Deck 6: Economic Growth

Question 1

In 2008, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2009, real GDP was $4.59 billion and population was 2.97 million. What was Armeniaʹs economic growth rate from 2008 to 2009?

A) 8.3 percent
B) 3.8 percent
C) 9.0 percent
D) 0.38 percent

Answer 1

C

Question 2

Which of the following is used to calculate the standard of living?

A) the one-third rule
B) real GDP in the current year - real GDP in previous year)/real GDP in previous year) x 100
C) real GDP/population
D) real GDP/aggregate hours

Answer 2

C

Question 3

During 2011, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2010, real GDP was 105 billion and the population was 0.85 billion. In 2011, real GDP per person was

A) $135
B) $124
C) $128
D) $117

Answer 3

C

Question 4

If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double?

A) 4
B) 17.5
C) 25
D) 8

Question 5

Using the Rule of 70, if the country of Flowerdomʹs current growth rate of real GDP per person was 7 percent a year, how long would it take the countryʹs real GDP per person to double?

A) 10 years
B) 2 years
C) 1 year
D) 49 years

Question 6

Suppose that in 2009 a country has a population of 1 million and real GDP of $1 billion. In 2010, the population is 1.1 million and the real GDP is $1.1 billion. The real GDP per person growth rate is

A) $1000.
B) zero.
C) negative.
D) positive.

Question 7

Slowdoniaʹs current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person?

A) 35 years
B) approximately 10 years
C) 28.6 years
D) half a year

Question 8

In 2008, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2009, real GDP was $4.59 billion and population was 2.97 million. Armeniaʹs real GDP per person in 2009 was

A) $1,413
B) $1,545
C) $380
D) $132

Question 9

If a nationʹs population grows, then,

A) growth in real GDP per person will be greater than the growth of real GDP.
B) growth in real GDP per person will be less than the growth of real GDP.
C) there must be an increase in real GDP per person.
D) there can be no economic growth.

Question 10

In 2008, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2009, real GDP was $4.59 billion and population was 2.97 million. From 2008 to 2009, Armeniaʹs standard of living .

A) increased
B) did not change
C) decreased
D) might have increased, decreased, or remained unchanged but more information is needed to determine which.

Question 11

We are interested in long-term growth primarily because it brings

A) higher price levels.
B) higher standards of living.
C) lower price levels.
D) trade wars with our trading partners.

Question 12

During 2011, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2010, real GDP was 105 billion and the population was 0.85 billion. In 2010, real GDP per person was

A) $117
B) $124
C) $128
D) $135

Question 13

Using the Rule of 70, if the country of Flowerdomʹs current growth rate of real GDP per person was 10 percent a year, how long would it take the countryʹs real GDP per person to double?

A) 10 years
B) 7 years
C) 0.7 years
D) 1 year

Question 14

Economic growth is measured by

A) changes in nominal GDP.
B) changes in the employment rate.
C) changes in real GDP.
D) All of the above are used to measure economic growth.

Question 15

Suppose real GDP for a country is $13 trillion in 2007, $14 trillion in 2008, $15 trillion in 2009, and
$16 trillion in 2010. Over this time period, the real GDP growth rate is

A) constant.
B) negative.
C) decreasing.
D) increasing.

Question 16

Suppose a nationʹs population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?

A) 10 percent per year
B) 2 percent per year
C) 5
D) 3 percent per year

Question 17

The Rule of 70 is used to

A) estimate how much of an economyʹs growth rate is due to increases in capital per hour of labor
B) calculate the standard of living
C) estimate how long it will take the level of any variable to double
D) calculate the economyʹs growth rate

Question 18

During 2009, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2008, real GDP was 105 billion and the population was 0.85 billion. Economiaʹs growth rate of real GDP per person is

A) 5 percent
B) 9.52 percent
C) 5.88 percent
D) 3.23 percent

Question 19

Slowdoniaʹs current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person?

A) 70 years
B) 35 years
C) 100 years
D) 10 year 2

Question 20

The best definition for economic growth is

A) a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period.
B) a sustained expansion of consumption goods over a given period.
C) a sustained expansion of production possibilities measured as the increase in real GDP over a given period.
D) a sustained expansion of production goods over a given period.

Question 21

Over the past 100 years, real GDP per person in the United States has grown at an average of
Percent a year.

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

Question 22

Since 1960, which of the following countries had average growth rates in real GDP per person higher than that of the United States?

A) Hong Kong
B) South Korea
C) Singapore
D) All of the above answers are correct.

Question 23

Over the past 100 years real GDP per person in the United States, on average, has

A) increased by about 5 percent per year.
B) increased by about 10 percent per year.
C) increased by about 2 percent per year.
D) decreased by about 5 percent per year.

Question 24

The growth rate of real GDP per person in the United States has

A) has consistently been 2 percent per decade over the past century.
B) has been the highest in the world over the past 5 decades.
C) averaged approximately 2 percent per year over the past century.
D) has increased every year over the past century.

Question 25

The historical record for the United States since 1910 shows

A) economic growth for about half the years and economic decline for the other half.
B) growth until 1970 and then a period of constant per person real GDP.
C) continuous economic growth for each year, although at different rates, throughout the entire century.
D) mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP.

Question 26

During the latter half of the 20th century, which of the following had the lowest level of real GDP per person?

A) Central and South America
B) Central Europe
C) Africa
D) United States

Question 27

Countries or regions in which real GDP per person has not grown as fast as in the United States since 1960 include

A) countries in Africa.
B) Hong Kong.
C) Japan.
D) Canada.

Question 28

In 2010, of the following had the highest real GDP per person.

A) Japan
B) Canada
C) the United States
D) the Europe Big 4 countries

Question 29

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

A) Canada
B) Japan
C) The big 4 nations of Europe
D) United States

Question 30

Which of the following statements are correct?
I. The average economic growth rate in real GDP per person in the United States over the last century was 5 percent per year.
II. The United States has the highest economic growth rate of any nation.

A) I only
B) both I and II
C) neither I nor II
D) II only

Question 31

Which of the following statements regarding U.S. economic growth is NOT correct?

A) The growth rate of real GDP per person accelerated between 1973 to 1984.
B) The average annual growth rate of real GDP per person in the United States was rapid during World War II.
C) Over the past 100 years, on the average real GDP per person grew 2 percent a year.
D) In the 1930s, real GDP fell well below its trend.

Question 32

Over the past four decades,

A) U.S. real GDP per person has fallen below that of the other rich industrial countries.
B) the growth rate of real GDP per person in the United States has been increasing.
C) U.S. real GDP per person has increased.
D) Both answers A and C are correct.

Question 33

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

A) in 2 years
B) never
C) in 10 years
D) in 15 years

Question 34

Over the past 100 years, in the United States the average growth rate of grew at a faster rate than .

A) real GDP; the population
B) the population; real GDP
C) inflation; real GDP
D) real GDP; nominal GDP

Question 35

Over the last 100 years, the average U.S. growth rate in real GDP per person was about

A) 1 percent per year.
B) 12.5 percent per year.
C) 6 percent per year.
D) 2 percent per year.

Question 36

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

A) 4
B) 30
C) 14
D) 7

Question 37

In 2010, of the following which nations had the highest level of real GDP per person?

A) Canada.
B) Europe Big 4.
C) Japan.
D) China.

Question 38

Which of following was a period of below-average economic growth in the United States?

A) the 1960s
B) the 1930s
C) the 1920s
D) all of the above

Question 39

Which of the following statements about world growth during the last half of the 20th century is correct?

A) Due to rapid growth, real GDP per person in China is now about 50 percent of that in the United States.
B) Real GDP per person in Hong Kong and Singapore are approaching or surpassing that in the United States.
C) Growth rates in South American countries have exceeded those in North America.
D) In every decade, Japan has experienced faster growth than the United States.

Question 40

The historical record for the United States for the past 100 years shows

A) economic growth for about half the years and economic decline for the other half.
B) growth until 1970 and then a period of constant per person real GDP.
C) continuous economic growth, although at different rates, throughout the entire century.
D) growth in real GDP per person during most years.

Question 41

Moving along the aggregate production function shows the relationship between , holding all else constant.

A) capital input and real GDP
B) technology and real GDP
C) labor input and real GDP
D) labor input, capital input and real GDP

Question 42

An aggregate production function shows the relationship between

A) real GDP and leisure.
B) real GDP and unemployment.
C) real GDP and the quantity of labor employed.
D) leisure and unemployment.

Question 43

The aggregate production function describes the relationship between

A) the rate of growth of real GDP and inflation.
B) real GDP and the quantity of labor employed.
C) real GDP and the price level.
D) real GDP and the unemployment rate.

Question 44

Of the following Asian countries, which has the lowest level of real GDP per person?

A) Singapore
B) China
C) Korea
D) Hong Kong

Question 45

The gaps between the United States and the Asian countries of Honk Kong, Singapore, Korea and China have been

A) increasing
B) remaining fairly constant
C) there are no gaps between these Asian countries and the United States
D) decreasing

Question 46

If a rich country grows at a faster rate than a poor one, then

A) the difference in their living standards will not change over time.
B) whether or not the living standards gap widens or closes over time depends on the absolute size of the relative growth rates.
C) the gap in their standard of living will widen over time.
D) the gap in their standard of living will close over time.

Question 47

Along the aggregate production function, as the quantity of labor rises, real GDP

A) stays the same
B) rises
C) falls
D) may fall, rise, or stay the same

Question 48

An increase in labor hours will lead to

A) both a movement along and a shift in the aggregate production function.
B) a shift of the aggregate production function but no movement along it.
C) neither a movement along nor a shift in the aggregate production function.
D) a movement along the aggregate production function but no shift in it.

Question 49

The aggregate production function

A) cannot show the impacts of productivity improvements.
B) measures the productivity of labor as leisure decreases.
C) increases only with increases in productivity.
D) shows that real GDP can increase because of increased productivity as well as increased labor hours.

Question 50

The aggregate production function shows how varies with .

A) real GDP; labor
B) labor; capital
C) labor; leisure time
D) leisure time; labor

Question 51

The aggregate production function shows that an economy increases its real GDP in the short run by

A) using more labor.
B) increasing its physical capital stock.
C) developing new technologies.
D) exploring for new deposits of natural resources.

Question 52

The aggregate production function is graphed as

A) an upward sloping line that becomes steeper as the quantity of labor increases.
B) an upward sloping line that becomes flatter as the quantity of labor increases.
C) a downward sloping curve.
D) an upward sloping straight line.

Question 53

Between which pair of countries or continents listed below has real GDP per person converged the most since 1960?

A) United States and Africa
B) Canada and Japan
C) United States and South America
D) Canada and South America

Question 54

A movement along the aggregate production function is the result of a change in

A) technology
B) capital
C) the quantity of labor
D) interest rates

Question 55

The aggregate production function relating real GDP to labor hours

A) has a positive slope and becomes less steep as employment increases.
B) has a constant slope.
C) has a negative slope.
D) has a positive slope and becomes steeper as employment increases.

Question 56

The gap between real GDP per person in Africa and real GDP per person in the United States has been

A) increasing.
B) remaining fairly constant.
C) decreasing.
D) there is no gap in real GDP per person between Africa and the United States.

Question 57

Convergence of the income gap has been most dramatic between

A) the Central European countries and the United States.
B) Africa and the United States.
C) South America and the United States.
D) Hong Kong and the United States.

Question 58

Over the past fifty years, there has been substantial closure of the gap in real GDP per person between which of the following groups of countries?

A) Africa and Western Europe
B) the United States and Japan
C) Central and South America and Africa
D) the United States and Central and South America

Question 59

Moving along the aggregate production function, all of the following are held constant EXCEPT

A) capital
B) human capital
C) technology
D) labor

Question 60

By measuring we can see that the economies of Hong Kong and Singapore are catching up to the economies of North America but that the economies of Central and South America are not.

A) real GDP
B) the population
C) real GDP per person
D) inflation per person

Question 61

As labor increases, there is a

A) movement along the aggregate production function and real GDP will decrease less with each additional increase in labor.
B) movement along the aggregate production function, but no shift in it.
C) movement along the aggregate production function and real GDP will increase less with each additional increase in labor.
D) shift of the aggregate production function, but no movement along it.

Question 62

The quantity of labor demanded depends on the

A) money wage rate not the real wage rate.
B) price of output not the money wage rate nor the real wage rate.
C) money wage rate AND the real wage rate.
D) real wage rate not the money wage rate.

Question 63

Which of the following statements are TRUE regarding the demand for labor?
I. The quantity of labor demanded depends on the real wage rate.
II. If the money wage rate increases and the price level remains the same, the quantity of labor demanded decreases.

A) I only
B) neither I nor II
C) I and II
D) II only

Question 64

In the illustration above, which figure shows an aggregate production function?

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

Question 65

The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will

A) move to point such as Z.
B) move to point such as X.
C) move to point such as Y.
D) remain at point W.

Question 66

The real wage rate measures the

A) dollar value of an hour of work.
B) average weekly earnings in dollars of a worker.
C) dollar value of what a worker could earn in another job.
D) quantity of goods and services that an hour of work will buy.

Question 67

Which of the following is TRUE regarding the labor market?
I. The labor supply curve slopes upward because firms maximize profits as they hire more workers.
II. If the real wage rate falls, the quantity of labor firms demand increases.
III. The demand for labor curve slopes downward because as the real wage rate falls, workers demand to work fewer hours.

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

Question 68

The decreasing slope of a production function reflects

A) increasing aggregate demand.
B) diminishing returns.
C) decreasing costs.
D) rising unemployment.

Question 69

Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded

A) does not change because there is no change in the money wage rate.
B) increases.
C) increases only if the price level also decreases.
D) decreases.

Question 70

The curvature of the production function shows that as employment increases, the productivity of labor

A) decreases and becomes negative.
B) remains positive and increases.
C) remains positive but decreases.
D) remains constant.

Question 71

If the price level falls by 5 percent and workersʹ money wage rates remain constant, firmsʹ

A) supply of jobs will increase.
B) quantity of labor demanded will decrease.
C) quantity of labor demanded will increase.
D) None of the above answers are correct.

Question 72

If the price level rises by 5 percent and workersʹ money wage rates remain constant, firmsʹ

A) supply of jobs will decrease.
B) quantity of labor demanded will increase.
C) quantity of labor demanded will decrease.
D) None of the above answers are correct.

Question 73

The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will

A) remain at point W.
B) move to point such as Y.
C) move to point such as X.
D) move to point such as Z.

Question 74

According to the law of diminishing returns, an additional unit of

A) labor produces more output than the previous unit.
B) capital produces more output than an additional unit of labor.
C) labor produces less output than the previous unit.
D) labor decreases output.

Question 75

The real wage rate equals

A) money wage rate)/price level).
B) money wage rate) × price level).
C) money wage) + number of hours worked)/price level).
D) price level)/money wage rate).

Question 76

Which of the following is TRUE regarding the real wage rate? The real wage rate
I. is always greater than the money wage.
II. measures the quantity of goods and services an hourʹs work can buy.

A) only II
B) neither I nor II
C) both I and II
D) only I

Question 77

Suppose there is a rise in the price level, but no change in the money wage rate. As a result, the quantity of labor demanded

A) decreases only if the money wage rate also decreases.
B) increases.
C) does not change because there is no change in the real wage rate.
D) decreases.

Question 78

Because the productivity of labor decreases as the quantity of labor employed increases,

A) the aggregate production function shifts upward as the real wage rate decreases.
B) the labor demand curve shifts right as the real wage rate decreases.
C) the quantity of labor a firm demands increases as the money wage rate decreases.
D) the quantity of labor a firm demands increases as the real wage rate decreases.

Question 79

Suppose the money wage rate and the price level both fall by 5 percent. As a result,

A) the quantity of labor demanded decreases.
B) people are worse off and there is more unemployment.
C) the quantity of labor demanded increases.
D) the quantity of labor demanded does not change because there is no change in the real wage.

Question 80

The relationship between the labor employed by a firm and the real wage rate is shown by the

A) supply of labor curve.
B) supply of jobs curve.
C) demand for labor curve.
D) demand for jobs curve.