Question 1

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 2

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

Accepted Answer

The table shows that the population at the end of 2010 was 40.86 million.

Question 3

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 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. As a result real GDP per capita _____, because it rose _____ than the population.

Accepted Answer

Real GDP per capita is calculated by dividing real GDP by population. In this case, real GDP increased from $100 billion to $106 billion, which is a 6% increase. Meanwhile, population only increased from 50 million to 51 million, which is only a 2% increase. Therefore, real GDP per capita increased at a faster rate than population, resulting in answer B, increased faster.

Question 5

Long-run economic growth depends almost entirely on:

Accepted Answer

Long-run economic growth is mostly determined by increases in productivity. As countries become more efficient in their use of labor and capital, they are able to produce more output per unit of input, which leads to economic growth over time. Population growth, agricultural production growth, and the number of hours worked may all contribute to short-term growth, but they do not have the same long-term impact on economic growth as increased productivity.

Question 6

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

Accepted Answer

Long-run economic growth refers to sustained growth over a period of years. Productivity growth is the main driver of long-run economic growth, as it leads to an increase in the output of goods and services for each hour worked. Population growth can also contribute to economic growth, but only in the short run. A democratically elected government and a balanced budget may be important for a stable economy, but they are not the primary drivers of long-run economic growth.

Question 7

Productivity is equal to:

Accepted Answer

Productivity is defined as the ratio of output to input, in this case, the output is measured by real GDP and the input is measured by the number of workers. Therefore, the correct formula for productivity is real GDP divided by the number of workers.

Question 8

Use the following to answer questions : 
-(Table: Kenya's Economy in 2010) Look at the 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 answer of Use the following to answer questions :...

Question 9

Which country had the lowest growth rate of real GDP per capita between 1980 and 2010?

Accepted Answer

Zimbabwe had the lowest growth rate of real GDP per capita between 1980 and 2010, largely due to a combination of political instability, economic mismanagement, and international sanctions.

Question 10

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 11

The Rule of 70 applies:

Accepted Answer

The Rule of 70 can be applied to any growth rate, not just GDP or GDP per capita. It is a simple mathematical formula used to estimate the number of years it takes for a certain variable to double at a given annual growth rate.

Question 12

Which country had the fastest growth rate of real GDP per capita between 1980 and 2010?

Accepted Answer

China had the fastest growth rate of real GDP per capita between 1980 and 2010, with an average annual growth rate of 8.5%. Ireland also had a high growth rate during this period, but its population is much smaller than China's. The United States and France had lower growth rates during this period.

Question 13

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

Accepted Answer

From the table, the aggregate output at the beginning of the year was $37.1 billion, and the population was approximately 48 million. Thus, dividing the aggregate output by the population gives us an output per capita of approximately $775.

Question 14

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

Accepted Answer

Real GDP per capita is a measure of economic productivity. Rising productivity means that more goods and services are being produced per worker, which leads to an increase in real GDP per capita. The other choices (A, B, D) are not directly related to economic productivity and do not necessarily result in an increase in real GDP per capita.

Question 15

Use the following to answer questions : 
-(Table: Kenya's Economy in 2010) Look at the 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

To calculate the growth rate of aggregate output per capita, we need to calculate the percentage increase in real GDP per capita from 2009 to 2010. Real GDP per capita in Kenya in 2009 was $1,248, and in 2010 it was $1,282. The percentage increase is:

($1,282 - $1,248) / $1,248 x 100% = 2.6%

Therefore, the correct answer is B.

Question 16

Labor productivity growth can be attributed to:

Accepted Answer

Labor productivity growth is mainly driven by improvements in technology which lead to greater efficiency in production processes, allowing workers to produce more output with the same amount of labor input. The other options listed are unlikely to have a significant impact on productivity growth.

Question 17

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 calculated by dividing real GDP by the population. 
In 2010, real GDP per capita for nation A was $100 billion / 50 million = $2,000. 
In 2011, real GDP per capita for nation A was $106 billion / 51 million = $2,078.43.

The annual growth rate in real GDP per capita can be calculated using the formula: 
[(final value / initial value)^(1/number of years)] - 1

Using this formula, the annual growth rate in real GDP per capita for nation A is:
[($2,078.43 / $2,000)^(1/1)] - 1 = 0.0392, or approximately 4%.

Therefore, the best choice is C, 4%.

Question 18

Use the following to answer questions : 
-(Table: Kenya's Economy in 2010) Look at the 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 answer of Use the following to answer questions :...

Question 19

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 20

Which of the following changes would contribute to a nation's rapid long-run economic growth?

Accepted Answer

Faster technological progress allows for increased productivity and efficiency, which can lead to long-run economic growth. Faster population growth, less physical capital per worker, and lower levels of average human capital can all impede economic growth.

Quiz 23: Long-Run Economic Growth