Deck 16: Long-Run Growth

Question 1

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Which of the following will cause a movement from Point D to Point A?

A) an increase in the productivity of workers
B) technological progress
C) an increase in capital stock
D) all of the above

Answer 1

D

Question 2

Output growth is defined as the growth rate of output

A) per person in the economy.
B) per worker in the economy.
C) for capitalist economies.
D) of the entire economy.

Answer 2

D

Question 3

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Economic growth is represented by

A) a movement from point D to point C.
B) a movement from point A to point C.
C) a movement from point D to point A.
D) all of the above

Answer 3

D

Question 4

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Economic growth is represented by

A) a movement from Point A to Point B along ppf₁.
B) a movement from Point C to Point B.
C) a movement from Point B to Point A.
D) a shift in the production possibilities frontier from ppf₂ to ppf₃.

Question 5

Economic growth allows a society to consume

A) more goods per person.
B) more than it should.
C) more than is sustainable.
D) exactly what it needs.

Question 6

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Economic growth is represented by

A) a movement from Point A to Point B along ppf₁.
B) a movement from Point B to Point C.
C) a movement from Point B to Point A.
D) a shift in the production possibilities frontier from ppf₂ to ppf₁.

Question 7

Per-capita output growth is the growth rate of output

A) per person in the economy.
B) per worker in the economy.
C) for capitalist economies.
D) of the entire economy.

Question 8

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. A movement from Point D to Point C represents

A) a decrease in capital stock.
B) economic growth.
C) economic decline.
D) a decrease in the labor force.

Question 9

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Which of the following causes the ppf to shift from ppf₂ to ppf₁?

A) technological progress
B) a decrease in capital stock
C) an increase in the labor force
D) an increase in per capita income

Question 10

Economic growth allows a society to consume

A) more goods per person.
B) a higher quality of goods.
C) a wider variety of goods.
D) all of the above

Question 11

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Technological progress will cause a

A) movement from Point A to Point B.
B) movement from Point B to Point A.
C) shift from ppf₂ to ppf_1.
D) shift from ppf₂ to ppf_3.

Question 12

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. A movement from Point B to Point D represents

A) an increase in capital stock.
B) technological progress.
C) economic decline.
D) an increase in the labor force.

Question 13

Labor productivity growth is the growth rate of output

A) per person in the economy.
B) per worker in the economy.
C) for labor-intensive economies.
D) for the entire economy.

Question 14

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. An economic decline is represented by a movement from

A) point A to point B.
B) point D to point A.
C) point C to point A.
D) point B to point A.

Question 15

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. A decrease in the labor force will cause a

A) movement from Point A to Point B.
B) movement from Point B to Point A.
C) shift from ppf₂ to ppf_1.
D) shift from ppf₂ to ppf_3.

Question 16

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Which of the following cannot cause a movement from Point A to Point C?

A) an expansionary monetary policy
B) technological progress
C) an increase in capital stock
D) an increase in the productivity of workers

Question 17

Which of the following is a source of economic growth?

A) more resources
B) active economic policies
C) technology
D) both A and C

Question 18

For economic growth to increase living standards,

A) society must discover ways of using available resources more efficiently.
B) the choices available to consumers must increase.
C) the rate of growth must exceed the rate of population increase.
D) society must acquire more resources.

Question 19

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. The highest unemployment rate occurs when the economy is at Point

A) A.
B) B.
C) C.
D) D.

Question 20

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Which of the following causes the ppf to shift from ppf₂ to ppf₃?

A) technological progress
B) a decrease in capital stock
C) a decrease in the labor force
D) an increase in the population

Question 21

Convergence theory suggests that gaps in ________ tend to close over time.

A) national income
B) population levels
C) unemployment rates
D) inflation rates

Question 22

The growth rate of output per person in the economy is called

A) factor growth.
B) labor productivity growth.
C) per-capita output growth.
D) output growth.

Question 23

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. Suboptimal production occurs when the economy is at Point

A) A.
B) B.
C) C.
D) D.

Question 24

The growth rate of output per worker is called

A) factor growth.
B) labor productivity growth.
C) per-capita output growth.
D) output growth.

Question 25

An increase in real GDP per capita is the strict definition of economic growth that serves to

A) increase living standards.
B) increase the population.
C) decrease inflation.
D) increase the money supply.

Question 26

In Ansonia, real GDP increased by 9% and the population increased by 9% in 2017. In 2017, Ansonia experienced

A) economic growth, but not an increase in living standards.
B) economic growth and an increase in living standards.
C) no economic growth, but an increase in living standards.
D) no economic growth and no increase in living standards.

Question 27

Higher productivity can be achieved through

A) innovation.
B) new techniques of production.
C) a better-educated workforce.
D) all of the above

Question 28

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. Point ________ is beyond the production capacity of this economy.

A) A
B) B
C) C
D) D

Question 29

For economic growth to ________, the rate of growth must exceed the rate of population increase.

A) result from a decrease in the labor force
B) occur with increasing unemployment levels
C) increase living standards
D) all of the above

Question 30

In Vidalia, real GDP increased by 6% and the population increased by 9% in 2016. In 2016, Vidalia experienced

A) economic growth, but not an increase in living standards.
B) economic growth and an increase in living standards.
C) no economic growth, but an increase in living standards.
D) an economic decline.

Question 31

Of the following countries, which one had the highest average growth rate per year from 1996-2013?

A) China
B) the United States
C) India
D) Japan

Question 32

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. An economy that chooses to be at Point B rather than Point A will achieve ________ in the future.

A) lower consumption levels
B) lower employment levels
C) a higher economic growth rate
D) higher opportunity costs

Question 33

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. An economy that chooses to be at Point ________ can achieve higher economic growth rate in the future.

A) A
B) B
C) C
D) D

Question 34

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. Point ________ can not be produced by the people of this society.

A) A
B) B
C) C
D) D

Question 35

In Polynomia, real GDP increased by 8% and the population increased by 3% in 2016. In 2016, Polynomia experienced

A) economic growth, but not an increase in living standards.
B) economic growth and an increase in living standards.
C) no economic growth, but an increase in living standards.
D) an economic decline.

Question 36

________ allows a society to consume more goods per person.

A) Economic growth
B) A population increase
C) Higher interest rates
D) Increased opportunity cost

Question 37

The strict definition of economic growth that serves to increase living standards is

A) an increase in real GDP per capita.
B) an increase in nominal GDP per capita.
C) an increase in capital accumulation per capita.
D) an increase in investment per capita.

Question 38

Expanding the production possibilities frontier occurs as a result of

A) higher wages.
B) output growth.
C) a changing allocation of existing resources.
D) increased demand.

Question 39

The growth rate of output of the entire economy is called

A) factor growth.
B) labor productivity growth.
C) per-capita output growth.
D) output growth.

Question 40

________ allows a society to consume a higher quality of goods.

A) Economic need
B) Increased opportunity cost
C) Government regulation
D) Economic growth

Question 41

Human capital increases with on-the-job training.

Question 42

Output growth is the growth rate of output of the entire economy.

Question 43

Innovation can lead to increased productivity.

Question 44

Output growth is another name for labor productivity growth.

Question 45

Total productivity of labor is measured as the total output produced by an additional worker.

Question 46

Human capital increases with college education.

Question 47

Of the following regions, which had the lowest average growth rate per year from 1996-2013?

A) China
B) the United States
C) Japan
D) Sub-Saharan Africa

Question 48

Average productivity of labor is measured as the additional output produced by an additional worker.

Question 49

Convergence theory suggests that gaps in national incomes

A) tend to close over time.
B) widen over time.
C) do not seem to change over time.
D) are irrelevant in global economies.

Question 50

In Chrysalis, real GDP decreased by 3% and the population decreased by 10% in 2017. In 2017, Chrysalis experienced

A) economic growth, but not an increase in living standards.
B) economic growth and an increase in living standards.
C) no economic growth, but an increase in living standards.
D) no economic growth and no increase in living standards.

Question 51

Increased labor productivity shifts the production possibility curve away from the origin.

Question 52

Technological progress shifts the production possibility curve away from the origin.

Question 53

If a society acquires more human capital, per capita production will fall unless it gets more physical capital too.

Question 54

The production possibility frontier shows the maximum output a nation can produce with available resources.

Question 55

Labor productivity growth is the growth rate of output per person in the economy.

Question 56

From 1996-2013, China had an average growth rate per year that was four times as high as that in the United States.

Question 57

Convergence theory suggests that when less developed countries begin to develop, they typically have higher growth rates as they catch up with more developed nations.

Question 58

If a society gets more capital, its production possibility curve increases.

Question 59

Per-capita growth is the growth rate of output per person in the economy.

Question 60

Economic decline will shift a society's production possibility frontier down and to the left.

Question 61

The aggregate production function is Y = 2K^0.5L0.5. If there are 225 units of capital and 196 units of labor, aggregate output is

A) 420 units.
B) 508 units.
C) 700 units.
D) 842 units.

Question 62

If the capital stock remains fixed while the supply of labor increases, it is likely that

A) the productivity of labor will rise.
B) the productivity of labor will fall.
C) the productivity of labor will not change.
D) output per capita will rise.

Question 63

If labor productivity in a steel mine is 3.5 tons per worker, then 400 steel workers with a fixed amount of capital produce

A) 87.5 tons.
B) 1,400 tons.
C) 1,750 tons.
D) 4,000 tons.

Question 64

Economic growth is an increase in real GDP per capita.

Question 65

The mathematical representation of the technological relationship between inputs and national output is known as the

A) aggregate supply function.
B) production possibilities frontier.
C) aggregate production function.
D) input-output table.

Question 66

Diminishing returns to a factor implies that with capital fixed,

A) as labor increases output always increases.
B) as output increases, labor increases.
C) as labor increases, output decreases.
D) as labor increases, labor productivity eventually decreases.

Question 67

Thomas Malthus and David Ricardo believed that to increase agricultural output, people would be forced to

A) farm land more intensively, in which case the returns to successive increases in population would diminish.
B) farm land less intensively, in which case the returns to successive increases in population would increase.
C) farm land more intensively, in which case the returns to successive increases in population would increase.
D) farm land less intensively, in which case the returns to successive increases in population would diminish.

Question 68

Labor productivity increases when

A) labor and output increase proportionately.
B) capital increases and labor remains constant.
C) output decreases and labor increases.
D) capital/labor ratio decreases.

Question 69

With a fixed amount of capital, 300 workers produce 9,000 cars. The average labor productivity is

A) 0.03.
B) 3.
C) 27.
D) 30.

Question 70

An increase in the capital stock

A) can increase output, even if it is not accompanied by an increase in the labor force.
B) provides valuable services directly, but not indirectly.
C) can increase output, but only if it is accompanied by an increase in the labor force.
D) cannot increase output, even if it is accompanied by an increase in the labor force.

Question 71

A company uses 200 workers and 50 units of capital to produce 1,000 units of output. Its average labor productivity is

A) 4.
B) 5.
C) 20.
D) 25.

Question 72

An increase in capital stock

A) enhances labor productivity.
B) provides valuable services directly.
C) causes economic growth.
D) all of the above

Question 73

An important source of increasing productivity is

A) an increase in the ratio of capital to labor.
B) an increase in the ratio of labor to capital.
C) a decrease in the ratio of capital to labor.
D) faster growth in the labor force than in the capital stock.

Question 74

The aggregate production function is Y = 3KL. If there are 30 units of capital and 40 units of labor, aggregate output is

A) 3,600 units.
B) 2,500 units.
C) 2,100 units.
D) 400 units.

Question 75

The aggregate production function is Y = 5K^0.5L0.5. If there are 49 units of capital and 16 units of labor, aggregate output is

A) 60 units.
B) 70 units.
C) 140 units.
D) 325 units.

Question 76

The aggregate production function is the mathematical representation of the technological relationship between

A) national output and fiscal policy.
B) national output and inputs.
C) fiscal and monetary policy changes and national output.
D) the rate of capital accumulation and national output.

Question 77

A company uses 100 workers and 30 units of capital to produce 500 units of output. If this company increases its capital to 50 units and, as a result, its output increases by 300 units, the productivity of labor ________ to ________ units per worker.

A) increases; 8
B) increases; 1
C) increases; 3
D) decreases; 4

Question 78

Convergence theory seems to fit the experiences of China and India since 1996.

Question 79

Globally, from 1996-2013 the highest average growth rate per year occurred on the continent of Africa.

Question 80

In all economies experiencing modern economic growth,

A) labor expands at a more rapid pace than capital.
B) capital and labor expand at a constant rate.
C) capital expands at a more rapid pace than labor.
D) capital expands, but labor remains constant.