Deck 27: Economic Growth

Question 1

For comparing changes in potential military strength and political preeminence,the most meaningful measure of economic growth would be changes in:

A) total nominal output.
B) total real output.
C) per capita output.
D) per family output.

Answer 1

B

Question 2

Under what circumstances do rates of economic growth understate the growth of economic well-being?

A) Economic growth has occurred because of the increased length of the workweek.
B) Product quality has improved.
C) Air quality has declined as real GDP has increased.
D) Population has grown faster than real output.

Answer 2

B

Question 3

At an annual growth rate of 7 percent,real GDP will double in about:

A) 11½ years.
B) 10 years.
C) 13½ years.
D) 9 years.

Answer 3

B

Question 4

Real GDP per capita is found by:

A) adding real GDP and population.
B) subtracting population from real GDP.
C) dividing real GDP by population.
D) dividing population by real GDP.

Question 5

The number of years required for real GDP to double can be found by:

A) dividing the annual growth rate by .07.
B) multiplying the annual growth rate by 70.
C) dividing 70 by the annual growth rate.
D) adding 14 to annual growth rate.

Question 6

For a nation's real GDP per capita to rise during a year:

A) consumption spending must increase.
B) real GDP must increase more rapidly than population.
C) population must increase more rapidly than real GDP.
D) investment spending must increase.

Question 7

If the economy's real GDP doubles in 18 years,we can:

A) not say anything about the average annual rate of growth.
B) conclude that its average annual rate of growth is about 5.5 percent.
C) conclude that its average annual rate of growth is about 2.4 percent.
D) conclude that its average annual rate of growth is about 3.9 percent.

Question 8

If a nation's real GDP is growing by 5 percent per year,its real GDP will double in approximately:

A) 22 years.
B) 20 years.
C) 14 years.
D) 8 years.

Question 9

Real per capita GDP in the United States in 2012 was approximately:

A) $13,300.
B) $39,800.
C) $43,900.
D) $13.3 trillion.

Question 10

The Industrial Revolution and modern economic growth resulted in:

A) the average human lifespan more than doubling.
B) a major population shift from urban to rural areas.
C) increased production by local craftsmen.
D) all of these.

Question 11

Economic growth is best defined as an increase in:

A) either real GDP or real GDP per capita.
B) nominal GDP.
C) total consumption expenditures.
D) wealth in the economy.

Question 12

Real GDP per capita:

A) cannot grow more rapidly than real GDP.
B) cannot grow more slowly than real GDP.
C) necessarily grows more rapidly than real GDP.
D) can grow either more slowly or more rapidly than real GDP.

Question 13

Economic historians date the start of the Industrial Revolution around the year 1776,when James Watt:

A) built the first factory for mass production.
B) invented the steam locomotive.
C) successfully lobbied British parliament for the enactment of patent legislation to protect new inventions.
D) invented and built a more powerful and efficient steam engine.

Question 14

Between 1950 and 2012,U.S.real GDP grew at an average annual rate of about:

A) 2.0 percent.
B) 3.1 percent.
C) 5.1 percent.
D) 8.6 percent.

Question 15

If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million,it real GDP per capita will:

A) remain constant.
B) fall by 6 percent.
C) rise by 6 percent.
D) fall by 12 percent.

Question 16

Given the annual rate of economic growth,the "rule of 70" allows one to:

A) determine the accompanying rate of inflation.
B) calculate the size of the GDP gap.
C) calculate the number of years required for real GDP to double.
D) determine the growth rate of per capita GDP.

Question 17

Between 1950 and 2012,U.S.real GDP per capita grew at an average annual rate of about:

A) 5.5 percent.
B) 4.2 percent.
C) 3.2 percent.
D) 2.0 percent.

Question 18

Countries that have experienced modern economic growth have also tended to:

A) adopt feudalistic institutions.
B) restrict women and minorities from holding certain economic and political positions.
C) move toward more democratic forms of government.
D) have less leisure time for sport and artistic activities.

Question 19

Which of the following best measures improvements in the standard of living of a nation?

A) Growth of nominal GDP.
B) Growth of real GDP.
C) Growth of real GDP per capita.
D) Growth of national income.

Question 20

Growth is advantageous to a nation because it:

A) promotes faster population growth.
B) lessens the burden of scarcity.
C) eliminates the economizing problem.
D) slows the growth of wants.

Question 21

Which of the following statements is most accurate about the prospects for poorer ("follower")countries catching up with richer ("leader")countries?

A) Catching up is unlikely to occur because their growth rates are the same on average.
B) Catching up is unlikely to occur because richer countries tend to grow at a faster rate.
C) Catching up is possible,but only if growth rates in leader countries fall to zero or become negative.
D) Catching up is possible as "follower countries" tend to grow faster than "leader countries."

Question 22

Use the list below to answer the following question: 1.Improvements in technology.
2)Increases in the supply (stock)of capital goods.
3)Purchases of expanding output.
4)Obtaining the optimal combination of goods,each at least-cost production.
5)Increases in the quantity and quality of natural resources.
6)Increases in the quantity and quality of human resources.
Which set of items in the list would shift an economy's production possibilities curve outward?

A) 2,5,and 6 only.
B) 2,4,5,and 6 only.
C) 1,2,5,and 6 only.
D) 1,3,and 4 only.

Question 23

Use the list below to answer the following question: 1.Improvements in technology.
2)Increases in the supply (stock)of capital goods.
3)Purchases of expanding output.
4)Obtaining the optimal combination of goods,each at least-cost production.
5)Increases in the quantity and quality of natural resources.
6)Increases in the quantity and quality of human resources.
Refer to the list.As distinct from the supply factors and efficiency factor of economic growth,the demand factor(s)of economic growth is (are):

A) 1 only.
B) 4 only.
C) 1 and 3 only.
D) 3 only.

Question 24

Strong property rights are important for modern economic growth because:

A) they allow governments to extract the gains from private citizens' investments.
B) people are more likely to invest if they don't fear that others can take their returns on investment without compensation.
C) they ensure an equitable distribution of income.
D) business cycle fluctuations will be smaller and less likely to disrupt investment patterns.

Question 25

A competitive market system:

A) encourages growth by allowing producers to make profitable investment decisions based on market signals.
B) encourages growth by ensuring that everyone in society will receive a decent standard of living.
C) discourages growth because firms busy competing have no time to innovate or invest.
D) discourages growth unless government protects domestic firms from foreign competition.

Question 26

The achievement of full employment through time will:

A) diminish labor productivity.
B) reduce the level of investment as a percentage of GDP.
C) increase the realized rate of economic growth.
D) have no impact on the rate of economic growth.

Question 27

In 1998,living standards in the United States were nearly ______ times higher than those in Africa.

A) 3
B) 8
C) 14
D) 20

Question 28

Based on the annual number of hours worked per capita,labor supply in the United States exceeds that of France by about _______ percent.

A) 20
B) 34
C) 51
D) 58

Question 29

Use the list below to answer the following question: 1.Improvements in technology.
2)Increases in the supply (stock)of capital goods.
3)Purchases of expanding output.
4)Obtaining the optimal combination of goods,each at least-cost production.
5)Increases in the quantity and quality of natural resources.
6)Increases in the quantity and quality of human resources.
Which set of items in the list would move an economy from a point inside its production possibilities curve to a point on its production possibilities curve?

A) 1,2,5,and 6 only.
B) 3 and 4 only.
C) 3 only.
D) 1,3,and 4 only.

Question 30

Which of the following economic regions has experienced the most growth in real GDP per capita since 1820?

A) Japan.
B) United States.
C) Latin America.
D) Western Europe.

Question 31

Which of the following economic regions has experienced the least growth in real GDP per capita since 1820?

A) Africa.
B) Asia excluding Japan.
C) Latin America.
D) Western Europe.

Question 32

Free trade:

A) discourages growth by increasing competitive pressures on domestic firms.
B) encourages growth by effectively eliminating all patent and copyright barriers to growth.
C) discourages growth compared to situations where the government strongly controls foreign trade.
D) encourages growth by promoting the rapid spread of new inventions and innovations.

Question 33

Which of the following institutional arrangements is most likely to promote growth?

A) Patents and copyrights that expire quickly and are loosely enforced.
B) Strong government control over resource allocation decisions.
C) Unrestricted trade between nations.
D) All of these.

Question 34

Use the list below to answer the following question: 1.Improvements in technology.
2)Increases in the supply (stock)of capital goods.
3)Purchases of expanding output.
4)Obtaining the optimal combination of goods,each at least-cost production.
5)Increases in the quantity and quality of natural resources.
6)Increases in the quantity and quality of human resources.
Refer to the list.As distinct from the demand and efficiency factors of economic growth,the supply factors of economic growth are:

A) 2,5,and 6 only.
B) 2,4,5,and 6 only.
C) 1,2,5,and 6 only.
D) 1,3,and 4 only.

Question 35

Real per capita GDP:

A) grows at approximately the same rate for all countries.
B) was much more equal across nations in 1820 than it is today.
C) has been about 20 times higher in the richer nations than the poorer nations for about 2000 years.
D) grows much faster in "leader countries" than in "follower countries."

Question 36

Which of the following institutional structures is most likely to promote growth?

A) A well-enforced system of patents and copyrights.
B) A tightly regulated market system.
C) A system of tariffs and other trade barriers to protect domestic companies.
D) All of these.

Question 37

Use the list below to answer the following question: 1.Improvements in technology.
2)Increases in the supply (stock)of capital goods.
3)Purchases of expanding output.
4)Obtaining the optimal combination of goods,each at least-cost production.
5)Increases in the quantity and quality of natural resources.
6)Increases in the quantity and quality of human resources.
Refer to the list.As distinct from the supply factors and demand factor of economic growth,the efficiency factor(s)of economic growth is (are):

A) 1 only.
B) 4 only.
C) 1 and 3 only.
D) 3 only.

Question 38

Economic growth rates in follower countries:

A) tend to be lower than in leader countries because labor forces in follower countries are too small.
B) tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs.
C) will never bring real GDP per capita up to the same levels as in leader countries,even if follower growth rates are greater than those in leader countries.
D) typically average about 2 percent per year.

Question 39

Which of the following is not a supply factor in economic growth?

A) The stock of capital.
B) Technological advance.
C) The size and quality of the labor force.
D) Aggregate expenditures of households,businesses,and government.

Question 40

Real GDP per capita in the United States (as of 2010)exceeds that of France primarily because:

A) the United States had higher annual rates of growth than France from 1960 through 2010.
B) the United States has a much larger population than France.
C) the United States has a higher percentage of the working-age population in the labor force and because U.S.employees average about 14 percent more hours worked per year.
D) European Union rules severely limit France's access to technologies developed outside the region.

Question 41

If the number of worker-hours in an economy is 100 and its labor productivity is $5 of output per worker-hour,the economy's real GDP:

A) is $20.
B) is $500.
C) is $5,000.
D) cannot be calculated.

Question 42

Between 2011 and 2022,productivity growth is expected to account for about ________ percent of the growth of real GDP in the United States.

A) 23
B) 40
C) 75
D) 92

Question 43

Suppose that an economy's labor productivity and total worker-hours each grew by 3 percent between year 1 and year 2.We could conclude that this economy's:

A) real GDP remained constant.
B) capital stock increased by 3 percent.
C) production possibilities curve shifted inward.
D) production possibilities curve shifted outward.

Question 44

The largest contributor to increases in the productivity of American labor is:

A) the reallocation of labor from agriculture to manufacturing.
B) improvements in labor quality.
C) increases in the quantity of capital.
D) technological advance.

Question 45

Empirical studies suggest that:

A) labor productivity has declined throughout U.S.history.
B) technological advances account for about 40 percent of U.S.productivity growth.
C) the achieving of economies of scale is the most important factor in U.S.economic growth.
D) all U.S.economic growth from between 2001 and 2007 can be attributed to increases in the quantity of labor.

Question 46

The percentage of the working-age population in the labor force (= employed + officially unemployed)is called the:

A) labor force participation rate.
B) employment-population ratio.
C) work-activity rate.
D) work-nonwork ratio.

Question 47

Which of the following statements is correct?

A) The U.S.population has increased more rapidly than real GDP in recent decades.
B) Improved education and training of labor is the most important source of U.S.productivity growth.
C) The average American factory worker has about 16 years of formal education.
D) The amount of real capital used per worker has increased historically in the United States.

Question 48

Economic growth can be portrayed as:

A) an outward shift of the production possibilities curve.
B) an inward shift of the production possibilities curve.
C) a movement from a point on to a point inside a production possibilities curve.
D) a movement from one point to another point on a fixed production possibilities curve.

Question 49

Other things equal,which of the following would decrease the rate of economic growth,as measured by changes in real GDP?

A) An increase in the educational attainment of the labor force.
B) A permanent decrease in frictional unemployment.
C) An increase in the amount of capital per worker.
D) A decrease in the labor force participation rate.

Question 50

An outward shift of a nation's production possibilities curve:

A) ensures the nation of an increase in real GDP per capita.
B) ensures the nation of an increase in real GDP,but not of real GDP per capita.
C) ensures a nation neither of an increase in real GDP nor of an increase in real GDP per capita.
D) ensures a nation of an increase in both real GDP and real GDP per capita.

Question 51

Which of the following would not be expected to increase labor productivity?

A) Technological advance.
B) The acquisition of more education and training by the labor force.
C) An increase in the size of the labor force.
D) The realization of economies of scale.

Question 52

Labor productivity is defined as:

A) total output/worker-hours.
B) nominal GDP minus real GDP.
C) the ratio of real capital to worker-hours.
D) the annual increase in nominal GDP per worker.

Question 53

Suppose that an economy's labor productivity and total worker-hours each grew by 4 percent between year 1 and year 2.We could conclude that this economy's:

A) real GDP also increased by 4 percent.
B) real GDP remained constant.
C) production possibilities curve shifted outward.
D) capital stock increased by 4 percent.

Question 54

Suppose that an economy's labor productivity fell by 3 percent and its total worker-hours remained constant between year 1 and year 2.We could conclude that this economy's:

A) real GDP declined.
B) capital stock increased.
C) production possibilities curve shifted outward.
D) actual production moved from one point to another on a fixed production possibilities curve.

Question 55

Which of the following statements is correct?

A) Between 1953 and 2011,all growth in U.S.real GDP can be attributed to increases in labor productivity.
B) Between 1953 and 2011,increases in labor productivity account for more of the growth in U.S.real GDP than do increases in the quantity of labor.
C) Between 1953 and 2011,increases in the quantity of labor account for more of the growth in U.S.real GDP than do increases in labor productivity.
D) Between 1953 and 2011,all growth in U.S.real GDP can be attributed to increases in the quantity of labor.

Question 56

Suppose total output (real GDP)is $4,000 and labor productivity is $8.We can conclude that:

A) real GDP per capita must be $500.
B) the price-level index must be greater than 100.
C) nominal GDP must be $500.
D) the number of worker-hours must be 500.

Question 57

Other things equal,which of the following would increase the rate of economic growth,as measured by changes in real GDP?

A) A decline in the average length of the workweek.
B) A decrease in the labor force participation rate.
C) An increase in the size of the working age population.
D) A decline in the amount of capital per worker.

Question 58

Suppose total output (real GDP)is $10,000 and worker-hours are 20,000.We can conclude that:

A) real GDP per capita must be $200,000.
B) the price-level index must be less than 100.
C) labor productivity must be $0.50.
D) nominal GDP must be between $10,000 and $20,000.

Question 59

Labor productivity is measured by:

A) the ratio of capital to labor.
B) real output per worker hour.
C) real output per capita.
D) the ratio of worker hours to real GDP.

Question 60

Which of the following is correct?

A) Total output = labor productivity/worker-hours.
B) Labor productivity = worker-hours/total output.
C) Total output = worker-hours × labor productivity.
D) Worker-hours = labor productivity × total output.

Question 61

Economies of scale refer to:

A) the idea that proprietorships are less bureaucratic and therefore more efficient than corporations.
B) public investments in highways,schools,utilities,and such.
C) the fact that large producers may be able to use more efficient technologies than smaller producers.
D) the reallocation of labor from less-productive to more-productive uses.

Question 62

The percentage of U.S.adults with a high school education or has:

A) remained constant since the 1960s.
B) risen from 8 percent in 1960 to 31 percent in 2012.
C) risen to over 90 percent in the twenty-first century.
D) risen from 41 percent in 1960 to 88 percent in 2012.

Question 63

The annual growth of U.S.labor productivity:

A) was greater between 1973 and 1995 than between 1995 and 2012.
B) was greater between 1995 and 2012 than between 1973 and 1995.
C) was negative in the late 1990s.
D) averaged nearly 5 percent in the 1990s.

Question 64

Other things equal,which of the following would increase labor productivity the most?

A) The stock of real capital and inputs of labor increase proportionately.
B) The increase in the stock of real capital exceeds the increase in inputs of labor.
C) The increase in inputs of labor exceeds the increase in the stock of real capital.
D) Inputs of labor increase and the stock of real capital remains constant.

Question 65

All of the following are sources of increasing returns and economies of scale except:

A) network effects.
B) the multiplier effect.
C) learning by doing.
D) simultaneous consumption.

Question 66

The fundamental invention underpinning the 1995-2012 rise in the average rate of productivity growth is the:

A) microchip.
B) fuel cell.
C) Internet.
D) personal computer.

Question 67

More than half the growth of real GDP in the United States is caused by:

A) a falling price level.
B) the reallocation of labor from manufacturing to agriculture.
C) increases in the productivity of labor.
D) the use of fewer inputs of labor.

Question 68

Human capital refers to:

A) the skills and knowledge that enable a worker to be productive.
B) machinery used by labor in production.
C) the accumulated financial wealth of households.
D) physical capital owned by households rather than businesses.

Question 69

Network effects are:

A) increases in the value of a product to each user,including existing users,as the total number of users rises.
B) reductions in per unit production cost as firms learn by doing.
C) increases in demand resulting from products being mentioned positively in a television program.
D) the change in real GDP resulting from a change in investment or government spending.

Question 70

What percentage of the U.S.adult population has a college or post-college education (as of 2012)?

A) 8 percent.
B) 31 percent.
C) 41 percent.
D) 88 percent.

Question 71

If the secular trend of labor productivity rises from 2 percent per year to 4 percent,the number of years that it will take for the standard of living to double will decline by about:

A) 5.2 years.
B) 10.1 years.
C) 17.5 years.
D) 23.8 years.

Question 72

What percentage of the U.S.adult population has at least a high school education (as of 2012)?

A) 31 percent.
B) 41 percent.
C) 88 percent.
D) 95 percent.

Question 73

Globally,on average test scores of eighth-grade math and science students,the U.S.ranks (as of 2011):

A) 5^th and 7^th,respectively.
B) 1^st and 1^st,respectively.
C) 9^th and 10^th,respectively.
D) 8^th and 6^th,respectively.

Question 74

Which of the following is the largest contributor to the growth of labor productivity in the United States?

A) Technological advance.
B) Education and training of labor.
C) Economies of scale.
D) Improved resource allocation.

Question 75

If the growth trend of labor productivity is 3 percent per year,the number of years that it will take for the standard of living to double will be about:

A) 15 years.
B) 17 years.
C) 20 years.
D) 23 years.

Question 76

Increases in the value of a product to each user,including existing users,as the total number of users rises are called:

A) information cascades.
B) learning effects.
C) network effects.
D) scale economies.

Question 77

The period in the U.S.economy from 1995 to 2012 is characterized by:

A) a higher trend rate of saving.
B) a higher natural rate of unemployment.
C) a higher trend rate of productivity growth.
D) the end of the business cycle.

Question 78

The historical reallocation of labor from agriculture to manufacturing in the United States has:

A) been inflationary.
B) had no effect on the average productivity of labor.
C) increased the average productivity of labor.
D) reduced the average productivity of labor.

Question 79

Other things equal,if a full-employment economy reallocated a substantial quantity of its resources to capital goods,we would expect:

A) present consumption to rise.
B) future consumption to fall.
C) a lower rate of growth of real GDP.
D) labor productivity to rise.

Question 80

A nation's infrastructure refers to:

A) its ability to realize economies of scale.
B) its stock of technological knowledge.
C) public capital goods such as highways and sanitation systems.
D) the productivity of its labor force.