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Terms in this set (75)
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.
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.
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.
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
If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will:
A. remain constant.
B. fall by 6 percent.
C. rise by 6 percent.
D. fall by 12 percent.
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.
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.
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.
Under what circumstances do rates of economic growth understate the growth of economic well-being?
A. Economic growth has occurred because of 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.
. Which of the following statements is most accurate about modern economic growth?
A. Economic historians mark modern economic growth as beginning around A.D. 1500.
B. Modern economic growth is characterized by sustained and ongoing increases in living standards.
C. Modern economic growth has virtually eliminated business cycle fluctuations.
D. Modern economic growth has been distributed more or less equally across nations.
. 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.
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.
As of 1998, living standards in the United States were nearly ______ times higher than those in Africa.
Real GDP per capita in the United States (as of 2007) exceeds that of France primarily because:
A. the United States had higher annual rates of growth than France from 1960 through 2007.
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 20 percent more hours worked per year.
D. European Union rules severely limit France's access to technologies developed outside the region.
Based on the annual number of hours worked per capita, labor supply in the United States exceeds that of France by about _______ percent.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
. 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 $5000.
D. cannot be calculated.
Suppose total output (real GDP) is $4000 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.
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 $0.5.
D. nominal GDP must be between $10,000 and $20,000.
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.
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
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 work week.
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.
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
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.
Between 2009 and 2020, productivity growth is expected to account for about ________ percent of the growth of real GDP in the United States.
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.
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.
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.
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.
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
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.
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.
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.
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.
What percentage of the U.S. adult population has at least a high school education (as of 2009)?
A. 29 percent
B. 41 percent
C. 87 percent
D. 95 percent
What percentage of the U.S. adult population has a college or post-college education (as of 2009)?
A. 8 percent
B. 29 percent
C. 41 percent
D. 87 percent
The annual growth of U.S. labor productivity:
A. was greater between 1973 and 1995 than between 1995 and 2009.
B. was greater between 1995 and 2009 than between 1973 and 1995.
C. was negative in the late 1990s.
D. averaged nearly 5 percent in the 1990s.
The period in the U.S. economy from 1995 to 2009 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.
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.
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.
Economists who believe that the recent rise in the average rate of productivity growth may be long-lasting claim that the above-normal economic growth in the United States between 1995 and 2009 was caused by:
A. increases in the rate of personal saving.
B. increased entrepreneurial activity, application of information technology, and global competition.
C. rising Federal budget surpluses that reduced real interest rates.
D. expansionary monetary policy.
Economists who believe that the recent rise in the average rate of productivity growth will be long lasting say that:
A. the United States is entering an era of high structural unemployment due to rapid technological change.
B. technological advance creates its own supply, which in turn creates its own demand.
C. innovations in computers and communications, together with global capitalism, are greatly boosting U.S. productivity and the economy's potential economic growth rate.
D. technological change will require more central planning and government regulation.
Between 1995 and 2009, the U.S. productivity rate:
A. was slightly negative, mainly because of record levels of employment growth.
B. grew substantially compared to prior years, leading some economists to predict a long-lasting resurgence of productivity growth.
C. slowed considerably relative to the high rates between 1990 and 1995.
D. reached record low levels for the United States' economy, leading some economists to talk of a long-term trend of stagnation.
Critics of economic growth:
A. contend that growth and industrialization reduce pollution.
B. argue that economic growth does not resolve socioeconomic problems such as an unequal distribution of income and wealth.
C. point out that growth results in greater economic security for workers.
D. say that its benefits accrue nearly exclusively to white males.
Over the past twenty-five years, China has averaged annual growth rates of nearly:
A. 5 percent.
B. 9 percent.
C. 12 percent.
D. 15 percent.
Growth of real per capita income and China has largely resulted from:
A. increased use of technology and improved technology.
B. population decline.
C. reduced unemployment rates.
D. its trade deficit with the United States.
Which of the following problems has not accompanied China's rapid economic growth over the past twenty-five years?
A. High rates of inflation.
B. Structural unemployment of displaced agricultural workers.
C. Uneven economic development.
D. Falling per capita income.
T/F: An economy with an average growth rate of 10 percent can expect to see its real GDP double in approximately 7 years.
T/F: Real GDP per capita is found by dividing real GDP by the size of the labor force.
T/F: Growth in well-being tends to be understated by growth in real GDP because of increases in leisure time.
T/F: Modern economic growth since the 1820s has widened wealth and income disparities between richer and poorer nations.
T/F: Follower countries achieve high rates of growth by adopting technologies developed by leader countries.
T/F: Strong economic growth since 1960 has allowed nations like Singapore and Ireland to surpass nations such as the United Kingdom and France in real GDP per capita.
T/F: Strong property rights inhibit economic growth by strictly regulating economic behavior.
T/F: Strong patent laws encourage innovation and promote economic growth.
T/F:. The intense competition of free trade prevents the investment that generates economic growth.
T/F: A competitive market system promotes growth by providing producers with market signals on which to base investment and production decisions.
T/F: Improvements in technology are considered a demand factor in economic growth.
T/F: Increases in household and business spending are a demand factor in economic growth.
T/F: Between 1953 and 2007, rising labor productivity contributed more to U.S. economic growth than did increases in inputs.
T/F: Real GDP = worker-hours × labor productivity.
T/F: Labor productivity = worker-hours/real GDP.
T/F: Because of the recent rise in the average rate of productivity growth, the business cycle is dead.
T/F: Critics of economic growth say studies show that people are not interested in achieving higher standards of living.
T/F: Proponents of economic growth claim that rising living standards can lead to environmental improvements as people can afford to care more about the environment.
T/F: Proponents of economic growth claim that growth leads to greater equality of income in an economy.