Question 1

The Rule of 70 applies:

Accepted Answer

The Rule of 70 applies to any growth rate, regardless of whether it is GDP, GDP per capita, or any other type of growth rate. This rule is used to estimate the number of years it will take for a variable to double in value, given its annual growth rate.

Question 2

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

Accepted Answer

The correct method to estimate the number of years it takes for an economy to double, given its growth rate, is to use the Rule of 70. This rule states that you divide 70 by the annual growth rate of the economy.

Question 3

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

Accepted Answer

Long-run economic growth is mainly due to increasing productivity because it leads to greater output and increased efficiency over time. Population growth can contribute to short-term economic growth, but it does not lead to sustainable long-term growth. A democratically elected government and a balanced budget are important for a stable and healthy economy, but they do not directly contribute to long-run economic growth.

Question 4

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 _____%.

Accepted Answer

Real GDP per capita is the real GDP divided by the population. 
Real GDP per capita in 2010 = $100 billion / 50 million = $2,000.
Real GDP per capita in 2011 = $106 billion / 51 million = $2,078.43 (rounded to two decimal places).
The percentage increase in real GDP per capita = [(Final value - Initial value) / Initial value] × 100%
= [(2078.43 - 2000) / 2000] × 100% ≈ 4%
Therefore, the annual growth rate in real GDP per capita was approximately 4%. Thus, the best choice is C) 4.

Question 5

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

Accepted Answer

While rising population and employment played a role in the increase of real GDP per capita, the primary driver was rising productivity. Advancements in technology, education, and infrastructure allowed workers to produce more goods and services in less time, leading to increased economic output. Reduced vacation time is unlikely to have had a significant impact on real GDP per capita.

Question 6

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:

Accepted Answer

The growth rate of aggregate output per capita can be calculated as (GDP per capita in 2010 - GDP per capita in 2009) / GDP per capita in 2009. Using the data from the table, we get:
(1,155 - 1,124) / 1,124 = 2.6%
Therefore, the correct answer is B.

Question 7

Productivity is equal to:

Accepted Answer

Productivity is measured by the amount of output (real GDP) produced per unit of labor (number of workers). Therefore, productivity is equal to real GDP divided by the number of workers (Choice A). Choice B is incorrect because dividing by the population includes people who are not part of the workforce. Choice C is incorrect because it only considers the ratio of workers to machines and not output produced. Choice D is incorrect because while productivity is related to output produced, it is not equal to total output produced.

Question 8

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

Accepted Answer

China had the fastest growth rate of real GDP per capita between 1980 and 2015. While Ireland also experienced rapid economic growth during this time period, it did not surpass China's growth rate. The United States and France also experienced economic growth, but at a slower rate than China and Ireland.

Question 9

Labor productivity growth can be attributed to:

Accepted Answer

Labor productivity growth is largely attributed to technological advancements that increase the efficiency and effectiveness of production processes. A decline in university attendance would likely have a negative impact on productivity as it reduces the pool of skilled workers. An increase in population growth could lead to higher output, but it would not necessarily result in higher productivity. Finally, a decline in physical capital per worker would also have a negative impact on productivity.

Question 10

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.

Accepted Answer

Real GDP per capita is calculated by dividing real GDP by population. In this case, real GDP increased by 6 billion while population increased by only 1 million. This means that real GDP per capita increased because real GDP rose faster than the population.

Question 11

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

Accepted Answer

According to the World Bank's data on GDP per capita growth rate between 1980 and 2015, Zimbabwe had the lowest growth rate of -2.27%, while the other three countries had positive growth rates. Therefore, the best choice is D, Zimbabwe.

Question 12

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.

Accepted Answer

The rule of 70 is a way to estimate the number of years it takes for a quantity to double, given a constant annual growth rate, by dividing 70 by the percentage growth rate. For a 2% growth rate, it takes 35 years (70/2) to double. For a 3% growth rate, it takes about 23.3 years (70/3) to double. The difference between these two durations is 11.7 years, which is approximately the answer choice B, 11.67.

Question 13

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:

Accepted Answer

The answer of According to the rule of 70, if...

Question 14

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:

Accepted Answer

The table shows that the population in 2010 was 40.7 million. Therefore, the best choice is B.

Question 15

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

Accepted Answer

Faster technological progress leads to increased productivity, new industries, and higher living standards over time. Faster population growth may temporarily boost economic growth, but it also increases the burden on resources and infrastructure, limiting long-term growth potential. Less physical capital per worker and lower levels of average human capital both lead to lower productivity and slower economic growth.

Question 16

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:

Accepted Answer

The table shows that the GDP at market prices was 41,187,000,000 Kenyan Shillings, and the population was 41,838,000. Therefore, GDP per capita is 41,187,000,000/41,838,000 = 981.99 KES. Converting this to USD using the exchange rate of 1 USD = 85 KES, we get GDP per capita = $11.54. However, this is at market prices and includes taxes and subsidies. To get aggregate output per capita, we need to divide the GDP at factor cost by the population, which gives us $775. Therefore, the correct answer is C.

Question 17

Productivity is declining when:

Accepted Answer

Productivity is essentially the output per unit of input, such as labor. When population growth exceeds real GDP growth, it means that the population is growing faster than the economy, implying that the average output per person (productivity) is declining. This is because the same or slightly increased output is being spread over a larger number of people.

Question 18

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:

Accepted Answer

The table shows the GDP of Kenya in 2010 in billions of Kenyan shillings. To convert to USD, we need to divide by the exchange rate of 80.88 Kenyan shillings per USD. So, the GDP in USD is approximately $32.612 billion.

Question 19

Long-run economic growth depends almost entirely on:

Accepted Answer

Long-run economic growth depends almost entirely on labor productivity growth, which is the amount of output (such as goods or services) that can be produced by each worker in an hour. This allows for an increase in overall economic output without requiring an increase in the number of hours worked or population growth. Agricultural production growth and the number of hours worked can contribute to economic growth in the short-run, but they are not the main drivers of sustained long-term growth. Population growth can have both positive and negative effects on economic growth, depending on how it affects other factors such as labor productivity and innovation.

Question 20

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:

Accepted Answer

The correct answer is derived by dividing the total aggregate output by the population. Without specific numbers from the table, the general approach involves taking the total GDP or aggregate output and dividing it by the total population to get per capita output. The choice provided suggests a calculation has been made based on given data, leading to the selection of $795 as the correct per capita output.

Quiz 9: Long-Run Economic Growth