Question 1

Per capita real GDP is of limited use as a measure of economic well being for all the following reasons, except:

Accepted Answer

A)   it says nothing about the quality of the environment.
B)   it does not reflect the degree of personal freedom in a society.
C)   it is not adjusted for changes in leisure time.
D)   it is not adjusted for changes in the rate of inflation.
E)   it says nothing about the distribution of income.

Question 2

If Korea's average annual growth rate is 9 percent and that of the United States is 4 percent, the time required for Korea's real GDP to double will be ____ less than the time required for the GDP of the United States to double.

Accepted Answer

A)   3 years
B)   6 years
C)   12 years
D)   15 years
E)   10 years E

Question 3

If the average annual growth rate of a developing country is 7.2 percent, real GDP will double in _____.

Accepted Answer

A)   2 years
B)   7.2 years
C)   14.4 years
D)   10 years
E)   15 years

Question 4

The development of a financial market is not important in determining the economic growth of a nation.

Accepted Answer

A) True 
 B)False  False

Question 5

Per capita real GDP is:

Accepted Answer

A)   equivalent to the real GDP level.
B)   a measure of the value of output produced and available to an average person.
C)   higher in developing countries than in developed countries.
D)   a measure of an economy's income distribution.
E)   a measure of the GDP per country.

Question 6

Economic growth is measured as:

Accepted Answer

A)   the quarterly percentage change in nominal GDP.
B)   total output per year divided by the inflation rate.
C)   total nominal GDP at the end of each year.
D)   the percentage change in population growth per year.
E)   the annual percentage change in real GDP.

Question 7

A lack of current saving can be offset by borrowing, but the availability of borrowing is limited by the prospects for future saving.

Accepted Answer

A) True 
 B)False

Question 8

The total factor productivity of an economy is the ratio of the economy's _____.

Accepted Answer

A)   total income to its total population
B)   output to its total stock of labor and capital
C)   stock of capital to its stock of labor
D)   total population to its total labor force
E)   total capital stock to its total population

Question 9

U.S. labor productivity had slowed down in the 1970s and 1980s, but recent data shows that labor productivity has once again increased in the country.

Accepted Answer

A) True 
 B)False

Question 10

The per capita real GDP in Sri Lanka is likely to be lower than the United States because Sri Lanka's economy is characterized by:

Accepted Answer

A)   a more equitable income distribution system.
B)   a high population growth.
C)   a low regard for political freedom.
D)   a higher level of consumption spending.
E)   a high budget deficit.

Question 11

If real GDP remains unchanged, the population size is stationary, and people have more leisure time, then per capita real GDP will _____.

Accepted Answer

A)   overstate actual economic growth
B)   understate actual economic growth
C)   be the most accurate measure of actual economic growth
D)   show that actual economic growth was negative
E)   show that actual economic growth was positive

Question 12

Per capita real GDP is a questionable indicator of the state of the economy because it does not account for:

Accepted Answer

A)   growth of national income.
B)   changes in inflation.
C)   income distribution.
D)   changes in the size of the population.
E)   changes in the level of output.

Question 13

What is the approximate per capita income of the US if the population is 3,405,813 and its GDP is $24 million?

Accepted Answer

A)   $8.17
B)   $1.41
C)   $7.05
D)   $0.08
E)   $6.18

Question 14

Suppose an economy grows by 2.5 percent, the labor force rises by 3 percent, and capital rises by 1 percent. If capital takes 50 percent of real GDP and labor takes the other 50 percent of real GDP, then the growth in total factor productivity must be _____.

Accepted Answer

A)   6.5%
B)   4.5%
C)   0.5%
D)   6%
E)   10%

Question 15

In developing countries, the labor force typically grows _____.

Accepted Answer

A)   as rapidly as in industrial countries
B)   less rapidly than in industrial countries
C)   more rapidly than in industrial countries
D)   at a diminishing rate
E)   at a constant rate

Question 16

Which of the following is considered a determinant of long-run economic growth?

Accepted Answer

A)   Increase in the interest rates
B)   Changing expectations
C)   Increase in the money supply
D)   Growth in productive resources
E)   Reduction in government spending

Question 17

If natural gas is replaced by solar power as a more efficient form of energy, we should expect _____.

Accepted Answer

A)   a leftward shift of the aggregate supply curve
B)   higher production prices at every output level
C)   a decline in the growth of total output
D)   a decrease in the stock of energy-efficient capital goods
E)   an increase in total factor productivity

Question 18

If the growth rate of resources is 2 percent and per capita real output is growing at 4 percent, then total factor productivity has fallen by 4 percent.

Accepted Answer

A) True 
 B)False  False

Question 19

Technological advancement implies:

Accepted Answer

A)   the increase in the quantity of inputs needed to produce a given quantity of output.
B)   the reduction in the quantity of inputs needed to produce a given quantity of output.
C)   the reduction in the productivity of a sector of the economy that has become obsolete.
D)   an increase in the labor to capital ratio in any production process.
E)   the growth in the natural resource endowment.

Question 20

If you invest $1,000 in a savings account and the annual interest rate is 3.6 percent, your account balance will double in value in approximately _____.

Accepted Answer

A)   185 years
B)   72 years
C)   34 years
D)   20 years
E)   3.4 years

Exam 16: Economic Growth

Per capita real GDP is of limited use as a measure of economic well being for all the following reasons, except:

Correct AnswerverifiedShow Answer

If Korea's average annual growth rate is 9 percent and that of the United States is 4 percent, the time required for Korea's real GDP to double will be ____ less than the time required for the GDP of the United States to double.

Correct AnswerverifiedE

If the average annual growth rate of a developing country is 7.2 percent, real GDP will double in _____.

Correct AnswerverifiedShow Answer

The development of a financial market is not important in determining the economic growth of a nation.

Correct AnswerverifiedFalse

Per capita real GDP is:

Correct AnswerverifiedShow Answer

Economic growth is measured as:

Correct AnswerverifiedShow Answer

A lack of current saving can be offset by borrowing, but the availability of borrowing is limited by the prospects for future saving.

Correct AnswerverifiedShow Answer

The total factor productivity of an economy is the ratio of the economy's _____.

Correct AnswerverifiedShow Answer

U.S. labor productivity had slowed down in the 1970s and 1980s, but recent data shows that labor productivity has once again increased in the country.

Correct AnswerverifiedShow Answer

The per capita real GDP in Sri Lanka is likely to be lower than the United States because Sri Lanka's economy is characterized by:

Correct AnswerverifiedShow Answer

If real GDP remains unchanged, the population size is stationary, and people have more leisure time, then per capita real GDP will _____.

Correct AnswerverifiedShow Answer

Per capita real GDP is a questionable indicator of the state of the economy because it does not account for:

Correct AnswerverifiedShow Answer

What is the approximate per capita income of the US if the population is 3,405,813 and its GDP is $24 million?

Correct AnswerverifiedShow Answer

Suppose an economy grows by 2.5 percent, the labor force rises by 3 percent, and capital rises by 1 percent. If capital takes 50 percent of real GDP and labor takes the other 50 percent of real GDP, then the growth in total factor productivity must be _____.

Correct AnswerverifiedShow Answer

In developing countries, the labor force typically grows _____.

Correct AnswerverifiedShow Answer

Which of the following is considered a determinant of long-run economic growth?

Correct AnswerverifiedShow Answer

If natural gas is replaced by solar power as a more efficient form of energy, we should expect _____.

Correct AnswerverifiedShow Answer

If the growth rate of resources is 2 percent and per capita real output is growing at 4 percent, then total factor productivity has fallen by 4 percent.

Correct AnswerverifiedFalse

Technological advancement implies:

Correct AnswerverifiedShow Answer

If you invest $1,000 in a savings account and the annual interest rate is 3.6 percent, your account balance will double in value in approximately _____.

Correct AnswerverifiedShow Answer

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