Question 1

-Based on the production function in the above figure,which of the following is an attainable combination of labor and real GDP?
I.300 billion hours of labor and real GDP of $20 trillion
Ii.300 billion hours of labor and real GDP of $8 trillion
Iii.100 billion hours of labor and real GDP of $12 trillion

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  ii and iii
E)  i and ii

Question 2

If the stock of physical capital (that is machinery,equipment,etc. ) and human capital remain the same and the population increases,then

Accepted Answer

A)  labor productivity will increase.
B)  labor productivity will decrease.
C)  the standard of living will increase.
D)  the new labor will be more productive.
E)  real GDP decreases.

Question 3

The production function is a relationship between the amount of labor employed and

Accepted Answer

A)  the maximum quantity of real GDP that can be produced.
B)  the maximum quantity of nominal GDP that can be produced.
C)  the wage rate paid to the workers.
D)  all other resources at different levels of employment.
E)  the amount of labor workers supply.

Question 4

Explain how the real wage and the extra output produced by each worker determine the quantity of labor demanded by a firm.

Accepted Answer

The firm compares the cost of hiring an ...

Question 5

Explain the productivity curve and how the components interact.

Accepted Answer

The productivity curve is a relationship...

Question 6

The labor market is in equilibrium whenever

Accepted Answer

A)  the nominal wage rate is decreasing.
B)  the nominal wage rate is increasing.
C)  the nominal wage rate is not changing.
D)  the real wage rate is increasing.
E)  the quantity of labor demanded equals the quantity of labor supplied.

Question 7

Suppose an economist stated that Brazil had achieved its potential GDP 2013.This would imply that at this level of real GDP,Brazil experienced

Accepted Answer

A)  peak in its business cycle in 2013.
B)  unemployment equal to zero.
C)  inflation equal to zero.
D)  full employment.
E)  a negative Okun Gap.

Question 8

-Using the data in the table above,the growth rate of real GDP for 2010 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 9

Why are the governments of developed countries concerned about the quality of education in their countries? What effect does education play in determining the country's economic growth rate and its standard of living? Why does it have this effect?

Accepted Answer

Improving the quality of education is an...

Question 10

-The figure above shows the U.S.supply of labor curve.An increase in the income tax rate leads to a

Accepted Answer

A)  rightward shift of the supply of labor curve.
B)  movement upward along the supply of labor curve from a point such as C to a point such as B.
C)  movement downward along the supply of labor curve from a point such as A to a point such as B.
D)  leftward shift of the supply of labor curve.
E)  None of the above answers is correct because there is no change in the supply of labor curve.

Question 11

If Country A's real GDP per person is growing at 6 percent and Country B's real GDP per person is growing at 3 percent,then

Accepted Answer

A)  the standard of living is higher in Country A.
B)  the standard of living is higher in Country B.
C)  the standard of living is growing more rapidly in Country A.
D)  We cannot say whose standard of living is growing more rapidly without knowing the population growth rate.
E)  We cannot say whose standard of living is growing more rapidly without knowing the growth rate of real GDP.

Question 12

The Monetarist model expands the Keynesian model by proposing that

Accepted Answer

A)  decreases in the quantity of money lead to higher interest rates.
B)  the government should lower taxes promote economic growth.
C)  decreases in tax rates generate higher consumption.
D)  decreases in the growth rate of the quantity of money trigger expansions by controlling inflation.
E)  markets should be left alone to determine the optimal outcome.

Question 13

If capital per hour of labor increases,GDP per hour of labor

Accepted Answer

A)  decreases for a given level of technology.
B)  increases because the level of technology advances.
C)  increases for a given level of technology.
D)  decreases because the level of technology decreases.
E)  changes only if technology also advances.

Question 14

If the growth rate of population is greater than a nation's growth rate of real GDP,then its real GDP per person

Accepted Answer

A)  falls.
B)  rises.
C)  does not change.
D)  might rise,fall,or not change.
E)  cannot be measured.

Question 15

A country's potential GDP is determined,in part,by

Accepted Answer

A)  the equilibrium price level.
B)  demand and supply in the labor market.
C)  the Lucas Wedge.
D)  actual real GDP.
E)  the Okun Gap.

Question 16

Which of the following would have the biggest payoff?

Accepted Answer

A)  restoring real GDP growth to its 1960s growth rate
B)  eliminating the Okun Gap
C)  increasing the Okun Gap
D)  making the Okun Gap equal the Lucas Wedge
E)  increasing the Lucas Wedge

Question 17

According to the law of diminishing returns,an additional unit of

Accepted Answer

A)  capital produces more output than an additional unit of labor.
B)  labor decreases output.
C)  capital produces the same amount of output as an additional unit of labor.
D)  capital produces more output than the previous unit.
E)  capital produces less output than the previous unit.

Question 18

Sustained increases in the standard of living depend on

Accepted Answer

A)  increases in the quantity of labor.
B)  increases in the population.
C)  increases in aggregate hours.
D)  increases in labor productivity.
E)  decreases in labor productivity.

Question 19

Expansion of a nation's human capital can be achieved through

Accepted Answer

A)  education and training.
B)  education and saving.
C)  education and technology improvements.
D)  education only.
E)  nothing because human capital is determined by the skills people are born with.

Question 20

The idea of "diminishing returns" means that real GDP ________ as the quantity of labor increases.

Accepted Answer

A)  increases at a slower rate
B)  decreases at a slower rate
C)  increases at a faster rate
D)  decreases at a faster rate
E)  does not change

Exam 17: Potential Gdp and Economic Growth

If Country A's real GDP per person is growing at 6 percent and Country B's real GDP per person is growing at 3 percent,then

Correct Answer
verified

The Monetarist model expands the Keynesian model by proposing that

Correct Answer
verified

The production function is a relationship between the amount of labor employed and

Correct Answer
verified

Suppose an economist stated that Brazil had achieved its potential GDP 2013.This would imply that at this level of real GDP,Brazil experienced

Correct Answer
verified

Which of the following would have the biggest payoff?

Correct Answer
verified

-The figure above shows the U.S.supply of labor curve.An increase in the income tax rate leads to a

Correct Answer
verified

Explain the productivity curve and how the components interact.

Correct Answer
verified
The productivity curve is a relationship...
View Answer

The idea of "diminishing returns" means that real GDP ________ as the quantity of labor increases.

Correct Answer
verified

If the stock of physical capital (that is machinery,equipment,etc. ) and human capital remain the same and the population increases,then

Correct Answer
verified

The labor market is in equilibrium whenever

Correct Answer
verified

If the growth rate of population is greater than a nation's growth rate of real GDP,then its real GDP per person

Correct Answer
verified

Sustained increases in the standard of living depend on

Correct Answer
verified

A country's potential GDP is determined,in part,by

Correct Answer
verified

Expansion of a nation's human capital can be achieved through

Correct Answer
verified

-Using the data in the table above,the growth rate of real GDP for 2010 is equal to

Correct Answer
verified

If capital per hour of labor increases,GDP per hour of labor

Correct Answer
verified

According to the law of diminishing returns,an additional unit of

Correct Answer
verified

Explain how the real wage and the extra output produced by each worker determine the quantity of labor demanded by a firm.

Correct Answer
verified
The firm compares the cost of hiring an ...
View Answer

Correct Answer
verified

Why are the governments of developed countries concerned about the quality of education in their countries? What effect does education play in determining the country's economic growth rate and its standard of living? Why does it have this effect?

Correct Answer
verified
Improving the quality of education is an...
View Answer

Exam 17: Potential Gdp and Economic Growth

If Country A's real GDP per person is growing at 6 percent and Country B's real GDP per person is growing at 3 percent,then

Correct AnswerverifiedShow Answer

The Monetarist model expands the Keynesian model by proposing that

Correct AnswerverifiedShow Answer

The production function is a relationship between the amount of labor employed and

Correct AnswerverifiedShow Answer

Suppose an economist stated that Brazil had achieved its potential GDP 2013.This would imply that at this level of real GDP,Brazil experienced

Correct AnswerverifiedShow Answer

Which of the following would have the biggest payoff?

Correct AnswerverifiedShow Answer

-The figure above shows the U.S.supply of labor curve.An increase in the income tax rate leads to a

Correct AnswerverifiedShow Answer

Explain the productivity curve and how the components interact.

Correct AnswerverifiedThe productivity curve is a relationship...View AnswerShow Answer

The idea of "diminishing returns" means that real GDP ________ as the quantity of labor increases.

Correct AnswerverifiedShow Answer

If the stock of physical capital (that is machinery,equipment,etc. ) and human capital remain the same and the population increases,then

Correct AnswerverifiedShow Answer

The labor market is in equilibrium whenever

Correct AnswerverifiedShow Answer

If the growth rate of population is greater than a nation's growth rate of real GDP,then its real GDP per person

Correct AnswerverifiedShow Answer

Sustained increases in the standard of living depend on

Correct AnswerverifiedShow Answer

A country's potential GDP is determined,in part,by

Correct AnswerverifiedShow Answer

Expansion of a nation's human capital can be achieved through

Correct AnswerverifiedShow Answer

-Using the data in the table above,the growth rate of real GDP for 2010 is equal to

Correct AnswerverifiedShow Answer

If capital per hour of labor increases,GDP per hour of labor

Correct AnswerverifiedShow Answer

According to the law of diminishing returns,an additional unit of

Correct AnswerverifiedShow Answer

Explain how the real wage and the extra output produced by each worker determine the quantity of labor demanded by a firm.

Correct AnswerverifiedThe firm compares the cost of hiring an ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Why are the governments of developed countries concerned about the quality of education in their countries? What effect does education play in determining the country's economic growth rate and its standard of living? Why does it have this effect?

Correct AnswerverifiedImproving the quality of education is an...View AnswerShow Answer

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verified
The productivity curve is a relationship...
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Correct Answer
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Correct Answer
verified
The firm compares the cost of hiring an ...
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Correct Answer
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Correct Answer
verified
Improving the quality of education is an...
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