Question 1

A condition necessary for a country to achieve economic growth is

Accepted Answer

A)  high tax rates so the government can purchase a lot of capital equipment.
B)  strict environmental regulations.
C)  economic freedom.
D)  government control of the banking system.
E)  democracy.

Question 2

Firms hire more labor as long as

Accepted Answer

A)  the real wage rate is less than the additional output the labor produces.
B)  the real wage rate is greater than the additional output the labor produces.
C)  extra labor will produce more output.
D)  the nominal wage rate exceeds the real wage rate.
E)  the nominal wage rate is less than the real wage rate.

Question 3

Real GDP in the country of Oz is growing at 5 percent and its population is growing at 2 percent. In the country of Lilliput, real GDP is growing at 4 percent and its population is growing at 0.5 percent. Thus,

Accepted Answer

A)  real GDP per person in Oz is growing at a faster rate than in Lilliput.
B)  real GDP per person in Lilliput is growing at a faster rate than in Oz.
C)  real GDP per person in Lilliput is growing at the same rate as in Oz.
D)  real GDP per person in Lilliput is growing at a rate that is not comparable to that in Oz.
E)  we need more information to determine if real GDP per person in Lilliput is growing faster or slower than real GDP per person in Oz.

Question 4

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 5

If a country experiences a real GDP growth rate of 6 percent, real GDP will double in

Accepted Answer

A)  10 years.
B)  11.67 years.
C)  14 years.
D)  17.5 years.
E)  16.67 years.

Question 6

Hong Kong is an example of an economy that

Accepted Answer

A)  does not experience economic growth because it is not a democracy.
B)  experiences economic growth in spite of the fact that is lacks democratic freedom.
C)  grows more slowly than other Asian countries because property rights are not valued.
D)  needs to promote investment so that economic growth can occur.
E)  lacks economic freedom and therefore experiences the slowest economic growth of all developed economies.

Question 7

Year  Real GDP  (millions of 2005 dollars)   Population  (millions of people)   Year 1 50010 Year 2 55011\begin{array} { l c c } 	ext { Year } & \begin{array} { c } 	ext { Real GDP } \	ext { (millions of 2005 dollars)  }\end{array} & \begin{array} { c } 	ext { Population } \	ext { (millions of people)  }\end{array} \\hline 	ext { Year 1 } & 500 & 10 \	ext { Year 2 } & 550 & 11 \\hline\end{array} Year  Year 1  Year 2 ​ Real GDP  (millions of 2005 dollars)  ​500550​ Population  (millions of people)  ​1011​​ 
-According to the data in the table above, real GDP grew at a rate of ________ between year 1 and year 2.

Accepted Answer

A)  10 percent
B)  1 percent
C)  50 percent
D)  5 percent
E)  55 percent

Question 8

The idea that potential GDP is the sustainable upper limit of production means that

Accepted Answer

A)  real GDP may be temporarily larger than potential GDP, but not permanently.
B)  the economy is operating environmentally efficiently.
C)  real GDP may be temporarily less than potential GDP.
D)  inflation must always occur in a growing economy.
E)  unemployment can only temporarily be zero in a healthy economy.

Question 9

The quantity of labor supplied increases as the real wage rises because

Accepted Answer

A)  higher real wages mean that nominal wages have increased.
B)  the opportunity cost of working increases.
C)  the quantity of labor demanded increases.
D)  the opportunity cost of leisure rises.
E)  labor force participation decreases so that only serious workers are left in the labor force.

Question 10

If real GDP in year 1 is $72 million and real GDP in year 2 is $87 million, then the growth rate of real GDP is

Accepted Answer

A)  15 percent.
B)  $15 million.
C)  20.8 percent.
D)  17 percent.
E)  83 percent.

Question 11

If capital per hour of labor decreases, real GDP per hour of labor

Accepted Answer

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

Question 12

A country will likely experience an increase in poverty if

Accepted Answer

A)  its population decreases over time.
B)  its real GDP growth rate decreases or slows over time.
C)  its inflation rate decreases or slows over time.
D)  its real GDP per person growth rate increases over time.
E)  it does not receive foreign aid.

Question 13

When all other influences on work plans remain the same, the

Accepted Answer

A)  lower the real wage rate, the smaller the quantity of labor supplied.
B)  higher the real wage rate, the greater the quantity of labor demanded.
C)  lower the real wage rate, the greater the quantity of labor supplied.
D)  lower the real wage rate, the smaller the quantity of labor demanded.
E)  lower the real wage rate, the larger the labor force participation.

Question 14

Labor productivity is defined as

Accepted Answer

A)  total real GDP.
B)  real GDP per person.
C)  total output multiplied by total hours of labor.
D)  real GDP per hour of labor.
E)  hours of work per person.

Question 15

One of the possible roles governments can play in sponsoring growth is to

Accepted Answer

A)  provide tax incentives to encourage saving.
B)  own more of the nation's resources in order to put them to use.
C)  close the nation to trade in order to protect its domestic producers.
D)  make decisions for its citizens as to the most suitable job.
E)  limit the use of property rights in order to decrease the harm they create.

Question 16

A key reason why some nations show little or no growth is

Accepted Answer

A)  overpopulation that overuses limited resources.
B)  lack of incentives to undertake actions toward growth.
C)  too much private property not directed by the government.
D)  patents in rich nations that keep technology only for the rich.
E)  too much international trade so that all economic growth spills over to foreigners.

Question 17

Approximately how long will it take Ethiopia to double its real GDP per person of $100 if its growth rate of real GDP per person is 0.9 percent?

Accepted Answer

A)  63 years
B)  77.7 years
C)  70 years
D)  109 years
E)  100 years.

Question 18

What is the effect on real GDP per person if labor productivity increases?
 What is the effect on the nation's standard of living?

Accepted Answer

Real GDP equals (aggregate hours)× (labo...

Question 19

Economic freedom provides the

Accepted Answer

A)  political system that encourages democracy.
B)  social system that supports families.
C)  production system that discourages property rights.
D)  incentive system that encourages growth-producing activities.
E)  necessary alternative to free markets.

Question 20

Which of the following ideas reflect the Monetarist macroeconomic model?
i. The Monetarist model supports the Classical model, in general.
ii. Decreases in the growth rate of the quantity of money trigger recessions.
iii. Government intervention is an appropriate tool to steady the economy.

Accepted Answer

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

Exam 17: Potential Gdp and Economic Growth

If a country experiences a real GDP growth rate of 6 percent, real GDP will double in

Correct Answer
verified

Hong Kong is an example of an economy that

Correct Answer
verified

Firms hire more labor as long as

Correct Answer
verified

A condition necessary for a country to achieve economic growth is

Correct Answer
verified

The quantity of labor supplied increases as the real wage rises because

Correct Answer
verified

The idea that potential GDP is the sustainable upper limit of production means that

Correct Answer
verified

If real GDP in year 1 is $72 million and real GDP in year 2 is $87 million, then the growth rate of real GDP is

Correct Answer
verified

A key reason why some nations show little or no growth is

Correct Answer
verified

A country will likely experience an increase in poverty if

Correct Answer
verified

If capital per hour of labor decreases, real GDP per hour of labor

Correct Answer
verified

When all other influences on work plans remain the same, the

Correct Answer
verified

What is the effect on real GDP per person if labor productivity increases? What is the effect on the nation's standard of living?

Correct Answer
verified
Real GDP equals (aggregate hours)× (labo...
View Answer

Approximately how long will it take Ethiopia to double its real GDP per person of $100 if its growth rate of real GDP per person is 0.9 percent?

Correct Answer
verified

Labor productivity is defined as

Correct Answer
verified

Economic freedom provides the

Correct Answer
verified

One of the possible roles governments can play in sponsoring growth is to

Correct Answer
verified

Real GDP in the country of Oz is growing at 5 percent and its population is growing at 2 percent. In the country of Lilliput, real GDP is growing at 4 percent and its population is growing at 0.5 percent. Thus,

Correct Answer
verified

Which of the following ideas reflect the Monetarist macroeconomic model? i. The Monetarist model supports the Classical model, in general. ii. Decreases in the growth rate of the quantity of money trigger recessions. iii. Government intervention is an appropriate tool to steady the economy.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 17: Potential Gdp and Economic Growth

If a country experiences a real GDP growth rate of 6 percent, real GDP will double in

Correct AnswerverifiedShow Answer

Hong Kong is an example of an economy that

Correct AnswerverifiedShow Answer

Firms hire more labor as long as

Correct AnswerverifiedShow Answer

A condition necessary for a country to achieve economic growth is

Correct AnswerverifiedShow Answer

The quantity of labor supplied increases as the real wage rises because

Correct AnswerverifiedShow Answer

The idea that potential GDP is the sustainable upper limit of production means that

Correct AnswerverifiedShow Answer

If real GDP in year 1 is $72 million and real GDP in year 2 is $87 million, then the growth rate of real GDP is

Correct AnswerverifiedShow Answer

A key reason why some nations show little or no growth is

Correct AnswerverifiedShow Answer

A country will likely experience an increase in poverty if

Correct AnswerverifiedShow Answer

If capital per hour of labor decreases, real GDP per hour of labor

Correct AnswerverifiedShow Answer

When all other influences on work plans remain the same, the

Correct AnswerverifiedShow Answer

What is the effect on real GDP per person if labor productivity increases? What is the effect on the nation's standard of living?

Correct AnswerverifiedReal GDP equals (aggregate hours)× (labo...View AnswerShow Answer

Approximately how long will it take Ethiopia to double its real GDP per person of $100 if its growth rate of real GDP per person is 0.9 percent?

Correct AnswerverifiedShow Answer

Labor productivity is defined as

Correct AnswerverifiedShow Answer

Economic freedom provides the

Correct AnswerverifiedShow Answer

One of the possible roles governments can play in sponsoring growth is to

Correct AnswerverifiedShow Answer

Real GDP in the country of Oz is growing at 5 percent and its population is growing at 2 percent. In the country of Lilliput, real GDP is growing at 4 percent and its population is growing at 0.5 percent. Thus,

Correct AnswerverifiedShow Answer

Which of the following ideas reflect the Monetarist macroeconomic model? i. The Monetarist model supports the Classical model, in general. ii. Decreases in the growth rate of the quantity of money trigger recessions. iii. Government intervention is an appropriate tool to steady the economy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Real GDP equals (aggregate hours)× (labo...
View Answer

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