Question 1

According to the rule of 70, if GDP per person is growing at a rate of roughly 1.5%, approximately how many years will it take for average income to double?
A)47 years
B)20 years
C)70 years
D)23 years

Accepted Answer

The rule of 70 is a way to estimate the number of years it takes for a quantity to double, given a specific annual growth rate. It is calculated by dividing 70 by the annual growth rate. In this case, 70 / 1.5 ≈ 46.67, which rounds to approximately 47 years.

Question 2

According to the rule of 70, if GDP per person is growing at a rate of roughly 7.9%, approximately how many years will it take for average income to double?
A)61 years
B)11 years
C)70 years
D)9 years

Accepted Answer

The answer of According to the rule of 70, if...

Question 3

According to the rule of 70, if GDP per person is growing at a rate of roughly 3.4%, approximately how many years will it take for average income to double?
A)49 years
B)52 years
C)21 years
D)13 years

Accepted Answer

The rule of 70 states that the number of years it takes for a variable to double is approximately 70 divided by the annual growth rate of that variable. In this case, 70 divided by 3.4 is approximately 20.6 years, which is rounded up to 21 years. Therefore, it would take approximately 21 years for average income to double at a growth rate of 3.4%.

Question 4

According to the rule of 70, if GDP per person is growing at a rate of roughly 4%, approximately how many years will it take for average income to double?
A)25 years
B)18 years
C)53 years
D)280 years

Accepted Answer

The rule of 70 states that to find the approximate number of years for a variable to double, divide 70 by the annual growth rate. So, if GDP per person is growing at a rate of 4%, it will take approximately 17.5 years (70/4) for average income to double. The closest choice is B, which states 18 years.

Question 5

A recent World Bank study found that in South Africa, the top 1% of the population have about 71% of the wealth in the economy, and the lowest 60% of the population have about 7% of the wealth in the economy. What shortcoming of GDP measurement does this finding reflect?
A)Nonmarket activities are excluded.
B)GDP ignores income distribution.
C)The shadow economy is missing.
D)Leisure does not count.

Accepted Answer

This finding reflects the shortcoming of GDP measurement that it ignores income distribution. While GDP measures the total economic output of a country, it does not take into account how that output is distributed among the population. The concentration of wealth among the top 1% in South Africa highlights the significant income inequality in the country that cannot be captured by GDP alone.

Question 6

A new tannery opens in town. Although the tannery brings many new jobs, it is also dumping waste into the river. What shortcoming of GDP measurement does this reflect?
A)Nonmarket activities are excluded.
B)GDP ignores income distribution.
C)The shadow economy is missing.
D)Environmental degradation is not counted.

Accepted Answer

The fact that the tannery is dumping waste into the river reflects the shortcoming that environmental degradation is not counted in GDP measurement. This is because GDP only measures the market value of goods and services produced, and it does not take into account negative externalities such as pollution.

Question 7

A person opts for the solitude of the wilderness and survives entirely by hunting, fishing, and growing food. What shortcoming of GDP measurement does this finding reflect?
A)Nonmarket activities are excluded.
B)GDP ignores income distribution.
C)The shadow economy is missing.
D)Environmental degradation is counted.

Accepted Answer

The person's activities involve nonmarket activities such as hunting and fishing, which are excluded from GDP measurement.

Question 8

A city experiences a rise in economic growth due to improvements in technology, but at the same time, there is increasing consumption of illegal drugs. What shortcoming of GDP measurement does this finding reflect?
A)Nonmarket activities are excluded.
B)GDP ignores income distribution.
C)The shadow economy is missing.
D)Environmental degradation is counted.

Accepted Answer

The increasing consumption of illegal drugs represents economic activity that is part of the shadow economy, which is not accounted for in standard GDP measurement. This reflects a shortcoming of GDP measurement in not capturing all economic activity within a given economy.

Question 9

Which of the following is a scaled number?
A)the sum of all expenditures in the economy
B)GDP per capita
C)the GDP of the United States
D)the sum of all incomes earned in the economy

Accepted Answer

A scaled number is a numerical value that has been adjusted or normalized to account for differences that might influence interpretation or comparison. GDP per capita is a scaled number because it divides the GDP by the population, giving a measure of the economic output per person, and it accounts for differences in the size of the population. The other options are absolute measures that do not consider differences in the size of the population or the distribution of income/expenditures, and they are not scaled.

Question 10

Which of the following is a scaled number?
A)government budget deficit as a percentage of GDP
B)the country's national debt
C)total tax revenues in the economy
D)the sum of all incomes earned in the economy

Accepted Answer

A scaled number is a measurement that has been adjusted or standardized in some way to make it easier to compare with other numbers. The government budget deficit as a percentage of GDP is a scaled number because it is a ratio that compares the deficit (which is a dollar amount) to the size of the overall economy (which is also measured in dollars). This allows for easier comparison across different time periods and countries. The other options are not scaled numbers because they are absolute values, not ratios or percentages.

Question 11

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:
A)1,250.
B)125.
C)1.25.
D)12.5.

Accepted Answer

To convert the given population number from millions to billions, we need to divide it by 1,000. So, 1,250,000,000 ÷ 1,000 = 1,250,000,000,000/1,000,000,000 = 1.25 billion. Therefore, the answer is C.

Question 12

In 2018, Luxembourg's GDP was about $65 billion. This number, in trillions, is:
A)6.5.
B)650.
C)0.65.
D)0.065.

Accepted Answer

To convert $65 billion to trillions, you divide by 1,000 (since 1 trillion is 1,000 billion), resulting in 0.065 trillions.

Question 13

This question has two parts.
(a) Draw and label a circular flow diagram.
(b) What are the key lessons learned from a circular flow diagram?

Accepted Answer

The answer of This question has two parts.
(a) Draw and...

Question 14

Define gross domestic product (GDP), and explain each part of the definition.

Accepted Answer

The answer of Define gross domestic product (GDP), and explain...

Question 15

If India's GDP is approximately $2.597 trillion, and the population is 1.339 billion, what is the approximate GDP per person?

Accepted Answer

The answer of If India's GDP is approximately $2.597 trillion,...

Question 16

If an economy's GDP is $3.179 trillion and the population is 25 million, what is the approximate GDP per person?

Accepted Answer

The answer of If an economy's GDP is $3.179 trillion...

Question 17

How do these transactions affect GDP for the current year?
(a) A manufacturer pays its workers $7.5 million as wages.
(b) Stockholders make $34 million worth of capital gains in two months.
(c) The local hot sauce factory purchases and uses $50,000 worth of habanero peppers and $8,000 worth of salt and spices to make habanero sauce, which is then sold for $122,000.

Accepted Answer

The answer of How do these transactions affect GDP for...

Question 18

How do each of these transactions below affect GDP for the current year?
(a) A stay-at-home parent returns to work.
(b) A stay-at-home parent purchases $70 worth of groceries, buys used books worth $40, and makes capital gains of $3,200.
(c) A worker is paid under the table and does not report the payments to the IRS.

Accepted Answer

The answer of How do each of these transactions below...

Question 19

What are four limitations of GDP?

Accepted Answer

The answer of What are four limitations of GDP?...

Question 20

Is nonmarket production the same as the shadow economy? Explain.

Accepted Answer

The answer of Is nonmarket production the same as the...

Quiz 21: Sizing up the Economy Using Gdp

According to the rule of 70, if GDP per person is growing at a rate of roughly 1.5%, approximately how many years will it take for average income to double?

According to the rule of 70, if GDP per person is growing at a rate of roughly 7.9%, approximately how many years will it take for average income to double?

According to the rule of 70, if GDP per person is growing at a rate of roughly 3.4%, approximately how many years will it take for average income to double?

According to the rule of 70, if GDP per person is growing at a rate of roughly 4%, approximately how many years will it take for average income to double?

A recent World Bank study found that in South Africa, the top 1% of the population have about 71% of the wealth in the economy, and the lowest 60% of the population have about 7% of the wealth in the economy. What shortcoming of GDP measurement does this finding reflect?

A new tannery opens in town. Although the tannery brings many new jobs, it is also dumping waste into the river. What shortcoming of GDP measurement does this reflect?

A person opts for the solitude of the wilderness and survives entirely by hunting, fishing, and growing food. What shortcoming of GDP measurement does this finding reflect?

A city experiences a rise in economic growth due to improvements in technology, but at the same time, there is increasing consumption of illegal drugs. What shortcoming of GDP measurement does this finding reflect?

Which of the following is a scaled number?

Which of the following is a scaled number?

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

In 2018, Luxembourg's GDP was about $65 billion. This number, in trillions, is:

This question has two parts. (a) Draw and label a circular flow diagram. (b) What are the key lessons learned from a circular flow diagram?

Define gross domestic product (GDP), and explain each part of the definition.

If India's GDP is approximately $2.597 trillion, and the population is 1.339 billion, what is the approximate GDP per person?

If an economy's GDP is $3.179 trillion and the population is 25 million, what is the approximate GDP per person?

What are four limitations of GDP?

Is nonmarket production the same as the shadow economy? Explain.