Deck 9: Long-Run Economic Growth

Question 1

The BEST available measure of the standard of living in a country is:

A) nominal GDP per capita.
B) real GDP per capita.
C) the unemployment rate.
D) the growth rate of productivity.

Answer 1

real GDP per capita.

Question 2

A key input for measuring economic growth is:

A) the size of the government's budget.
B) real GDP per capita.
C) life expectancy.
D) the Dow Jones stock market index.

Answer 2

real GDP per capita.

Question 3

In an economy whose aggregate real output is growing faster than the total population:

A) real GDP per capita is rising.
B) standard of living is declining.
C) national income is falling.
D) nominal GDP per capita is decreasing.

Answer 3

real GDP per capita is rising.

Question 4

Suppose that a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. According to the rule of 70, what must be the predicted annual growth rate of real GDP per capita?

A) 140%
B) 3.5%
C) 2.85%
D) 14%

Question 5

Which factor is the MOST widely accepted measure of economic growth over time?

A) inflation
B) increases in real per capita GDP
C) decline in real interest rates
D) increases in the available labor supply

Question 6

Use the following to answer questions:
(Table: South Korea's Real GDP per Capita) Use Table: South Korea's Real GDP per Capita. As a percentage of real GDP per capita in 1960, approximately how much did South Korea produce in 2000?

A) 10%
B) 15%
C) 151%
D) 1,011%

Question 7

China has much higher rate of growth than the United States, but the average Chinese household is _____ a typical U.S. household. China's real GDP per capita is _____ that of the United States.

A) as well off as; catching up with
B) richer than; much higher than
C) still a bit poorer than; catching up with
D) still far poorer than; much lower than

Question 8

The key measure used to track economic growth is:

A) real GDP per capita.
B) nominal GDP.
C) real GDP.
D) nominal GDP per capita.

Question 9

Real GDP per capita in the United States increased almost _____ times between 1900 and 2015.

A) 2
B) 3
C) 8
D) 10

Question 10

U.S. real GDP per capita in 2015 was _____% as much per person as it was in 1900.

A) 16
B) 189
C) 46
D) 804

Question 11

The rule of 70 indicates that a 6% annual increase in the level of real GDP would lead to the output doubling in approximately _____ years.

A) 6
B) 12
C) 24
D) 30

Question 12

The rule of 70 states that a variable's approximate doubling time equals:

A) 70 times the growth rate.
B) the growth rate divided by 70.
C) 70 divided by the doubling time.
D) 70 divided by the growth rate.

Question 13

Economists use real GDP per capita to measure economic growth:

A) because it ignores the effect of price changes.
B) because poor nations have a large population and the population of richer nations is declining.
C) because it is the inflation-adjusted value of a country's production of goods and services corrected for the change in a country's population.
D) even though nominal GNP per capita is a far superior measure of economic growth.

Question 14

A typical family in the United States in 1900 had a purchasing power equal to _____% of the real U.S. GDP per capita in 2015.

A) 1
B) 12
C) 70
D) 136

Question 15

Use the following to answer questions:
(Table: South Korea's Real GDP per Capita) Use Table: South Korea's Real GDP per Capita. As a percentage of real GDP per capita in 2000, approximately how much did South Korea produce in 1960?

A) 10%
B) 15%
C) 151%
D) 1,011%

Question 16

Output per capita in the United States in 2015 was about _____ as high as it was in 1900.

A) twice
B) 3 times
C) 8 times
D) 10 times

Question 17

Today, more than _____ of the world's population lives in countries poorer than the United States was a century ago.

A) one-fifth
B) one-third
C) one-half
D) two-fifths

Question 18

Suppose that a panel of economists predicts that a nation's real GDP per capita will have an average annual growth rate of 2%. According to the rule of 70, how many years will it take for this nation's real GDP per capita to double?

A) 35
B) 70
C) 140
D) 20

Question 19

If a country has a population of 1,000 people, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:

A) $500.
B) $5,000.
C) $50,000.
D) $5 million.

Question 20

The standard of living in a country can be BEST measured by:

A) nominal GDP per capita.
B) real GDP per capita.
C) the productivity growth rate.
D) the business cycles.

Question 21

If real GDP doubles in 12 years, its average annual growth rate is approximately:

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

Question 22

India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500, while the United States is growing at a rate of 3% per year, and its real GDP per capita is about $47,000. How long will it take the United States to double its real GDP per capita?

A) 10.5 years
B) 23.3 years
C) 30 years
D) 50 years

Question 23

India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500, while the United States is growing at a rate of 3% per year, and its real GDP per capita is about $47,000. About how much will U.S. real GDP per capita be in 14 years?

A) $71,000
B) $28,000
C) $112,000
D) $224,000

Question 24

Real GDP per capita, growing at a constant rate over a 35-year period, has doubled at the end of that period. What must the annual growth rate of real GDP per capita be for this economy?

A) 1%
B) 2%
C) 4%
D) 15%

Question 25

India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500, while the United States is growing at a rate of 3% per year, and its real GDP per capita is about $47,000. How long will it take India to double its real GDP per capita?

A) 7.8 years
B) 10.2 years
C) 14.6 years
D) 90 years

Question 26

Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year and that real GDP per capita of China is $4,000, and its annual growth rate is 7%. According to the rule of 70, how large will China's real GDP per capita be in 20 years?

A) $5,600
B) $8,000
C) $16,000
D) $28,000

Question 27

Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year and that real GDP per capita of China is $4,000, and its annual growth rate is 7%. How long will it take China's real GDP per capita to double?

A) 14 years
B) 10 years
C) 35 years
D) 50 years

Question 28

If real GDP grows at an annual rate of 1%, it will double in approximately _____ years.

A) 11
B) 23
C) 35
D) 70

Question 29

There are two countries on a peninsula. The first has a per capita annual growth rate of 2%, and its neighbor to the south has an annual growth rate of 5%. How much sooner will the country in the south double its GDP per capita than will its neighbor in the north?

A) 5 years
B) 10 years
C) 15 years
D) 21 years

Question 30

Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year and that real GDP per capita of China is $4,000, and its annual growth rate is 7%. How long will it take real GDP per capita of the United States to double?

A) 35 years
B) 50 years
C) 2.25 years
D) 14 years

Question 31

The rule of 70 states that:

A) the average score on standardized tests is normally distributed with a mean of 70 and a standard deviation of 10.
B) everyone should retire by age 70.
C) the number of years for a variable to double equals 70 divided by its annual growth rate.
D) Social Security benefits should increase when people reach 70.

Question 32

If real GDP doubles in 35 years, its average annual growth rate is approximately:

A) 1%.
B) 2%.
C) 3%.
D) 4%.

Question 33

Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year and that real GDP per capita of China is $4,000, and its annual growth rate is 7%. How many years will it take for China's real GDP per capita to be larger than real GDP per capita in the United States?

A) 70 to 75 years
B) 40 to 45 years
C) 15 to 20 years
D) 5 to 10 years

Question 34

If real GDP grows at an average rate of 3% per year, it will double in _____ years.

A) less than 10
B) approximately 17
C) approximately 23
D) approximately 36

Question 35

India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500, while the United States is growing at a rate of 3% per year, and its real GDP per capita is about $47,000. About how much will India's real GDP per capita be in 20 years?

A) approximately $20,000
B) approximately $56,000
C) approximately $14,000
D) approximately $30,000

Question 36

The formula for the rule of 70, where n is number of years and r is growth rate, is expressed as:

A) n * 70 = r.
B) n / r = 70.
C) r / n = 70.
D) n * r = 70.

Question 37

If output is growing at 5% annually, how many years will it take for output to quadruple?

A) 14 years
B) 10 years
C) 20 years
D) 28 years

Question 38

If real GDP per capita grows at 5% per year consistently over time, how many years will it take for it to double?

A) 5
B) 10
C) 14
D) 70

Question 39

According to the rule of 70, if a country doubles its real GDP per capita every 20 years, that country must be growing at an annual rate of:

A) 2%.
B) 3.5%.
C) 35%.
D) 70%.

Question 40

The rule of 70 is MOST useful in:

A) identifying the causes of economic growth.
B) identifying the sources of economic growth.
C) estimating the productivity of labor.
D) estimating the doubling time of real GDP for a given growth rate.

Question 41

The Rule of 70 applies:

A) only to GDP.
B) only to GDP per capita.
C) to any growth rate.
D) only to developed countries.

Question 42

To find the approximate number of years it takes the economy to double:

A) divide its growth rate by 70.
B) divide 70 by its growth rate.
C) divide its growth rate by 100.
D) multiply its growth rate by 20.

Question 43

Economists say that long-run economic growth is almost entirely due to:

A) rising productivity.
B) population growth.
C) a democratically elected government.
D) a balanced budget.

Question 44

From 2010 to 2011, nation A's real GDP increased from $100 billion to $106 billion and its population grew from 50 million to 51 million. Its annual growth rate in real GDP per capita was approximately _____%.

A) 1
B) -3
C) 4
D) 6

Question 45

Over the course of the twentieth century, real GDP per capita in the United States rose MOSTLY as a result of:

A) rising population.
B) rising employment.
C) rising productivity.
D) reduced vacation time.

Question 46

Use the following to answer questions:
(Table: Kenya's Economy in 2010) Use Table: Kenya's Economy in 2010. During 2010, assuming no changes in the price level, aggregate output per capita in Kenya grew at a rate of:

A) 0.6%.
B) 2.6%.
C) 5.2%.
D) 7.8%.

Question 47

Productivity is equal to:

A) real GDP divided by the number of workers.
B) real GDP divided by the population.
C) the number of workers per machine.
D) the total output produced.

Question 48

Which country had the FASTEST growth rate of real GDP per capita between 1980 and 2015?

A) the United States
B) Ireland
C) China
D) France

Question 49

Labor productivity growth can be attributed to:

A) improvement in technology.
B) a decline in university attendance.
C) an increase in population growth.
D) a decline in the physical capital per worker.

Question 50

From 2010 to 2011, nation A's real GDP increased from $100 billion to $106 billion and its population grew from 50 million to 51 million. As a result, real GDP per capita _____ because real GDP rose _____ than the population.

A) increased; more slowly
B) increased; faster
C) decreased; more slowly
D) decreased; faster

Question 51

Which country had the LOWEST growth rate of real GDP per capita between 1980 and 2015?

A) Ireland
B) France
C) Argentina
D) Zimbabwe

Question 52

According to the rule of 70, if a country's real GDP per capita grows at an annual rate of 2% instead of 3%, it will take _____ additional years for that country to double its level of real GDP per capita.

A) 35
B) 11.67
C) 23.3
D) 30

Question 53

According to the rule of 70, if real GDP per capita is growing at 2% a year, in 100 years it will have increased by:

A) about 4 times.
B) about 7 times.
C) almost 30 times.
D) almost 60 times.

Question 54

Use the following to answer questions:
(Table: Kenya's Economy in 2010) Use Table: Kenya's Economy in 2010. The population at the end of 2010 was about:

A) 400 million.
B) 41 million.
C) 14 million.
D) 401 million.

Question 55

Which change would contribute to a nation's rapid long-run economic growth?

A) faster technological progress
B) faster population growth
C) less physical capital per worker
D) lower levels of average human capital

Question 56

Use the following to answer questions:
(Table: Kenya's Economy in 2010) Use Table: Kenya's Economy in 2010. Aggregate output per capita at the beginning of 2010 was:

A) $5,000.
B) $10,000.
C) $775.
D) $7,750.

Question 57

Productivity is declining when:

A) the number of hours worked exceeds the number of workers.
B) population growth exceeds real GDP growth.
C) the ratio of adult civilians employed outside the home rises.
D) real GDP growth exceeds the population growth.

Question 58

Use the following to answer questions:
(Table: Kenya's Economy in 2010) Use Table: Kenya's Economy in 2010. Aggregate output at the end of 2010, assuming no changes in the price level, was about:

A) $326 billion.
B) $32.612 billion.
C) $3,635 billion.
D) $6,500 billion.

Question 59

Long-run economic growth depends almost entirely on:

A) labor productivity growth.
B) population growth.
C) agricultural production growth.
D) the number of hours worked.

Question 60

Use the following to answer questions:
(Table: Kenya's Economy in 2010) Use Table: Kenya's Economy in 2010. Aggregate output per capita at the end of 2010, assuming no changes in the price level, was:

A) $7,000.
B) $7,005.
C) $795.
D) $7,490.

Question 61

Human capital refers to:

A) output per worker.
B) the education and knowledge embodied in the workforce.
C) society's investment in capital goods.
D) people working with capital goods.

Question 62

Which change will NOT increase the productivity of labor?

A) technological improvements
B) an increase in the capital stock
C) improvements in education
D) an increase in the size of the labor force

Question 63

If technology advances:

A) GDP per capita declines.
B) physical capital is less productive.
C) workers can produce more with fixed amounts of physical and human capital.
D) human capital is less useful.

Question 64

The MOST important driver for economic growth appears to be:

A) increase in physical capital.
B) increase in human capital.
C) technological progress.
D) foreign investment.

Question 65

A factor that does NOT drive productivity growth is:

A) growth convergence.
B) physical capital.
C) technological progress.
D) human capital.

Question 66

Workers today are more productive than workers were in the past because:

A) they now are physically stronger on average.
B) they now have more physical capital embodying better technology.
C) more of them use the same number of machines as in the past.
D) they are paid more.

Question 67

If technology advances,:

A) more output can be obtained from the same inputs.
B) more inputs are needed to produce the same output.
C) less output can be obtained from the same inputs.
D) less output can be produced even with more inputs.

Question 68

An example of human capital is a person's:

A) money.
B) job skills.
C) capital goods or machines.
D) stocks and bonds.

Question 69

The term human capital describes improvement:

A) made possible by better machines and equipment.
B) in the technology available to the work force.
C) in a worker's skills made possible by education, training, and knowledge.
D) in the robotics technology that can substitute for a human worker.

Question 70

The skills, training, and education possessed by workers that contribute to economic growth are known as:

A) saving.
B) human capital.
C) natural resources.
D) output of labor.

Question 71

Which factor will NOT increase labor's productivity?

A) education
B) technology
C) new capital
D) growth in the population

Question 72

Physical capital includes:

A) a worker's education or knowledge.
B) machine tools.
C) money.
D) shares of stock.

Question 73

To acquire human capital a person would:

A) save to buy a printing press.
B) purchase a printing press rather than a very large television.
C) learn to use a printing press.
D) sell the books that the printing press produces.

Question 74

An example of physical capital is a:

A) truck that a company purchases for deliveries.
B) worker who physically learns to work on a truck his company buys.
C) truck that a worker buys for personal use.
D) a truck a company purchases for work, a worker who physically learns to work on a truck his company buys, or a truck a worker buys for personal use.

Question 75

Technological progress allows workers to produce more:

A) because it increases the amount of physical capital available.
B) because it increases the amount of human capital available.
C) even when the amount of physical capital and human capital do not change.
D) only if the amount of physical capital grows at the same rate.

Question 76

Rising high school graduation rates are an example of an increase in:

A) technological progress.
B) human capital.
C) population stock.
D) fertility rates.

Question 77

A reason that does NOT explain why average workers in the United States today produce more than their counterparts did a century ago is that the modern worker:

A) is better educated.
B) has more physical capital to work with.
C) has better technology to work with.
D) works longer hours.

Question 78

Human capital is:

A) the improvement in labor made possible by education and knowledge that is embodied in the workforce.
B) the machinery and tools that each worker owns.
C) robots that can perform tasks that only humans could do in the past.
D) not as important as physical capital.

Question 79

For developed countries, which factor is considered the MOST important driver in productivity growth?

A) the level of educational attainment
B) the amount of physical capital
C) technological progress
D) the abundance of natural resources

Question 80

The improvement in labor made possible by education and knowledge that is embodied in the work force is known as _____ capital.

A) physical
B) human
C) financial
D) real