Deck 10: Economicgrowth

Question 1

According to the rule of 70, if a country grows at 7 percent per year, it will double its real GDP per capita in:

A) 2 years.
B) 20 years.
C) 35 years.
D) 10 years.

Answer 1

10 years.

Question 2

According to the rule of 70, we can estimate how long it will take a country to double its real GDP per capita by:

A) dividing the average growth rate by 70.
B) dividing 70 by the average growth rate.
C) dividing the current real GDP per capita by 70.
D) multiplying the average growth rate by 70 percent.

Answer 2

dividing 70 by the average growth rate.

Question 3

According to the rule of 70, if a country grows at an average rate of 2 percent per year, what would happen after 35 years?

A) The country's real GDP per capita would double.
B) The country's nominal GDP would double.
C) The country's real GDP would double.
D) The country's nominal GDP per capita would double.

Answer 3

The country's real GDP per capita would double.

Question 4

Historically, real income per person:

A) barely changed at all until the 1800s but began to increase after.
B) barely changed at all until the 1500s but began to increase after.
C) has steadily increased at an average rate of 2 percent
D) has barely changed worldwide.

Question 5

If a country grows at an average rate of 3.5 percent per year over a ten year period, what is its compounded growth rate over that time period?

A) 41 percent
B) 35 percent
C) 32.7 percent
D) 45 percent

Question 6

Over the last 100 years or so, the U.S. economy has grown annually at an average rate of:

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

Question 7

In a given year, suppose the real GDP per capita growth rate is 3.8 percent, the inflation rate is 2 percent, and the population growth rate is 1.2 percent. What is the nominal GDP growth rate?

A) 3.8 percent
B) 5.0 percent
C) 5.8 percent
D) 7.0 percent

Question 8

The real GDP per capita growth rate is captured by subtracting the percentage changes in:

A) both prices and population from the nominal GDP growth rate.
B) both population and capital depreciation from the nominal GDP growth rate.
C) prices from the nominal GDP growth rate.
D) population from the nominal GDP growth rate.

Question 9

According to the rule of 70, a country will double its real GDP per capita in 10 years if it experiences a 7 percent:

A) real GDP per capita growth rate.
B) inflation rate.
C) population growth rate.
D) None of these are true.

Question 10

In a given year, suppose the nominal GDP growth rate is 7 percent, the inflation rate is 2 percent, and the population growth rate is 1.2 percent. What is the real GDP per capita growth rate?

A) 3.8 percent
B) 5.0 percent
C) 5.8 percent
D) 7.0 percent

Question 11

If a country grows at an average rate of 3.5 percent per year, we can estimate it will double its:

A) growth rate in 35 years.
B) real GDP per capita in 35 years.
C) real GDP per capita in 20 years.
D) growth rate in 20 years.

Question 12

We can roughly estimate how long it will take a country to double its real GDP per capita using the:

A) rule of 70.
B) rule of 60.
C) growth estimator.
D) GDP deflator.

Question 13

In general, the number of years it will take for income to double at the current real growth rate is approximately:

A) 70 divided by the growth rate.
B) 50 divided by the growth rate.
C) 7 times the growth rate.
D) 5 times the growth rate.

Question 14

We can calculate how long it will take a country to double its real GDP per capita using:

A) its average growth rate.
B) the GDP deflator.
C) the CPI indexation factor.
D) the GDP growth estimator.

Question 15

According to the rule of 70, a country will double its real GDP per capita in 20 years if it grows at an average of _______ per year.

A) 2.0 percent
B) 3.5 percent
C) 5.0 percent
D) 7.0 percent

Question 16

Rapid economic growth:

A) is a modern phenomenon, happening only in the last century or two.
B) has happened in various places around the world since the 1300s.
C) has occurred since 1500, but strong depressions since then have prevented real growth.
D) is a modern phenomenon, happening only in the past decade.

Question 17

In a given year, suppose the nominal GDP growth rate is 5 percent, the inflation rate is 1.2 percent, and the population growth rate is 3.8 percent. What is the real GDP per capita growth rate?

A) 3.8 percent
B) 5.0 percent
C) 1.2 percent
D) 0.0 percent

Question 18

Real income per person stayed relatively steady:

A) until the 1800s, when the Industrial Revolution caused it to grow.
B) until the 1500s, when the Renaissance caused it to grow.
C) until the 1990s, when wireless technology caused it to grow.
D) over the last three centuries.

Question 19

Economic growth means:

A) more goods and services are produced.
B) people maintain their standard of living.
C) fewer goods are imported.
D) tax revenues decrease in general.

Question 20

Total changes in GDP over time are:

A) larger than the annual growth rate due to compounding.
B) smaller than the annual growth rate due to seasonal adjustments.
C) larger than the annual growth rate due to inflation.
D) larger than the annual growth rate due to population growth.

Question 21

Suppose that a country has a GDP of 1 trillion dollars in year 1. If the country grows at an average rate of 3 percent per year over a 15-year period, what will its compounded GDP be at the end of that time period?

A) $1.47 trillion
B) $2 trillion
C) $1.33 trillion
D) $1.56 trillion

Question 22

The amount of physical capital in an economy is calculated by adding up the value of all:

A) tools, equipment, and structures.
B) skills and expertise of employed people.
C) money held by firms.
D) technological capabilities used in production.

Question 23

Suppose that a country has a nominal GDP of 10.3 trillion dollars in year 1. If the country grows at an average rate of 3 percent per year over a 15-year period, what will its compounded GDP be at the end of that time period?

A) $14.7 trillion
B) $16 trillion
C) $16.3 trillion
D) $15.6 trillion

Question 24

Which of the following is an example of physical capital?

A) A combine harvester
B) A bank loan
C) Seeds
D) A tree

Question 25

We can tell how much physical capital has been added to the economy by:

A) considering both new investment and depreciation of capital.
B) adding up the value of all tools, equipment, and structures that have ever been built.
C) determining the working age population.
D) tracking workplace education programs.

Question 26

Productivity is generally measured as:

A) output per worker.
B) output divided by capital.
C) the number of new products developed each year.
D) a country's nominal output.

Question 27

The productivity of workers can depend upon which of the following?

A) Physical capital
B) Population growth
C) Number of businesses established
D) All of these are determinants of productivity.

Question 28

Which of the following would not be considered physical capital?

A) A combine harvester
B) Fertile soil
C) A factory
D) A forklift

Question 29

A country's income:

A) depends upon how productive its workers are.
B) is difficult to measure given current macroeconomic data.
C) is likely to increase if the country experiences high rates of inflation.
D) does not change that often.

Question 30

National output per person is another way to report:

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

Question 31

Which of the following is generally not a result of increases in productivity per person?

A) Increases in per capita income
B) Economic growth
C) Increases in overall GDP
D) Increases in unemployment

Question 32

The productivity of workers can depend upon which of the following?

A) Human capital
B) Natural resources
C) Technology
D) All of these are determinants of productivity.

Question 33

Which of the following would not be considered physical capital?

A) An optical lens
B) A trained physicist
C) A spotlight
D) A clipboard

Question 34

If a country grows at an average rate of 5 percent per year over a 5 year period, what is its compounded growth rate over that time period?

A) 27.6 percent
B) 35 percent
C) 32.7 percent
D) 20.5 percent

Question 35

Increases in productivity per person lead to increases in:

A) economic growth.
B) imports.
C) the GDP deflator.
D) new businesses.

Question 36

The productivity of workers can be improved through: human capital. technological capital. physical capital.

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

Question 37

Which of the following is an example of physical capital?

A) A factory
B) A computer
C) A pen
D) All of these are examples of physical capital.

Question 38

The measurement of output per worker is called:

A) productivity.
B) the production growth rate.
C) nominal output.
D) unemployment.

Question 39

Physical capital is:

A) the stock of equipment and structures that support the production of goods and services.
B) the skills someone acquires to enhance the available stock of capital.
C) the set of skills, knowledge, experience, and talent that determine the productivity of workers.
D) The monetary reserves a company has on hand.

Question 40

Which of the following is an example of physical capital?

A) A tractor
B) A farmer
C) A high-yield seed variety
D) All of these are examples of physical capital.

Question 41

Which of the following is not an example of human capital investment?

A) A leadership training course
B) A bachelor's degree
C) Word processing software
D) All of these are examples of human capital investment.

Question 42

When Sheldon forgets how to compile code his human capital:

A) decreases.
B) increases.
C) is unaffected.
D) None of these are true.

Question 43

During the industrial revolution, inventors in England developed new industrial technologies. This change meant that, relative to other countries, England:

A) could produce more outputs with the same level of physical capital.
B) would produce less with the same amount of physical capital.
C) could institute fairer labor laws.
D) would continue to produce the same amount of output.

Question 44

The value of human capital can decrease when:

A) someone forgets how to do something that was valuable in their work.
B) the skills someone possesses are no longer needed.
C) machines can be taught to do what people used to do.
D) All of these can decrease human capital.

Question 45

Which of the following would not contribute to human capital?

A) A college student taking an economics course
B) An apprentice completing on-the-job training
C) A high school student playing varsity soccer
D) A firm purchasing a new piece of machinery

Question 46

Which of the following is an example of human capital?

A) A computer
B) Writing skills
C) A desk
D) Microsoft Office software

Question 47

Which of the following would contribute to human capital?

A) A firm expanding and creating 20 more jobs
B) A firm offering on-the-job training for all workers
C) A firm buying new machines to help workers be more productive
D) All of these would contribute to human capital.

Question 48

Education and training are ways to build _______ capital.

A) human
B) physical
C) technological
D) productive

Question 49

Human capital:

A) is always on the rise.
B) can become outdated or deteriorate.
C) is more productive when acquired as an adult.
D) All of these are true.

Question 50

Which of the following is an example of human capital?

A) The Internet
B) The Google search engine
C) Your ability to use Google
D) None of these are examples of human capital.

Question 51

After staying home for almost two decades to raise his children, Howard wants to go back to work in the TV repair business, which was his profession before becoming a stay-at-home parent. What can be said about Howard?

A) After taking a break from the workforce, Howard will have higher human capital.
B) Howard's knowledge of how to repair TVs is obsolete, and his human capital is less valuable now than it was before he became a stay-at-home parent.
C) Howard's human capital has stayed constant; once gained, human capital cannot be lost.
D) None of these are true about Howard.

Question 52

Countries with low levels of GDP per capita usually also have:

A) low levels of education.
B) a robust financial sector.
C) mandatory military service.
D) highly developed infrastructures.

Question 53

The level of savings in an economy can be an important:

A) determinant of future productivity.
B) determinant of unemployment in an economy.
C) source of funding for government projects.
D) source of instability in an economy.

Question 54

Higher levels of technology:

A) help economies produce more output with the same inputs.
B) do not support economic growth.
C) is the main goal of industrial policy.
D) enhance human capital without changing physical capital.

Question 55

One explanation for the growth in the U.S. economy over the last 100 years is:

A) a large increase in human capital.
B) a more equal distribution of wealth in the economy.
C) concentrated industrial policy.
D) restrained government spending.

Question 56

Human capital contributes to growth because it helps workers in the economy:

A) produce more with the same amount of physical capital.
B) capture a larger share of company profits.
C) work longer hours.
D) All of these are true.

Question 57

Which of the following is an example of human capital?

A) An office chair
B) A training session on Microsoft Excel
C) Microsoft Excel software
D) All of these are examples of human capital.

Question 58

The money for investment in physical capital comes from:

A) the savings of ordinary households.
B) government subsidies.
C) shareholder dividends.
D) tariffs collected from trade with foreign countries.

Question 59

Human capital is generally acquired through: education. job training. job experience.

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

Question 60

Human capital refers to the:

A) skills, experience, and natural talent that determine the productivity of workers.
B) number of people a firm has access to for production.
C) production per capita in an economy.
D) machinery and tools that labor can use for production.

Question 61

Diamonds are:

A) a renewable resource.
B) a nonrenewable resource.
C) physical capital.
D) a nondurable good.

Question 62

Often, improvements in technology can:

A) lead to further improvements in technology.
B) lead to sustainable rates of growth in income for a country.
C) continuously increase the productivity of workers.
D) All of these are true.

Question 63

Which of the following is not an example of a natural resource?

A) A river
B) A forest
C) A coal deposit
D) Machinery

Question 64

A renewable resource:

A) can be replenished naturally over time.
B) is used to regenerate an old piece of capital.
C) is any product that can be easily made in a factory using available resources.
D) is not subject to trade restrictions.

Question 65

Which of the following is an example of a renewable resource?

A) A river
B) Coal
C) Natural gas
D) All of these are renewable resources.

Question 66

If a country has a high level of economic growth, it must have:

A) a rapidly increasing GDP per capita.
B) a high level of income.
C) an equitable distribution of wealth.
D) All of these are true.

Question 67

Japan has one of the more educated workforces in the OECD and access to highly advanced technology. Which of the following statements is most likely true about Japan?

A) It has a high rate of economic growth
B) It has a high standard of living
C) It is growing at a higher rate than neighboring countries
D) None of these are likely true about Japan.

Question 68

Which of the following is not an example of a renewable resource?

A) Hydroelectric power
B) Sunlight
C) Wind
D) All of these are renewable resources.

Question 69

Natural resources are:

A) production inputs that come from the earth.
B) natural talents people are born with that make them productive.
C) physical structures that sit on the earth, improving it and making it more productive.
D) None of these are true.

Question 70

Which of the following is an example of a nonrenewable resource?

A) Natural gas
B) Sunlight
C) Rivers
D) Wind

Question 71

Which of the following is not an example of a renewable resource?

A) Wind
B) Sunlight
C) Oil
D) All of these are renewable resources.

Question 72

Which of the following is an example of a natural resource?

A) Serena Williams' athletic ability
B) Yosemite National Park
C) An Oculus virtual reality headset
D) The cotton gin

Question 73

A nonrenewable resource:

A) is a production input that does not naturally replenish when used.
B) can be replenished naturally over time.
C) is used to regenerate an old piece of capital.
D) All of these are true.

Question 74

A country that alters the demographic of its workforce in a manner that increases the labor force, such as by raising the legal minimum retirement age, is likely to experience:

A) a higher level of income.
B) a sustainable, high income growth rate.
C) more productive workers in all facets of the economy.
D) All of these are true.

Question 75

Trees are:

A) a renewable resource.
B) a nonrenewable resource.
C) physical capital.
D) a nondurable good.

Question 76

Which of the following productive resources is considered fundamentally different from other resources with respect to supply and diminishing returns?

A) Labor
B) Land
C) Physical capital
D) Technology

Question 77

Natural resources:

A) are production inputs that come from the earth.
B) include lakes, mineral deposits, forests, and so on.
C) can be split into two categories: renewable or nonrenewable.
D) All of these are true.

Question 78

If a country has a high level of income:

A) its income must be rapidly increasing each year.
B) it likely also has large amounts of physical and human capital.
C) it must have a large endowment of natural resources.
D) it likely has limited access to technology.

Question 79

If a country has a high level of income, it likely has:

A) a highly-productive work force.
B) widespread access to technology.
C) high levels of physical capital.
D) All of these are true.

Question 80

Which of the following is a sustainable long-term source of growth?

A) Supporting the tech sector
B) Mining yttrium, a valuable metal used to make superconductors
C) Encouraging older workers to postpone retirement
D) A reliance on oil reserves