Deck 28: Economic Growth

Question 1

Real per capita GDP

A)grows at approximately the same rate for all countries.
B)was much more equal across nations in 1820 than it is today.
C)has been about 20 times higher in the richer nations than the poorer nations for about 2,000 years.
D)grows much faster in "leader countries" than in "follower countries."

Answer 1

was much more equal across nations in 1820 than it is today.

Question 2

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.

Answer 2

either real GDP or real GDP per capita.

Question 3

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.Topic: Is Growth Desirable and Sustainable?

Answer 3

lessens the burden of scarcity.

Question 4

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

Question 5

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.

Question 6

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.

Question 7

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.

Question 8

Given the annual rate of economic growth, the "rule of 70" allows one to

A)determine the accompanying rate of inflation.
B)calculate the size of the GDP gap.
C)calculate the number of years required for real GDP to double.
D)determine the growth rate of per capita GDP.

Question 9

Under what circumstances do rates of economic growth understate the growth of economic well-being?

A)Economic growth has occurred because of the 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.

Question 10

The number of years required for real GDP to double can be found by

A)dividing the annual growth rate by 0.07.
B)multiplying the annual growth rate by 70.
C)dividing 70 by the annual growth rate.
D)adding 14 to annual growth rate.

Question 11

Economic historians date the start of the Industrial Revolution around the year 1776, when James Watt

A)built the first factory for mass production.
B)invented the steam locomotive.
C)successfully lobbied British Parliament for the enactment of patent legislation to protect new inventions.
D)invented and built a more powerful and efficient steam engine.

Question 12

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.

Question 13

Between 1950 and 2015, U.S.real GDP grew at an average annual rate of about

A)2.0 percent.
B)3.1 percent.
C)5.1 percent.
D)8.6 percent.

Question 14

If the economy's real GDP doubles in 18 years, we can

A)not say anything about the average annual rate of growth.
B)conclude that its average annual rate of growth is about 5.5 percent.
C)conclude that its average annual rate of growth is about 2.4 percent.
D)conclude that its average annual rate of growth is about 3.9 percent.

Question 15

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.

Question 16

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 craftspeople.
D)all of these.

Question 17

Between 1950 and 2015, U.S.real GDP per capita grew at an average annual rate of about

A)5.5 percent.
B)4.2 percent.
C)3.2 percent.
D)2.0 percent.

Question 18

If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately

A)22 years.
B)20 years.
C)14 years.
D)8 years.

Question 19

At an annual growth rate of 7 percent, real GDP will double in about

A)11½ years.
B)10 years.
C)13½ years.
D)9 years.

Question 20

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.

Question 21

Which of the following economic regions has experienced the most growth in real GDP per capita since 1820?

A)Japan
B)United States
C)Latin America
D)Western Europe

Question 22

Which of the following is not a supply factor in economic growth?

A)the stock of capital
B)technological advance
C)the size and quality of the labor force
D)aggregate expenditures of households, businesses, and government

Question 23

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

Question 24

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.

Question 25

Which of the following economic regions has experienced the least growth in real GDP per capita since 1820?

A)Africa
B)Asia excluding Japan
C)Latin America
D)Western Europe

Question 26

Economic growth rates in follower countries

A)tend to be lower than in leader countries because labor forces in follower countries are too small.
B)tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs.
C)will never bring real GDP per capita up to the same levels as in leader countries, even if follower growth rates are greater than those in leader countries.
D)typically average about 2 percent per year.

Question 27

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.

Question 28

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.

Question 29

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

Question 30

Increases in the quantity and quality of human resources.Use the accompanying list to answer the following question.As distinct from the supply factors and demand factor of economic growth, the efficiency factor(s) of economic growth is (are)

A)1 only.
B)4 only.
C)1 and 3 only.
D)3 only.

Question 31

Based on the annual number of hours worked per capita, labor supply in the United States exceeds that of France by about percent.

A)20
B)34
C)51
D)58

Question 32

Increases in the quantity and quality of human resources.Which set of items in the accompanying list would shift an economy's production possibilities curve outward?

A)2, 5, and 6 only
B)2, 4, 5, and 6 only
C)1, 2, 5, and 6 only
D)1, 3, and 4 only

Question 33

Real GDP per capita in the United States (as of 2010) exceeds that of France primarily because

A)the United States had higher annual rates of growth than France from 1960 through 2010.
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 14 percent more hours worked per year.
D)European Union rules severely limit France's access to technologies developed outside the region.

Question 34

Increases in the quantity and quality of human resources.Use the accompanying list to answer the following question.As distinct from the supply factors and demand factor of economic growth, the efficiency factor(s) of economic growth is (are)

A)1 only.
B)4 only.
C)1 and 3 only.
D)3 only.

Question 35

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.

Question 36

Increases in the quantity and quality of human resources.Use the accompanying list to answer the following question.As distinct from the demand and efficiency factors of economic growth, the supply factors of economic growth are

A)2, 5, and 6 only.
B)2, 4, 5, and 6 only.
C)1, 2, 5, and 6 only.
D)1, 3, and 4 only.

Question 37

In 1998, living standards in the United States were nearly times higher than those in Africa.

A)3
B)8
C)14
D)20

Question 38

Free trade

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.

Question 39

Which of the following statements is most accurate about the prospects for poorer ("follower") countries catching up with richer ("leader") countries?

A)Catching up is unlikely to occur because their growth rates are the same on average.
B)Catching up is unlikely to occur because richer countries tend to grow at a faster rate.
C)Catching up is possible, but only if growth rates in leader countries fall to zero or become negative.
D)Catching up is possible, as "follower countries" tend to grow faster than "leader countries."

Question 40

Increases in the quantity and quality of human resources.Which set of items in the accompanying list would move an economy from a point inside its production possibilities curve to a point on its production possibilities curve?

A)1, 2, 5, and 6 only
B)3 and 4 only
C)3 only
D)1, 3, and 4 only

Question 41

Which of the following statements is correct?

A)Between 1953 and 2015, all growth in U.S.real GDP can be attributed to increases in labor productivity.
B)Between 1953 and 2015, increases in labor productivity account for more of the growth in U.S.real GDP than do increases in the quantity of labor.
C)Between 1953 and 2015, increases in the quantity of labor account for more of the growth in U.S.real GDP than do increases in labor productivity.
D)Between 1953 and 2015, increases in labor productivity and increases in the quantity of labor contributed equally to the growth in U.S.real GDP.

Question 42

Suppose that an economy's labor productivity and total worker-hours each grew by 4 percent between year 1 and year 2.We could conclude that this economy's

A)real GDP also increased by 4 percent.
B)real GDP remained constant.
C)production possibilities curve shifted outward.
D)capital stock increased by 4 percent.

Question 43

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)achieving 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.

Question 44

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.

Question 45

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.

Question 46

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.

Question 47

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 workweek
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

Question 48

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

Question 49

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.

Question 50

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.

Question 51

Suppose that an economy's labor productivity and total worker-hours each grew by 3 percent between year 1 and year 2.We could conclude that this economy's

A)real GDP remained constant.
B)capital stock increased by 3 percent.
C)production possibilities curve shifted inward.
D)production possibilities curve shifted outward.

Question 52

An outward shift of a nation's production possibilities curve

A)ensures the nation of an increase in real GDP per capita.
B)ensures the nation of an increase in real GDP, but not of real GDP per capita.
C)ensures a nation neither of an increase in real GDP nor of an increase in real GDP per capita.
D)ensures a nation of an increase in both real GDP and real GDP per capita.

Question 53

Between 2015 and 2026, productivity growth is expected to account for about percent of the growth of real GDP in the United States.

A)62
B)40
C)92
D)88

Question 54

Suppose total output (real GDP) is $4,000 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.

Question 55

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.

Question 56

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 $5,000.
D)cannot be calculated.

Question 57

Which of the following is correct?

A)Total output = labor productivity/worker-hours.
B)Labor productivity = worker-hours/total output.
C)Total output = worker-hours × labor productivity.
D)Worker-hours = labor productivity × total output.

Question 58

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

Question 59

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.

Question 60

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 $0.50.
D)nominal GDP must be between $10,000 and $20,000.

Question 61

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.

Question 62

The fundamental invention underpinning the 1995-2010 rise in the average rate of productivity growth is the

A)microchip.
B)fuel cell.
C)Internet.
D)personal computer.

Question 63

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.

Question 64

The annual growth of U.S.labor productivity

A)was greater between 1973 and 1995 than between 1995 and 2010.
B)was greater between 1995 and 2010 than between 1973 and 1995.
C)was negative in the late 1990s.
D)averaged nearly 5 percent in the 1990s.

Question 65

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.

Question 66

Other things equal, which of the following would increase labor productivity the most?

A)The stock of real capital and inputs of labor increase proportionately.
B)The increase in the stock of real capital exceeds the increase in inputs of labor.
C)The increase in inputs of labor exceeds the increase in the stock of real capital.
D)Inputs of labor increase and the stock of real capital remains constant.

Question 67

If the growth trend of labor productivity is 3 percent per year, the number of years that it will take for the standard of living to double will be about

A)15 years.
B)17 years.
C)20 years.
D)23 years.

Question 68

What percentage of the U.S.adult population has at least a high school education (as of 2015)?

A)31 percent
B)41 percent
C)88 percent
D)95 percent

Question 69

If the secular trend of labor productivity rises from 2 percent per year to 4 percent, the number of years that it will take for the standard of living to double will decline by about

A)5.2 years.
B)10.1 years.
C)17.5 years.
D)23.8 years.

Question 70

All of the following are sources of increasing returns and economies of scale except

A)network effects.
B)the multiplier effect.
C)learning by doing.
D)simultaneous consumption.

Question 71

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

Question 72

The period in the U.S.economy from 1995 to 2010 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.

Question 73

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.

Question 74

All of the following are economic implications of the 1995-2010 rise in the average rate of productivity growth except

A)a lower natural rate of unemployment.
B)larger outward shifts of the economy's production possibilities curve.
C)an end to the business cycle.
D)a greater rate of economic growth.

Question 75

Globally, on average test scores of eighth-grade math and science students, the U.S.ranks (as of 2011)

A)5th and 7th, respectively.
B)1st and 1st, respectively.
C)9th and 10th, respectively.
D)8th and 6th, respectively.

Question 76

What percentage of the U.S.adult population has a college or post-college education (as of 2015)?

A)8 percent
B)33 percent
C)41 percent
D)88 percent

Question 77

Which of the following explanations is consistent with the decline in productivity growth that followed the Great Recession?

A)High levels of debt incurred prior to the Great Recession have hindered firms' ability to make productivity-enhancing investments.
B)The Federal Reserve kept interest rates too high, stifling investments that would increase productivity.
C)High levels of inflation following the Great Recession created too much uncertainty for firms, discouraging productivity-enhancing investments.
D)Consumer demand following the Great Recession exceeded firms' capacity to satisfy that demand.

Question 78

Economies of scale refers 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.

Question 79

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.

Question 80

The percentage of U.S.adults with a high school education has

A)remained constant since the 1960s.
B)risen from 8 percent in 1960 to 33 percent in 2015.
C)risen to over 90 percent in the 21st century.
D)risen from 41 percent in 1960 to 88 percent in 2015.