Question 1

A reason a nation faces diminishing returns along a production function is because

Accepted Answer

A)  unemployment always exists.
B)  potential GDP is fixed.
C)  the quantity of physical capital is fixed.
D)  full employment is not possible.
E)  the wage rate is fixed while moving along the production function.

Question 2

A nation's annual growth rate of real GDP per person is 2 percent. Its standard of living will

Accepted Answer

A)  double in 35 years.
B)  not change because its population is growing.
C)  fall because of its population growth.
D)  double in 10 years.
E)  double in 50 years.

Question 3

-Using the data in the table above, the growth rate of real GDP for 2008 is equal to

Accepted Answer

A)  9.09 percent.
B)  7.00 percent.
C)  5.00 percent.
D)  4.76 percent.
E)  10.0 percent.

Question 4

Economic growth is slow or absent in some economies because those lack

Accepted Answer

A)  political freedom.
B)  economic freedom.
C)  democracy.
D)  cultural freedom.
E)  a strong government.

Question 5

Economic freedom

Accepted Answer

A)  is not important for nations to grow.
B)  must come from a democratic government.
C)  is founded, in part, on the rule of law.
D)  is created when the nation imposes many regulations on businesses.
E)  is harmed by having too many property rights.

Question 6

Economic growth is defined as equal to the increase in

Accepted Answer

A)  employment.
B)  population.
C)  real GDP.
D)  the price level.
E)  the inflation rate.

Question 7

Suppose Mexico's real GDP per person in 2008 is $6,000 and the U.S. real GDP per person is $24,000. Mexico has annual growth in real GDP per person of 5 percent. Approximately how many years will it take Mexico to equal $24,000 of real GDP per person?

Accepted Answer

A)  14 years
B)  18 years
C)  28 years
D)  36 years
E)  40 years

Question 8

As additional units of labor hours are employed, holding all other factors constant, along the production function,

Accepted Answer

A)  real GDP increases at an increasing rate.
B)  nominal GDP decreases at an increasing rate.
C)  real GDP increases at a decreasing rate.
D)  real GDP increase at a constant rate.
E)  real GDP initially decreases and then starts to increase.

Question 9

Real GDP equals $12 trillion and aggregate hours equals 300 billion hours. What does labor productivity equal?

Accepted Answer

Labor productivity is defined ...

Question 10

Real GDP can increase either because the quantity of labor increases or because labor productivity increases. What is the effect on the standard of living if real GDP increases because
a. the quantity of labor increases?
b. labor productivity increases?

Accepted Answer

a. An increase in real GDP because the q...

Question 11

Choose which statement is most correct.

Accepted Answer

A)  Real GDP can never exceed potential GDP.
B)  Real GDP must always equal potential GDP.
C)  At times, real GDP can exceed potential GDP.
D)  Nominal GDP can never exceed potential GDP.
E)  Nominal GDP must always equal potential GDP.

Question 12

The following government policies will help achieve faster economic growth EXCEPT

Accepted Answer

A)  discouraging saving and encouraging spending.
B)  encouraging research and development.
C)  establishing and protecting property rights.
D)  improving the quality of education.
E)  increasing saving.

Question 13

-Using the data in the table above, the growth rate of real GDP has

Accepted Answer

A)  increased from year to year.
B)  increased more rapidly from year to year.
C)  remained constant from year to year.
D)  slowed from year to year.
E)  probably changed, but more information is needed about the price level to determine by how much it has changed.

Question 14

The productivity curve shifts upward when

Accepted Answer

A)  physical capital increases.
B)  human capital decreases.
C)  hours of labor increase.
D)  hours of labor decrease.
E)  technology advances.

Question 15

Over the last decade, a country experiences a significant increase in labor productivity.
a. Draw and label a labor market supply and demand diagram. Show how the equilibrium real wage rate and the equilibrium quantity of labor change as productivity increases.
b. Draw and label a production function. Show how potential GDP changes as labor productivity increases.

Accepted Answer

a. The figure above shows the effect o...

Question 16

At full employment, actual ________ equals ________.

Accepted Answer

A)  nominal GDP; potential GDP
B)  real GDP; potential GDP
C)  real GDP; nominal GDP
D)  potential GDP; nominal GDP
E)  unemployment; zero

Question 17

Property rights

Accepted Answer

A)  don't include intellectual property.
B)  don't include financial property.
C)  don't include physical property.
D)  include physical, financial, and intellectual property.
E)  slow the economic growth by placing limits on who can use what.

Question 18

The annual growth rate of an economy is 10 percent. The economy's GDP will double in about ________ years.

Accepted Answer

A)  7
B)  10
C)  12
D)  14
E)  20

Question 19

The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then

Accepted Answer

A)  Joanne is creating a $2.00 per hour loss for the firm.
B)  Joanne is creating a $2.00 per hour profit for the firm.
C)  the Bubby Gum company should decrease the price of the bubble gum so it sells more and makes a larger profit.
D)  the Bubby Gum company should pay Joanne more.
E)  the Bubby Gum company should increase its demand for labor.

Question 20

If Country A's real GDP grows at a rate of 14 percent per year, about how many years will it take for Country A's real GDP to double?

Accepted Answer

A)  10
B)  7
C)  5
D)  30
E)  14

Exam 17: Potential Gdp and Economic Growth

At full employment, actual equals .

Correct Answer
verified

Real GDP can increase either because the quantity of labor increases or because labor productivity increases. What is the effect on the standard of living if real GDP increases because a. the quantity of labor increases? b. labor productivity increases?

Correct Answer
verified
a. An increase in real GDP because the q...
View Answer

As additional units of labor hours are employed, holding all other factors constant, along the production function,

Correct Answer
verified

If Country A's real GDP grows at a rate of 14 percent per year, about how many years will it take for Country A's real GDP to double?

Correct Answer
verified

Suppose Mexico's real GDP per person in 2008 is $6,000 and the U.S. real GDP per person is $24,000. Mexico has annual growth in real GDP per person of 5 percent. Approximately how many years will it take Mexico to equal $24,000 of real GDP per person?

Correct Answer
verified

-Using the data in the table above, the growth rate of real GDP has

Correct Answer
verified

-Using the data in the table above, the growth rate of real GDP for 2008 is equal to

Correct Answer
verified

Real GDP equals $12 trillion and aggregate hours equals 300 billion hours. What does labor productivity equal?

Correct Answer
verified
Labor productivity is defined ...
View Answer

The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then

Correct Answer
verified

A nation's annual growth rate of real GDP per person is 2 percent. Its standard of living will

Correct Answer
verified

Economic freedom

Correct Answer
verified

Economic growth is slow or absent in some economies because those lack

Correct Answer
verified

A reason a nation faces diminishing returns along a production function is because

Correct Answer
verified

Choose which statement is most correct.

Correct Answer
verified

Economic growth is defined as equal to the increase in

Correct Answer
verified

Correct Answer
verified

a. The figure above shows the effect o...
View Answer

The following government policies will help achieve faster economic growth EXCEPT

Correct Answer
verified

Property rights

Correct Answer
verified

The productivity curve shifts upward when

Correct Answer
verified

The annual growth rate of an economy is 10 percent. The economy's GDP will double in about ________ years.

Correct Answer
verified

Exam 17: Potential Gdp and Economic Growth

At full employment, actual ________ equals ________.

Correct AnswerverifiedShow Answer

Real GDP can increase either because the quantity of labor increases or because labor productivity increases. What is the effect on the standard of living if real GDP increases because a. the quantity of labor increases? b. labor productivity increases?

Correct Answerverifieda. An increase in real GDP because the q...View AnswerShow Answer

As additional units of labor hours are employed, holding all other factors constant, along the production function,

Correct AnswerverifiedShow Answer

If Country A's real GDP grows at a rate of 14 percent per year, about how many years will it take for Country A's real GDP to double?

Correct AnswerverifiedShow Answer

Suppose Mexico's real GDP per person in 2008 is $6,000 and the U.S. real GDP per person is $24,000. Mexico has annual growth in real GDP per person of 5 percent. Approximately how many years will it take Mexico to equal $24,000 of real GDP per person?

Correct AnswerverifiedShow Answer

-Using the data in the table above, the growth rate of real GDP has

Correct AnswerverifiedShow Answer

-Using the data in the table above, the growth rate of real GDP for 2008 is equal to

Correct AnswerverifiedShow Answer

Real GDP equals $12 trillion and aggregate hours equals 300 billion hours. What does labor productivity equal?

Correct AnswerverifiedLabor productivity is defined ...View AnswerShow Answer

The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then

Correct AnswerverifiedShow Answer

A nation's annual growth rate of real GDP per person is 2 percent. Its standard of living will

Correct AnswerverifiedShow Answer

Economic freedom

Correct AnswerverifiedShow Answer

Economic growth is slow or absent in some economies because those lack

Correct AnswerverifiedShow Answer

A reason a nation faces diminishing returns along a production function is because

Correct AnswerverifiedShow Answer

Choose which statement is most correct.

Correct AnswerverifiedShow Answer

Economic growth is defined as equal to the increase in

Correct AnswerverifiedShow Answer

Correct Answerverified a. The figure above shows the effect o...View AnswerShow Answer

The following government policies will help achieve faster economic growth EXCEPT

Correct AnswerverifiedShow Answer

Property rights

Correct AnswerverifiedShow Answer

The productivity curve shifts upward when

Correct AnswerverifiedShow Answer

The annual growth rate of an economy is 10 percent. The economy's GDP will double in about ________ years.

Correct AnswerverifiedShow Answer

At full employment, actual equals .

Correct Answer
verified

Correct Answer
verified
a. An increase in real GDP because the q...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Labor productivity is defined ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

a. The figure above shows the effect o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified