted Answer

A)  increased by 13.5 percent.
B)  decreased by 6.5 percent.
C)  increased by 6.5 percent.
D)  decreased by 13.5 percent.
E)  increased by 3.5 percent.

Question 3

Governments should promote education because education contributes to the nation's

Accepted Answer

A)  employment.
B)  free markets.
C)  economic growth potential.
D)  international trade.
E)  protection of property rights.

Question 4

Human capital is

Accepted Answer

A)  the same as labor productivity.
B)  a measure of the number of labor hours available.
C)  the accumulated skills and knowledge of workers.
D)  the average number of years of schooling of the labor force.
E)  what people are born with and cannot be changed.

Question 5

Why are the governments of developed countries concerned about the quality of education in their countries?
 What effect does education play in determining the country's economic growth rate and its standard of living?
 Why does it have this effect?

Accepted Answer

Improving the quality of education is an...

Question 6

The real wage rate is $35 an hour. At this wage rate there are 100 billion labor hours supplied and 200 billion labor hours demanded. There is a

Accepted Answer

A)  shortage of 300 billion hours of labor.
B)  shortage of 100 billion hours of labor.
C)  surplus of 100 billion hours of labor.
D)  surplus of 300 billion hours of labor.
E)  shortage of 200 billion hours of labor.

Question 7

If a country experiences a real GDP growth rate of 4 percent, real GDP will double in

Accepted Answer

A)  14 years.
B)  17.5 years.
C)  23.3 years.
D)  35 years.
E)  25 years.

Question 8

The productivity curve is a relationship between ________ and ________.

Accepted Answer

A)  real GDP; hours of labor
B)  real GDP; capital
C)  real GDP per hour of labor; capital
D)  capital per hour of labor; labor per hour of capital
E)  real GDP per hour of labor; capital per hour of labor

Question 9

Labor productivity is calculated as

Accepted Answer

A)  (real GDP ÷ aggregate hours) .
B)  (real GDP ÷ aggregate hours × number of workers) .
C)  (real GDP ÷ number of workers × ratio of capital per worker) .
D)  (real GDP ÷ technology level) .
E)  (real GDP ÷ aggregate hours × number of workers) × 100.

Question 10

Potential GDP is

Accepted Answer

A)  equal to the maximum amount of goods and services that can be produced at any given time.
B)  another name for real GDP.
C)  the level of output produced when the economy is fully employed.
D)  a measure of the short term fluctuations in real GDP.
E)  another name for nominal GDP.

Question 11

Suppose India wants to measure how much the standard of living has changed over the last decade. Which piece of data should India use?

Accepted Answer

A)  population
B)  real GDP per person
C)  real GDP
D)  wages
E)  inflation

Question 12

A country's leadership believes that the neoclassical growth theory is correct. The country already has the necessary preconditions for growth, so suggest policy changes the government might enact to help speed economic growth.

Accepted Answer

The policy changes should encourage tech...

Question 13

If real GDP increases by 6 percent and at the same time the population increases by 2 percent, then real GDP per person grows by

Accepted Answer

A)  6 percent.
B)  4 percent.
C)  2 percent.
D)  8 percent.
E)  3 percent.

Question 14

Economic growth in Cuba has been slow; what can best explain the slow growth?

Accepted Answer

A)  Lack of economic resources
B)  Lack of incentive mechanisms and economic freedom
C)  Labor productivity is low.
D)  A non-democratic form of government
E)  Too much competition within the economy

Question 15

If New Zealand is operating at potential GDP, which of the following is true?
i. New Zealand only has frictional and structural unemployment.
ii. There is no inflation in New Zealand.
iii. New Zealand has positive net exports.

Accepted Answer

A)  i, ii and iii
B)  i only
C)  i and ii
D)  i and iii
E)  ii only

Question 16

Economic freedom is a precondition for economic growth. Which of the following is a characteristic of economic freedom?
I. A democratic form of government.
Ii. Property rights must be protected.
Iii. The government must support and pay for inventions and innovations.

Accepted Answer

A)  i only
B)  ii only
C)  Both i and ii
D)  Both ii and iii
E)  Both i and iii

Question 17

The ________ describes the relationship between the amount of labor employed and real GDP.

Accepted Answer

A)  production function
B)  production possibilities frontier
C)  Lucas Wedge
D)  inflation rate
E)  Okun Gap

Question 18

-The figure above shows the U.S. demand for labor curve. If there is a simultaneous increase in the nominal wage rate of 10 percent and a 10 percent increase in the price level, there will be a

Accepted Answer

A)  rightward shift of the demand for labor curve.
B)  leftward shift of the demand for labor curve.
C)  movement downward along the demand for labor curve from a point such as A to a point such as B.
D)  movement upward along the demand for labor curve from a point such as C to a point such as B.
E)  None of the above answers is correct because there is no change in the demand for labor curve.

Question 19

________ increases with education, training, and job experience. i. Physical capital
Ii. Human capital
Iii. Financial capital

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  Both ii and iii
E)  i, ii, and iii

Question 20

A nation's population was 250 million last year and is 255 million this year. If its real GDP was $8.5 trillion last year and is $8.8 trillion this year, what is its growth rate of real GDP per person?

Accepted Answer

Last year real GDP per person equaled ($...

Exam 17: Potential Gdp and Economic Growth

If New Zealand is operating at potential GDP, which of the following is true? i. New Zealand only has frictional and structural unemployment. ii. There is no inflation in New Zealand. iii. New Zealand has positive net exports.

Correct AnswerverifiedShow Answer

Economic growth in Cuba has been slow; what can best explain the slow growth?

Correct AnswerverifiedShow Answer

Human capital is

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Potential GDP is

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Labor productivity is calculated as

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The real wage rate is $35 an hour. At this wage rate there are 100 billion labor hours supplied and 200 billion labor hours demanded. There is a

Correct AnswerverifiedShow Answer

-The figure above shows the U.S. demand for labor curve. If there is a simultaneous increase in the nominal wage rate of 10 percent and a 10 percent increase in the price level, there will be a

Correct AnswerverifiedShow Answer

Economic freedom is a precondition for economic growth. Which of the following is a characteristic of economic freedom? I. A democratic form of government. Ii. Property rights must be protected. Iii. The government must support and pay for inventions and innovations.

Correct AnswerverifiedShow Answer

In India last year, the growth rate of real GDP was 3.5 percent and the population grew from 1,000 million people to 1,100 million. Real GDP per person

Correct AnswerverifiedShow Answer

The real wage rate is the ________ divided by the ________.

Correct AnswerverifiedShow Answer

________ increases with education, training, and job experience. i. Physical capital Ii. Human capital Iii. Financial capital

Correct AnswerverifiedShow Answer

A nation's population was 250 million last year and is 255 million this year. If its real GDP was $8.5 trillion last year and is $8.8 trillion this year, what is its growth rate of real GDP per person?

Correct AnswerverifiedLast year real GDP per person equaled ($...View AnswerShow Answer

If real GDP increases by 6 percent and at the same time the population increases by 2 percent, then real GDP per person grows by

Correct AnswerverifiedShow Answer

The ________ describes the relationship between the amount of labor employed and real GDP.

Correct AnswerverifiedShow Answer

Why are the governments of developed countries concerned about the quality of education in their countries? What effect does education play in determining the country's economic growth rate and its standard of living? Why does it have this effect?

Correct AnswerverifiedImproving the quality of education is an...View AnswerShow Answer

Governments should promote education because education contributes to the nation's

Correct AnswerverifiedShow Answer

Suppose India wants to measure how much the standard of living has changed over the last decade. Which piece of data should India use?

Correct AnswerverifiedShow Answer

If a country experiences a real GDP growth rate of 4 percent, real GDP will double in

Correct AnswerverifiedShow Answer

A country's leadership believes that the neoclassical growth theory is correct. The country already has the necessary preconditions for growth, so suggest policy changes the government might enact to help speed economic growth.

Correct AnswerverifiedThe policy changes should encourage tech...View AnswerShow Answer

The productivity curve is a relationship between ________ and ________.

Correct AnswerverifiedShow Answer

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The real wage rate is the divided by the .

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Last year real GDP per person equaled ($...
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Improving the quality of education is an...
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The policy changes should encourage tech...
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The productivity curve is a relationship between and .

Correct Answer
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