Chapter 8: Economic Growth
if country A has a total input of labor hours of 20,000 hours and the productivity is $20, then real GDP in country A is:
$400,000
Generally, technological advance is generated by the discovery of new _____, which allows _____ to be combined in improved ways to increase output.
knowledge; resources
in any year, a nation's rel GDP depends on hours of work multiplied by:
labor productivity
identify the statements which exemplify how the supply, demand and efficiency factors are related
low spending on investment may cause insufficient spending and unemployment, inefficiency int he use of resources may translate into higher costs of goods and services and lower profits which may cause innovation, unemployment caused by insufficient total sending may lower the rate of new capital accumulation and delay expenditures on research
the core element of the productivity speedup is an explosion of entrepreneurship and innovation based on:
microprocessor (microchip)
sources of increasing returns
more specialized inputs, spreading of development, simultaneous consumption, network effects, learning by doing
continual economic growth and increases in living standards are driven by:
new innovation and new technologies
how the social-cultural-political environment of the united states has encouraged economic growth
no social or moral taboos on production, economic and political freedom, stable political system, positive attitude toward work, wealth creation is accepted as a desirable goal, positive attitude toward risk taking, protective policies for foreign trade
the expansion of total output relative to population results in which of the following?
rising wages and incomes and higher standards of living
ideally, a nation acquires funds for investment spending on plant and equipment by _____ income
saving
a new firm focused on creating and introducing a particular new product or employing a new production or distribution method is called a _____ firm
start-up
the growth promoting institutional structure that involves the ability of citizens to own land, houses and businesses is:
strong property rights
which of the following are growth-promoting institutional structures?
strong property rights, patents and copyrights, efficient financial institutions, literacy and widespread education, free trade, competitive market system
which of the following allow the economy to achieve a higher rate of economic growth?
stronger productivity growth and heightened global competition
_____ advancement and investment are related because they promote further economic investment in new machinery and equipment
technological
the five factors that together appear to explain changes in productivity growth rate
technological advances, the amount of capital each worker has to work with, education and training, economic of scale, and resource allocation
economic growth is made possible due to ______ that shifts the production possibilities curve outward
the factors of production
all of the following are reasons why the average worker in the united states today produces more than his or her counterpart a century ago EXCEPT:
the modern worker works longer hours
the rule 70 states that:
the number of years for a variable to double equals 70 divided by its annual growth rate
american;s positive attitude toward _____ and risk taking results in a supply of willing workers and innovative entrepreneurs
work
workers today are more productive than workers in the past because
workers now have more physical capital embodying better technology with which to work
The fraction of the _____-_____ population that is in the labor force is called the labor-force participation rate
working-age
economic growth is normally calculated as a percentage rate of growth per quarter of per _____
year
When an economy uses its resources to maximize people's well-being by producing a specific mix of goods and services, it is called:
allocative efficiency
an important source of increasing labor productivity is:
an increase in the ratio of capital to labor
the growth-promoting institutional structure that involves prices and profits serving as signals to guide production is called:
competitive market system
The purchase of the economy's expanding goods and services by household, businesses, and the government is known as the _____ factor
demand
reductions in per-unit production costs that result from increases in output levels lead to _____ of _____
economies of scale
literacy and widespread _____ is the growth-promoting institutional structure that contributes to a productive labor force
education
the two types of investment in human capital are on-the-job training and formal _____
education
two examples where the rule of 70 applies:
estimating how long it will take the price level (inflation) or savings account (interest) to double at various percentage rates of inflation or interest
households, businesses, and government must _____ their purchases of goods and services in order to provide a market for all the new output that can be potentially be produced
expand
the growth promoting institutional structure that involve banks and the stock and bond markets are called efficient _____ institutions
financial
if the capital stock remains _____ while labor ______, labor productivity will probably ______
fixed; decreases; increase
which growth-promoting institutional structure allows countries to specialize so that different types of output can be produced in the countries where they can be made most efficiently?
free trade
efficiency factor is when an economy must achieve economic efficiency as well as _____ _____ to reach its full production
full employment
the method used to identify the contribution to economic growth from increased capital, labor, and technological progress is known as:
growth accounting
Examples of infrastructure
highways and bridges, public transit systems, wastewater treatment facilities, water systems, airports, educational facilities
over time, when workers move from low-productivity to high-productivity employment, it is called:
improved resource allocation
a nations economic growth from one year to the next depends on its:
increase in labor inputs and increase in labor productivity
the "determinants" that directly affect the right of economic growth
increases in quantity and quality natural resources and human resources, increases in the supply (or stock) of capital goods, improvement in technology, total spending on goods and services, economic efficiency and full employment
identify the supply factors that are "determinants" of economic growth
increases in the supply of capital goods, increases in the quantity and quality of human resources and natural resources, improvements in technology
A situation in which a given percentage increase in the amount of inputs a firm uses leads to a even larger percentage increase in the amount of output the firm produces is called _____ returns
increasing
if a firm doubles the size of its plant, equipment and labor force and finds that its total output has tripled, they have experienced _____ returns
increasing
which of the following comprise technological advancement?
innovative production techniques, new managerial methods and new forms of business organization that improve the process of production
human capital refers to:
investment in education and training
Which of the following are used by economists to define and measure economic growth?
1. an increase in real GDP occurring over some period of time 2.an increase in real GDP per capita occurring over some period of time
two reasons for the reawakening of capitalism throughout the world.
1. collapse of socialist economies 2. success of the free market system
Increases in capital are important to productivity growth because _____ in the quantity and quality of capital make workers _____ productive
1. decreases; less 2. increases; more
the two supply-side elements of real GDP are:
1. increases in hours of work 2. increases in labor productivity
economic growth will _____ the burden of scarcity
reduce
when society increases its input of resources and raises the productivity of those resources it can increase real _____ and _____
output; income (wages)
the growth-promoting institutional structure that involves giving inventors and authors the exclusive rights to market and sell their creations are called _____ and _____.
patents; copyrights
public investment in U.S. infrastructure like roads and bridges promotes _____ investment in new factories and retail stores
private
When an economy uses its resources in the least costly way to produce goods and services it is called:
productive efficiency
the competitive market system tends to drive the economy toward _____ efficiency and ______ efficiency
productive; allocative
Real GDP divided by the size of the population is called
real GDP per capita
the best economic growth measurement to compare living standards is:
real GDP per capita
labor productivity is:
real output per hour of work
