Deck 10: Economic Growth

Question 1

If you are told that in a given year the real growth rate is 7% with inflation and population growth rates of 2% and 1.2% respectively, then nominal growth rate of GDP per capita is:

A) 3.8%.
B) 5.0 %.
C) 5.8%.
D) 7.0 %.

Answer 1

7.0 %.

Question 2

According to the rule of 70, a country will double its real GDP per capita in 35 years if it grows at an average of ________ per year.

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

Answer 2

2.0%

Question 3

Creating economic growth:

A) is well understood by macroeconomists.
B) has no central tenets upon which the theory is based.
C) involves savings, capital, labor, and technology.
D) is an easy thing for policy-makers to achieve with correct taxation policy.

Answer 3

involves savings, capital, labor, and technology.

Question 4

Real income per person was the same until:

A) the 1800s, when the Industrial Revolution caused it to grow.
B) the 1500s, when the Renaissance caused it to grow.
C) the 1900s, when wireless technology caused it to grow.
D) Real income per person has been roughly the same for the last three centuries.

Question 5

A variable that is essential to economic growth is:

A) savings.
B) capital.
C) technology.
D) All of these are important to economic growth.

Question 6

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 7

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

A) both prices and population from the nominal GDP growth rate.
B) population from the nominal GDP growth rate, while dividing it by the inflation rate in order to hold prices constant.
C) prices from the nominal GDP growth rate and not the population growth.
D) population from the nominal GDP growth rate and not the percentage changes in prices.

Question 8

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 backsliding has prevented real growth.
D) is a modern phenomenon, happening only this year.

Question 9

Real per capital GDP in the United States is:

A) over three times what it was a century ago.
B) over seven times what it was a century ago.
C) over 30 times what it was a century ago.
D) about the same as it was a century ago.

Question 10

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

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

Question 11

We can estimate that 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.

Question 12

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 at all worldwide.

Question 13

In a given year the nominal growth rate is 7% with inflation and population growth rates of 2% and 1.2% respectively, then real growth rate of GDP per capita is:

A) 3.8%.
B) 5.0 %.
C) 5.8%.
D) 7.0 %.

Question 14

Total changes in GDP over time are:

A) bigger than the annual growth rate due to compounding.
B) smaller than the annual growth rate due to compounding.
C) smaller than the annual growth rate due to backsliding.
D) bigger than the annual growth rate due to population growth.

Question 15

In a given year the nominal growth rate is 5% with inflation and population growth rates of 1.2% and 3.8% respectively, then real growth rate of GDP per capita is:

A) 3.8%.
B) 5.0 %.
C) 1.2%.
D) 0.0 %.

Question 16

The fact that the United States has grown _______ per year for the last hundred years is ______________.

A) 1 %; alarming and needs to be altered
B) 2 %; alarming and needs to be altered
C) 2 %; impressive and hopefully will continue
D) 3 %; impressive and hopefully will continue

Question 17

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.

Question 18

Economic growth means:

A) more production of goods and services.
B) people maintain their standard of living.
C) all of a nation's citizens must be better-educated.
D) in general tax revenues are lower.

Question 19

The purchasing power of the average person in the world today is:

A) more than 30 times as high as it was 200 years ago.
B) more than 20 times as high as it was 300 years ago.
C) is about the same as it has been during the last two centuries.
D) has increased steadily over the last two centuries.

Question 20

The middle class in China:

A) outnumbers the entire population of the United States.
B) is almost equal in size to the entire population of the California.
C) is about half the size of the population of the Germany.
D) None of these is true.

Question 21

Output per person on a country level is another way to think about:

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

Question 22

Suppose that a nation has a GDP of 1.0 trillion dollars in 2000. If a country grows at an average rate of 3.0 % per year over a fifteen year period, then its compounded GDP at the end of the 15 year period should be:

A) 1.47 Tr.
B) 2.00 Tr.
C) 1.33 Tr.
D) 1.56 Tr.

Question 23

The US had a nominal GDP of 10.3 trillion dollars in 2000. If the US great at an average rate of 3.0 % per year then its compounded GDP at the end of 2015 would have been:

A) 14.7 Tr.
B) 16.0 Tr.
C) 16.3 Tr.
D) 15.6 Tr.

Question 24

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 25

Estimations calculated using the rule of 70:

A) make it easier to appreciate how small differences in growth rates can add up to huge differences in income over time.
B) make it easier to appreciate how big differences in growth rates are needed to create any real difference in income over time.
C) are simple to use, but make it difficult to see the relationship between growth rate and income over time.
D) are simple to use, but give estimates that have been proven wrong in recent decades.

Question 26

The only way that the family can consume more and enjoy a higher standard of living is to:

A) increase the amount each person produces.
B) decrease the amount each person produces.
C) increase how many people are in the family.
D) increase both how many people are in the family, and the amount each one produces.

Question 27

Our measurement of output per worker is called:

A) productivity.
B) production growth rate.
C) nominal output.
D) None of these is true.

Question 28

If a country grows at an average rate of 3.5 % per year over a ten year period, then its compounded growth rate over that period is roughly:

A) 41.0%.
B) 35.0%.
C) 32.7 %.
D) 45.0 %.

Question 29

The rule of 70 estimates how long it will take a country to:

A) double its real GDP per capita.
B) achieve zero inflation.
C) reach its maximum production capacity.
D) double its output.

Question 30

If a country grows at an average rate of 5 % per year over a 5 year period, then its compounded growth rate over that period is roughly:

A) 27.6 %.
B) 35.0 %.
C) 32.7 %.
D) 20.5 %.

Question 31

Productivity is generally measured as:

A) output per worker.
B) nominal output over time.
C) real output over time.
D) output per year.

Question 32

A country's income is:

A) dependent upon how productive its workers are.
B) difficult to measure given current macroeconomic data.
C) likely to increase if the country experiences high rates of inflation.
D) None of these is true.

Question 33

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 GDP per capita.
D) increase in unemployment.

Question 34

Increasing productivity per person:

A) is highly desirable, as it leads to economic growth.
B) is unavoidable, and macroeconomists work to prevent it.
C) can harm an economy if misallocated.
D) is highly undesirable, as it leads to increases in GDP per capita.

Question 35

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 70 years.
B) real GDP per capita in 70 years.
C) real GDP per capita in 20 years.
D) growth rate in 20 years.

Question 36

The rule of 70 estimates 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.

Question 37

Increases in productivity per person lead to increases in per capita income, which we call:

A) economic growth.
B) GDP per capita.
C) the GDP deflator.
D) the producer productivity index.

Question 38

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

A) experiences a 7 percent growth rate in per-capita GDP.
B) has inflation of 7 percent.
C) has a population growth rate of 7 percent.
D) None of these is true.

Question 39

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

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

Question 40

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 41

Physical capital is:

A) the stock of equipment and structures that allow for the production of goods and services.
B) the skills a human being acquires that enhances the available stock of equipment.
C) the set of skills, knowledge, experience, and talent that determine the productivity of workers.
D) All of these describe physical capital.

Question 42

Which of the following would not be considered physical capital?

A) An axe
B) Fertile soil
C) A factory
D) A forklift

Question 43

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

A) taking into account both new investment and depreciation of capital.
B) adding up the value of all tools, equipment, and structures that have ever been built.
C) counting the number of persons of working age.
D) counting the number of persons of working age who are employed.

Question 44

An example of physical capital is a:

A) plow.
B) bank loan.
C) seeds.
D) tree.

Question 45

Human capital refers to the:

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

Question 46

Education and training are ways to build:

A) human capital.
B) physical capital.
C) technological capital.
D) All of these could be true.

Question 47

When people are educated, they become:

A) more productive to society, because they have more skills to apply to a job.
B) less productive to society, because they stop working while in school.
C) less productive to society, because they require higher pay per hour.
D) more productive to society, because they are paid more.

Question 48

Where does the money for investment in physical capital come from? It largely comes from:

A) the savings of ordinary households.
B) government subsidies.
C) the reinvestment of funds from businesses.
D) donation by foreign countries.

Question 49

The level of savings in an economy can be:

A) an important determinant of future productivity.
B) an important determinant of capital investment.
C) a source of funding for physical capital.
D) All of these are true.

Question 50

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 51

An example of physical capital is:

A) a factory.
B) a computer.
C) a pen.
D) All of the items are examples of physical capital.

Question 52

Human capital is generally acquired through:

A) education, training and experience of workers.
B) training, but not academic education.
C) job experience, but not training workshops because they are generally specific to certain job types.
D) occupational workshops only,because this is where workers attain job focused skills.

Question 53

An example of physical capital is:

A) a construction worker's strength.
B) a scientist's knowledge of cellular biology.
C) Both of these are examples of physical capital.
D) Neither of these is an example of physical capital.

Question 54

What types of capital can improve the productivity of workers?

A) Technological and human
B) Human and physical
C) Physical and technological
D) Human, technological, and physical capital are all determinants of productivity

Question 55

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 56

An example of human capital would be:

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

Question 57

An example of physical capital is:

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

Question 58

Which of the following would probably not result in acquiring human capital?

A) Taking an economics course.
B) Learning how to make chicken parmigiana.
C) Playing varsity soccer.
D) Purchasing a new piece of machinery.

Question 59

An example of the opportunity to gain human capital would be:

A) a firm expanding and creating 20 more jobs.
B) a firm offering on-the-job training.
C) a firm starting a community garden for its employees.
D) All of these are examples of human capital.

Question 60

We calculate the amount of physical capital in an economy by adding up the value of all:

A) tools, equipment, and structures.
B) skills and expertise of all employed people.
C) skills and expertise of the working age population.
D) technological capabilities used in production.

Question 61

An example of a renewable resource would be:

A) a river.
B) coal.
C) natural gas.
D) All of these are examples of renewable resources.

Question 62

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

A) low levels of schooling.
B) high levels of schooling.
C) mandatory military service.
D) highly developed infrastructures.

Question 63

An example of human capital would be:

A) your computer.
B) your writing skills.
C) your desk.
D) None of these is an example of human capital.

Question 64

An example of a natural resource is:

A) Michael Jordan's athletic ability.
B) Farmer Joe's farm fields.
C) Bill Gates' revolutionary iPod.
D) All of these are examples of natural resources.

Question 65

An example of a renewable resource would be:

A) trees.
B) oxygen.
C) fish in the ocean.
D) All of these are examples of renewable resources.

Question 66

In the 1980s, Howard was one of the best car phone repairmen in his area. After staying home in the 1990s and early 2000s to take care of his children, Howard wants to go back to work in the phone repair business. Which of the following can be said about Howard?

A) Because car phones are obsolete, Howard's human capital is less valuable.
B) Howard's knowledge of how to repair car phones is obsolete, and his human capital is less valuable now than in 1980.
C) Howard's ability to repair car phones represents an obsolete skill.
D) All of these could be said about Howard.

Question 67

Natural resources can be:

A) renewable.
B) nonrenewable.
C) Both of these are true.
D) Neither of these is true.

Question 68

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 rapid decline in human capital.
C) a small, incremental increase in human capital.
D) Human capital was not the cause of growth in the United States over the last 100 years.

Question 69

A renewable resource:

A) can be replenished naturally over time.
B) is used to regenerate an old piece of capital.
C) is used when adopting new technology, and replacing old capital.
D) cannot be replenished naturally over time.

Question 70

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 statements.

Question 71

If a nation has a higher level of technology than another nation it can produce:

A) more outputs with the same level of physical capital.
B) less with the same amount of physical capital.
C) more with no use of human capital.
D) the same output with the same level of inputs.

Question 72

Which of the following is an example of human capital?

A) The Internet
B) The Google search engine on the Internet
C) Your ability to use Google
D) None of these is an example of human capital.

Question 73

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

A) A leadership training course
B) A bachelor's degree
C) Software with spell-check included
D) All of these are examples of human capital investment.

Question 74

Natural resources:

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

Question 75

The value of human capital can decrease when:

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

Question 76

If a nation has a higher level of technology than another nation it means that they will be able to produce:

A) more outputs with the same inputs.
B) less with the same amount of physical capital.
C) more with no capital.
D) the same output with the same level of inputs.

Question 77

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

A) produce more with the same amount of physical capital.
B) work smarter.
C) be more productive with their time.
D) All of these are true.

Question 78

When Skippy the sailor forgets how to tie a slip knot his:

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

Question 79

Human capital:

A) is always increasing.
B) can become outdated or deteriorate.
C) is better when acquired as an adult.
D) All of these are true.

Question 80

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

A) River
B) Forest
C) Coal deposit
D) Piece of machinery