Question 1

Which of the following factors contribute to economic growth?

Accepted Answer

The answer of Which of the following factors contribute to...

Question 2

Shifts to the right in the long-run aggregate supply curve are the result of

Accepted Answer

Shifts to the right in the long-run aggregate supply curve are the result of upward shifts in the production function. This means that the economy is able to produce more output with the same amount of inputs or produce the same amount of output with fewer inputs. This is often the result of technological advancements or improvements in the efficiency of production processes, which increase productivity and allow firms to produce more output. Increases in aggregate demand, decreases in the supply of labor, and reductions in the demand for labor can all affect the short-run aggregate supply curve, but they do not typically cause shifts in the long-run aggregate supply curve.

Question 3

During the industrial revolution, the United States saw increases in the demand for labor and increases in the supply of labor. The increase in real wages rose during this period is consistent with which of the following statements?

Accepted Answer

An increase in both demand for and supply of labor typically leads to an increase in wages. However, if the increase in demand for labor is greater than the increase in supply of labor, then the equilibrium wage rate would increase. This can be seen as a rightward shift in the labor demand curve (meaning employers are willing to pay more for the same quantity of labor) compared to the rightward shift of the labor supply curve (meaning more workers are willing and able to work at each wage rate). Therefore, choice A is the best answer.

Question 4

The determinants of economic growth include all of the following except

Accepted Answer

Growth in money supply is not considered a determinant of economic growth as it only affects inflation rather than the overall growth rate of the economy. The other options (technological improvement, growth in physical capital, and growth in human capital) are all recognized as important factors in promoting economic growth.

Question 5

During the industrial revolution, technological changes, capital investment, and the number of workers employed all increased. What must be true about capital and labor?

Accepted Answer

The fact that both capital investment and the number of workers employed increased during the industrial revolution suggests that capital and labor are complementary inputs in production. This means that they are both necessary inputs to produce goods and services, and increasing one input may increase the productivity of the other.

Question 6

The determinants of economic growth include all of the following except

Accepted Answer

While stable prices can contribute to a favorable economic environment, they are not considered a direct determinant of economic growth. The other choices - technological improvement, improvements in the quality of factors of production, and increases in the quantity of factors of production - are all key factors in driving economic growth.

Question 7

Which of the following occurred during the industrial revolution in the United States?
I. More and more firms shifted toward mass production and automation.
II. More and more firms substituted capital investment and technology for labor, leading to a decrease in the demand for labor.
III. Technological change and capital investment displaced workers in some industries, although for the economy as a whole, the demand for labor increased.

Accepted Answer

During the industrial revolution in the United States, more and more firms shifted toward mass production and automation (I) and technological change and capital investment displaced workers in some industries, although for the economy as a whole, the demand for labor increased (III). While it is true that more capital investment and technology were substituted for labor in some industries, leading to a decrease in the demand for labor (II), this trend was not universal and did not apply to the economy as a whole. Therefore, choices B and D are incorrect as they only reflect a partial understanding of the industrial revolution in the United States.

Question 8

What is the opportunity cost of allocating more and more resources to the production of capital goods?

Accepted Answer

Allocating more resources to the production of capital goods means less resources are available for the production of consumer goods. Therefore, the opportunity cost is the amount of consumption goods that could have been produced but are now foregone. Option A is incorrect because allocating more resources to the production of capital goods may actually increase real income in the long run. Option C is irrelevant as it does not directly relate to the opportunity cost mentioned. Option D may be true but not directly related to the opportunity cost.

Question 9

A factor critical to economic growth is

Accepted Answer

Technological change that increases labor productivity is critical to economic growth. This leads to increased efficiency, lowering costs and increasing output, which ultimately drives economic growth. Increased saving rates and reduced dependence on imports can also contribute to economic growth, but to a lesser extent. Increases in human consumption can actually lead to economic instability if not accompanied by productivity growth.

Question 10

All of the following are sources of economic growth except

Accepted Answer

Increases in consumption spending can stimulate short-term production, but it is not a sustainable source of economic growth. Long-term economic growth is driven by increases in physical capital, improvements in human capital, and an increase in the savings rate.

Question 11

Economic growth occurs when

Accepted Answer

Economic growth occurs when a nation's capacity to produce increases, which can be due to advancements in technology, increased capital stock, and/or increases in the labor force. Increases in nominal GDP or GDP per capita can occur without actual economic growth if they are due to inflation or population growth respectively. Movement along the production possibility curve resulting in increased personal consumption expenditures is not necessarily indicative of economic growth as it may simply be a result of a shift in consumer preferences.

Question 12

Which of the following is a cost of economic growth?

Accepted Answer

The answer of Which of the following is a cost...

Question 13

Economic growth can be modeled as
I. an outward shift of the economy's production possibilities curve.
II. a rightward shift of the economy's long-run aggregate supply curve.
III. a rightward shift of the labor demand and the labor supply curves.
IV. a downward shift of the economy's aggregate production function.

Accepted Answer

Option I is correct because economic growth leads to an increase in the production capacity of an economy, which leads to an outward shift of its production possibilities curve. 
Option II is correct because economic growth leads to an increase in the economy's potential output in the long run, which leads to a rightward shift of its long-run aggregate supply curve. 
Option III is correct because economic growth leads to an increase in demand for labor and an increase in the supply of labor, which leads to a rightward shift of both the labor demand and the labor supply curves. 
Option IV is incorrect because economic growth does not lead to a downward shift of the economy's aggregate production function, as this function represents the relationship between inputs and output, and economic growth would increase the output for a given set of inputs, or utilize inputs more efficiently to produce more output.

Question 14

For a given level of technology, a higher rate of economic growth can probably be achieved only if a country's citizens are prepared to

Accepted Answer

Achieving higher economic growth necessitates channelizing resources into investments, such as capital goods, infrastructure, and education. This requires forgoing present consumption and saving more to invest in such assets. Hence, a country's citizens must sacrifice some present consumption to achieve higher economic growth.

Question 15

During the industrial revolution (the period between the Civil War and World War I), the United States had a massive influx of working age immigrants. What happens in the labor market?

Accepted Answer

The massive influx of working age immigrants during the industrial revolution would increase the supply of labor in the United States, shifting the supply of labor curve to the right. This increase in supply would likely lead to a downward pressure on wages, creating a more competitive labor market.

Question 16

Which of the following will not increase labor's productivity?

Accepted Answer

Growth in output is a result of increased productivity, not a cause of it. Therefore, it cannot be a factor that increases labor productivity.

Question 17

Economic growth can be achieved through

Accepted Answer

Economic growth can be achieved by increasing the production of capital goods. Capital goods are used in the production of other goods and services, which can increase productivity and overall economic output. Decreases in the labor force or research and development expenditures would likely have a negative impact on economic growth.

Question 18

Investment in human capital

Accepted Answer

Investment in human capital, such as education and training, improves the quality and productivity of the workforce, leading to an upward shift in the aggregate production function. This results in higher output and economic growth.

Question 19

In the long run, economic growth will lead to
I. the opportunity to produce more consumer goods.
II. the opportunity to produce more capital goods.
III. a higher material standard of living.
IV. a more equitable distribution of income.

Accepted Answer

The answer of In the long run, economic growth will...

Question 20

Which of the following events would be most likely to increase an economy's potential output?

Accepted Answer

An improvement in technology would increase an economy's potential output as it would allow for more efficient and productive production processes. A tax increase (A) would likely decrease output as it reduces consumer and business spending. An increase in transfer payments (B) would increase consumer spending but may not have a significant impact on overall output. An increase in net exports (D) would increase output in the short term but may not necessarily increase potential output in the long term.

Quiz 8: Economic Growth

Which of the following factors contribute to economic growth?

Shifts to the right in the long-run aggregate supply curve are the result of

During the industrial revolution, the United States saw increases in the demand for labor and increases in the supply of labor. The increase in real wages rose during this period is consistent with which of the following statements?

The determinants of economic growth include all of the following except

During the industrial revolution, technological changes, capital investment, and the number of workers employed all increased. What must be true about capital and labor?

The determinants of economic growth include all of the following except

What is the opportunity cost of allocating more and more resources to the production of capital goods?

A factor critical to economic growth is

All of the following are sources of economic growth except

Economic growth occurs when

Which of the following is a cost of economic growth?

For a given level of technology, a higher rate of economic growth can probably be achieved only if a country's citizens are prepared to

During the industrial revolution (the period between the Civil War and World War I) , the United States had a massive influx of working age immigrants. What happens in the labor market?

Which of the following will not increase labor's productivity?

Economic growth can be achieved through

Investment in human capital

In the long run, economic growth will lead to I. the opportunity to produce more consumer goods. II. the opportunity to produce more capital goods. III. a higher material standard of living. IV. a more equitable distribution of income.

Which of the following events would be most likely to increase an economy's potential output?