ECON 201 Test 2

Scenario 10-1 Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I= $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion Refer to Scenario 10-1. Based on the information above, what is the level of private saving in the economy? Select one: A. $3 trillion B. $4 trillion C. $5 trillion D. $8 trillion

A. $3 trillion

Refer to Figure 11-3. Based on the "catch-up line" drawn above, poorer countries are more likely to be at a point like ________, where growth in GDP is relatively ________, while richer countries are more likely to be at a point like ________, where growth in GDP is relatively ________. Select one: A. A; high; B; low Correct B. A; low; B; high C. B; high; A; low D. B; low; A; high

A. A; high; B; low Correct

The best measure of a country's standard of living is Select one: A. GDP per capita. B. GDP per labor hour. C. total nominal GDP. D. GDP per unit of capital.

A. GDP per capita.

Which of the following is not a reason why the U.S. economy has been more stable since 1950? Select one: A. Goods have become a larger fraction of GDP and services have become a smaller fraction of GDP. B. Unemployment insurance and other government programs curtail the decline in spending that occurs during a recession. C. Services have become a larger fraction of GDP and goods have become a smaller fraction of GDP. D. The government has actively pursued policy to combat recessions and prolong expansions.

A. Goods have become a larger fraction of GDP and services have become a smaller fraction of GDP.

Refer to Figure 10-2. Which of the following is consistent with the graph depicted above? Select one: A. New government regulations decrease the profitability of new investment. B. There is a shift from an income tax to a consumption tax. C. The government runs a budget surplus. D. An expected expansion increases the profitability of new investment.

A. New government regulations decrease the profitability of new investment.

In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) Select one: A. T - G - TR B. Y - G - T C. Y - C - T + TR D. Y - C - T

A. T - G - TR

There is a government budget surplus if Select one: A. T - TR > G. B. G > TR. C. G > T. D. TR < T.

A. T - TR > G.

In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) Select one: A. Y - C - G B. Y - C - T C. Y - T + TR D. C + G -T

A. Y - C - G

If consumers decide to be more frugal and save more out of their income, then this will cause Select one: A. a shift in the supply curve for loanable funds to the right. B. a movement to the left along the supply curve for loanable funds. C. a shift in the supply curve for loanable funds to the left. D. a movement to the right along the supply curve for loanable funds.

A. a shift in the supply curve for loanable funds to the right.

The period of expansion ends with a ________ and the period of recession ends with a ________. A. business cycle peak; business cycle trough B. business cycle peak; business cycle peak C. business cycle trough; business cycle trough D. business cycle trough; business cycle peak

A. business cycle peak; business cycle trough

An economic growth model explains Select one: A. changes in real GDP per capita in the long run. B. the growth rate of the price level over time. C. how changes in the money supply affect real interest rates. D. changes in government tax policies over time.

A. changes in real GDP per capita in the long run.

Since 1950, recessions in the United States Select one: A. have become less severe than before 1950. B. have become more severe than before 1950. C. are about as severe as they were before 1950. D. have not occurred.

A. have become less severe than before 1950.

When the government runs a budget deficit, we would expect to see that Select one: A. investment will fall. B. private saving will fall. C. public saving is positive. D. G + TR < T.

A. investment will fall.

The period between a business cycle peak and a business cycle trough is called Select one: A. recession. B. recalculation. C. expansion. D. diffusion.

A. recession.

Purchases of Huggies diapers should Select one: A. remain fairly constant over the business cycle. B. increase in recessions and decrease in expansions. C. decrease in recessions and increase in expansions. D. increase in recessions and remain constant in expansions.

A. remain fairly constant over the business cycle.

As the economy nears the end of an expansion, which of the following do we typically see? Select one: A. rising interest rates B. falling wages relative to output prices C. rising firm profits D. rising levels of firm investment

A. rising interest rates

According to Douglass North, the Industrial Revolution occurred in England because Select one: A. the British Parliament took control of the government and could credibly commit to upholding property rights. B. the British Parliament instituted a command economy structure and implemented a planned economy. C. the British courts became tied to the king and began to refuse to enforce property rights. D. the British monarchy took control of the government and pledged not to raise taxes arbitrarily.

A. the British Parliament took control of the government and could credibly commit to upholding property rights.

What is investment in a closed economy if you have the following economic data? Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion Select one: A. $2 trillion B. $3 trillion C. $5 trillion D. cannot be determined without information on taxes (T)

B. $3 trillion

Significant economic growth did not begin in the world until Select one: A. 1000 A.D. B. 1750 A.D. C. 1820 A.D. D. the 20th century A.D.

B. 1750 A.D.

Which of the following is an example of foreign direct investment? Select one: A. You buy a plane that was made in China. B. American Airlines builds a hub in China. C. You purchase a plane ticket to China on American Airlines. D. A stock broker from China sells you a Chinese government savings bond.

B. American Airlines builds a hub in China.

Which of the following accurately describes the impact of the rule of law on a country's economic growth rate? Select one: A. Countries that enforce property rights through lawsuits have slower economic growth. B. Countries with a strong rule of law have faster economic growth. C. Countries where favoritism and bribery are common have stronger rates of growth. D. Countries with a weak rule of law have faster economic growth.

B. Countries with a strong rule of law have faster economic growth.

Country GDP Population Sweden $3.85 9.05 Ireland 2.23 4.21 Refer to Table 11-1. Based on the table above, which country has a higher standard of living and why? Select one: A. Sweden has a higher standard of living because their GDP is higher. B. Ireland has a higher standard of living because their GDP per capita is higher. C. Sweden has a higher standard of living because their GDP per capita is higher. D. Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden.

B. Ireland has a higher standard of living because their GDP per capita is higher.

In the early 1900s, Henry Ford revolutionized the automotive manufacturing industry by instituting the assembly line. What impact did the assembly line method for producing automobiles have on the per-worker production function for Ford? Select one: A. It became linear. B. It shifted up. C. It shifted down. D. It became flatter.

B. It shifted up.

Empirical evidence from 1960 to 2010 shows that convergence in economic growth is occurring in which of the following cases? Select one: A. Low-income developing countries are catching up to high-income industrial countries. B. Low-income industrial countries are catching up to high-income industrial countries. C. All low-income countries are catching up to all high-income countries. D. Low-income industrial countries are catching up to high-income developing countries.

B. Low-income industrial countries are catching up to high-income industrial countries.

If government purchases are $400 million, taxes are $700 million, and transfers are $200 million, which of the following is true? Select one: A. The budget deficit is $500 million. B. Public saving is $100 million. C. Public saving is $500 million. D. The budget deficit is $100 million.

B. Public saving is $100 million.

Which of the following is most liquid? Select one: A. a corporate bond B. a dollar bill C. a government bond D. a mutual fund share

B. a dollar bill

According to Joseph Schumpeter, economic growth is achieved through Select one: A. removing the entrepreneur from the production function. B. a process termed "creative destruction." C. focusing only on making old products better rather than inventing new ones. D. centralizing economic production.

B. a process termed "creative destruction."

Which of the following goods would see the largest decline in demand during a recession? Select one: A. clothing B. automobiles C. food D. haircuts

B. automobiles

When additions of input to a fixed quantity of another input lead to progressively smaller increases in output, we say we are facing Select one: A. negative returns. B. diminishing returns. C. accelerating returns. D. decreasing production.

B. diminishing returns.

High-income countries are also referred to as Select one: A. developing countries. B. industrial countries. C. agrarian countries. D. growing countries.

B. industrial countries.

In a closed economy, which of the following components of GDP is not included? Select one: A. investment B. net exports C. consumption D. government spending

B. net exports

In the long run, ________ differences in economic growth rates result in ________ differences in GDP per capita. Select one: A. large; no B. small; large C. small; no D. large; small

B. small; large

To what do economists attribute the rapid growth of labor productivity in the United States relative to other countries? Select one: A. the low rate of job mobility in the United States B. the flexibility of U.S. labor markets and the efficiency of the U.S. financial system C. the strict government rules in the United States that regulate a firm's ability to hire and fire workers D. the high level of unemployment benefits the United States pays relative to other countries like Canada

B. the flexibility of U.S. labor markets and the efficiency of the U.S. financial system

Refer to Figure 10-5. "Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above. Select one: A. B to A B. C to A C. A to B D. B to C

C. A to B

Refer to Figure 11-1. Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from Select one: A. C to D. B. D to C. C. A to C. D. B to C.

C. A to C.

Refer to Figure 11-1. Suppose the per-worker production function in the figure above represents the production function for the U.S. economy. If the United States decided to double its support of university research, this would cause a movement from Select one: A. B to A. B. D to C. C. B to C. D. A to B.

C. B to C.

Refer to Figure 11-1. Technological change is illustrated in the per-worker production function in the figure above by a movement from Select one: A. D to C. B. B to A. C. B to C. D. A to B.

C. B to C.

Refer to Figure 10-1. Which of the following is consistent with the graph depicted above? Select one: A. An expected recession decreases the profitability of new investment. B. The government runs a budget surplus. C. Technological change increases the profitability of new investment. D. Households become spendthrifts and begin to save less.

C. Technological change increases the profitability of new investment.

In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) Select one: A. Y - C - T B. Y - G - T + TR C. Y + TR - C - T D. Y - G - T

C. Y + TR - C - T

Inflation is measured Select one: A. using the level of the consumer price index. B. using the level of real GDP. C. as the percentage change in the consumer price index. D. as the percentage change in real GDP.

C. as the percentage change in the consumer price index.

Financial securities that represent promises to repay a fixed amount of funds are known as Select one: A. pension funds. B. stocks. C. bonds. D. insurance premiums.

C. bonds.

Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500. If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns? Select one: A. by more than $5,000 but less than $20,000 B. by more than $500 but less than $5,000 C. by less than $500 D. by exactly $500

C. by less than $500

Lack of investment in strong education and health care systems Select one: A. increases human capital and cause a decline in labor productivity. B. causes a deterioration in human capital and an increase in physical capital. C. causes a deterioration in human capital and a decline in labor productivity. D. causes a decline in physical capital and a decline in labor productivity.

C. causes a deterioration in human capital and a decline in labor productivity.

During a recession, spending on ________ tends to fall more dramatically than spending on ________. Select one: A. necessities; luxuries B. nondurable goods; durable goods C. durable goods; nondurable goods D. food; cars

C. durable goods; nondurable goods

Most economists believe that the occurrence of ________ during the 2007-2009 recession is a key reason why the recession was so severe. Select one: A. high tariffs B. rapid inflation C. financial instability D. high interest rates

C. financial instability

Georg, a German citizen, just purchased 10 shares of stock in Microsoft, a U.S. company. This purchase is an example of Select one: A. foreign public investment. B. contractual globalization. C. foreign portfolio investment. D. foreign direct investment.

C. foreign portfolio investment.

During the recession phase of the business cycle, Select one: A. income is usually rising. B. production is usually rising. C. interest rates are usually falling. D. unemployment is usually falling.

C. interest rates are usually falling.

Until recently, many developing countries Select one: A. encouraged foreign direct investment but discouraged foreign portfolio investment. B. were quite open to foreign investment. C. sealed themselves off from foreign investment. D. encouraged foreign portfolio investment but discouraged foreign direct investment.

C. sealed themselves off from foreign investment.

By offering less generous unemployment insurance programs, the United States can expect Select one: A. workers to be slow in gaining new skills in response to fluctuations in the labor market. B. citizens to pay more in taxes than citizens pay in Europe. C. shorter periods of unemployment for their workers. D. longer periods of unemployment for their workers.

C. shorter periods of unemployment for their workers.

According to new growth theory, Select one: A. economic growth is determined by forces outside the control of the market system. B. growth in real GDP per capita occurs only if there are increasing returns. C. technological change is influenced by economic incentives. D. centrally-planned economies are the most efficient.

C. technological change is influenced by economic incentives.

The key factors in raising standards of living in low-income countries have been increases in Select one: A. foreign aid and population. B. capital accumulation and the money supply. C. technology and knowledge. D. income and government ownership of resources.

C. technology and knowledge.

Since 1950, Select one: A. economic expansions in the United States have been so short that expansions barely exist. B. the average length of expansions in the United States have become shorter as compared to before 1950. C. the average length of expansions in the United States have become longer as compared to before 1950. D. the average length of expansions in the United States are about the same length as compared to before 1950.

C. the average length of expansions in the United States have become longer as compared to before 1950.

Liquidity refers to Select one: A. the number of shares of stock a corporation issues. B. the ease with a stock can be traded for a bond. C. the ease with which a financial security can be traded for cash. D. the number of times a dollar changes hands in the creation of GDP in an economy.

C. the ease with which a financial security can be traded for cash.

There is a federal budget deficit when Select one: A. the government spends the same amount it collects in taxes. B. taxes are too high. C. the government spends more that it collects in taxes. D. the government spends less that it collects in taxes.

C. the government spends more that it collects in taxes.

Because of diminishing returns, an economy can continue to increase real GDP per hour worked only if Select one: A. there are decreases in human capital. B. the per-worker production function shifts downward. C. there is technological change. D. there continue to be decreases in capital per hour worked.

C. there is technological change.

Which of the following government provisions would help increase the accumulation of knowledge capital? Select one: A. patents B. education subsidies C. copyrights D. All of the above are correct.

D. All of the above are correct.

Refer to Figure 11-1. Within a country, the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from Select one: A. B to C. B. A to B. C. B to A. D. C to A.

D. C to A.

The Soviet Union's economy grew rapidly in terms of GDP per hour worked in the 1950s, but eventually this growth slowed. Why did this occur? Select one: A. The centrally planned economy invested too heavily in technological change. B. Increasing implementation of new technologies eventually suffered diminishing marginal returns. C. Capital per hour worked grew slowly, but technological change grew very rapidly. D. Capital per hour worked grew rapidly from 1950 to 1980, but technological change occurred very slowly.

D. Capital per hour worked grew rapidly from 1950 to 1980, but technological change occurred very slowly.

The Industrial Revolution began in Select one: A. the United States around 1820. B. France around 1680. C. Germany around 1780. D. England around 1750.

D. England around 1750.

The economic growth model predicts that Select one: A. GDP per capita of poor countries will never change. B. Governments must centrally direct the economy for growth to occur. C. GDP per capita of rich countries will grow more rapidly than in poor countries. D. GDP per capita of poor countries will grow more rapidly than in rich countries.

D. GDP per capita of poor countries will grow more rapidly than in rich countries.

If government saving is negative, then Select one: A. T > TR. B. Y + TR < C - T. C. G > T. D. T - TR < G.

D. T - TR < G.

Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $6,000. In Beta, real GDP per capita is $9,000. Based on the economic growth model, what would you predict about the growth rates in real GDP per capita across these two countries? Select one: A. The growth rate of real GDP per capita will be lower in Alpha than it is in Beta. B. The economic growth model makes no predictions regarding differences in growth rates of real GDP per capita across the two countries. C. The growth rate of real GDP per capita in Alpha and Beta will be the same. D. The growth rate of real GDP per capita will be higher in Alpha than it is in Beta.

D. The growth rate of real GDP per capita will be higher in Alpha than it is in Beta.

Under which of the following circumstances would private saving be positive in a closed economy? Select one: A. Y = $8 trillion C = $2 trillion TR = $4 trillion G = $2 trillion public saving = $4 trillion B. Y = $6 trillion C = $2 trillion TR = $8 trillion G = $3 trillion public saving = $1 trillion C. Y = $9 trillion C = $5 trillion TR = $1 trillion G = $1 trillion public saving = $3 trillion D. Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion public saving = $1 trillion

D. Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion public saving = $1 trillion

Foreign investment can give a low-income country Select one: A. no hope to break the vicious cycle of poverty. B. the means to slow down growth. C. a path to dependency and low growth. D. access to funds for investment and access to technology.

D. access to funds for investment and access to technology.

Which of the following is not one of the three sources of technological change? Select one: A. better means of organizing and managing production B. better machinery and equipment C. increases in human capital D. additional amounts of existing capital

D. additional amounts of existing capital

During the expansion phase of the business cycle, which of the following eventually increases? Select one: A. production B. income C. employment D. all of the above

D. all of the above

Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita? Select one: A. Countries that are relatively poor are more likely to experience wars and revolutions. B. Many of these developing countries do not have a functioning court system that can enforce laws. C. Countries that are relatively poor are likely to have a lower quality of health care. D. all of the above

D. all of the above

An increase in the demand for loanable funds will occur if there is Select one: A. an increase in the nominal interest rate accompanied by an equal increase in inflation. B. a decrease in the real interest rate. C. an increase in the real interest rate. D. an increase in expected profits from firm investment projects.

D. an increase in expected profits from firm investment projects.

Which of the following will increase investment spending in the economy, holding everything else constant? Select one: A. an increase in consumer dissavings B. an increase in transfer payments C. an increase in the budget deficit D. an increase in the federal government surplus

D. an increase in the federal government surplus

Knowledge capital is Select one: A. rival. B. nonrival. C. nonexcludable. D. both B and C

D. both B and C

Which of the following explains the ability of the U.S. economy to avoid diminishing returns and experience accelerating growth in the early to mid-20th century? Select one: A. additions of a greater amount of capital of the same quality B. a decrease in the quality of labor C. immigration D. continuing technological change

D. continuing technological change

The response of investment spending to an increase in the government budget deficit is called Select one: A. expansionary investment. B. private dissaving. C. income minus net taxes. D. crowding out.

D. crowding out.

Globalization is positively associated with Select one: A. poverty. B. declining rates of investment. C. declining standards of living. D. economic growth.

D. economic growth.

Technological improvements are more likely to occur if Select one: A. companies face little competition in their markets. B. economic decisions are made by politicians rather than entrepreneurs. C. the economy is centrally planned. D. entrepreneurs are compensated with higher profits for taking risks.

D. entrepreneurs are compensated with higher profits for taking risks

In a closed economy public saving plus private saving is equal to Select one: A. taxes minus transfers. B. the budget deficit. C. the budget surplus. D. investment.

D. investment.

Globalization is defined as the process of countries becoming ________ open to foreign trade and ________ open to foreign investment. Select one: A. less; less B. more; less C. less; more D. more; more

D. more; more

Scenario 10-1 Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I= $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion Refer to Scenario 10-1. Based on the information above, what is the level of public saving? Select one: A. $0 B. $1 trillion C. $2 trillion D. negative $1 trillion (a deficit of $1 trillion)

D. negative $1 trillion (a deficit of $1 trillion)

What is the name of the organization that defines business cycle peaks and troughs in the United States? Select one: A. the National Peak and Trough Committee B. the Bureau of Labor Statistics C. the Federal Reserve D. the National Bureau of Economic Research

D. the National Bureau of Economic Research

Firms free ride on the research and development of other firms when they Select one: A. buy a firm's newly developed product, and then give it away to consumers. B. choose a level of research and development that is inefficiently high. C. license a new technology from a firm that developed the new technology. D. use knowledge other firms have developed without paying for that knowledge.

D. use knowledge other firms have developed without paying for that knowledge.

A period of economic expansion ends with a business cycle trough. Select one: True False

False

As predicted by the economic growth model, countries that start with lower levels of GDP per capita always grow faster than countries that start with higher levels of GDP per capita. Select one: True False

False

Over the last three decades in the United States, services have become a smaller fraction of GDP relative to goods. Select one: True False

False

The purchase of stocks and bonds issued in another country is known as foreign direct investment. Select one: True False

False

The question of whether economic growth is desirable is a positive question, easily settled by economic analysis. Select one: True False

False

An economy that grows too slowly fails to raise living standards. Select one: True False

True

year Real GDP 2013 $8,700 2014 $8,875 2015 $9,000 2016 $9,280 Refer to Table 10-1. Using the table above, what is the approximate average annual growth rate from 2013 to 2016? Select one: a. 2% b. 1% c. 1.5% d. 3%

a. 2%

If real GDP grows by 3% in 2014, 3.2% in 2015, and 2.5% in 2016, what is the average annual growth rate of real GDP? Select one: a. 2.9% b. 4.2% c. 3.1% d. 2.6%

a. 2.9%

Growth in potential GDP in the United States is estimated to be about Select one: a. 3.2% per year. b. 8.25% per year. c. 1.5% per year. d. 5.0% per year.

a. 3.2% per year.

Suppose that in 2016, real GDP grew in Estonia by 3% and the population increased by 5%. Therefore, in 2016, Estonia experienced Select one: a. economic growth, but not an increase in living standards. b. no economic growth, but an increase in living standards. c. no economic growth and no increase in living standards. d. economic growth and an increase in living standards.

a. economic growth, but not an increase in living standards.

Actual real GDP will be above potential GDP if Select one: a. firms are producing above capacity. b. firms are producing below capacity. c. firms are producing at capacity. d. inflation is rising.

a. firms are producing above capacity. Correct

Policies to promote growth by increasing saving and investment work through Select one: a. increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. b. decreasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. c. increasing the supply of loanable funds, increasing the interest rate, raising the level of investment in physical capital. d. increasing the supply of loanable funds, lowering the interest rate, lowering the level of investment in physical capital.

a. increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital.

India's rapid growth can be explained by Select one: a. reduced regulations and market-based reforms. b. investment in human capital from 1947 through 2013. c. an increase in labor force participation. d. the movement of workers from the agricultural sector to the manufacturing sector.

a. reduced regulations and market-based reforms.

Potential GDP refers to Select one: a. the level of GDP attained when all firms are producing at capacity. b. the extent to which real GDP is above or below nominal GDP. c. the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year. d. the level of GDP attained by the country with the highest growth in real GDP in a given year.

a. the level of GDP attained when all firms are producing at capacity.

Refer to Figure 11-2. Based on the per-worker production function above, if the economy raises capital per hour worked from $35,000 to $40,000, by how much will real GDP per hour worked increase? Select one: a. $2,000 b. $150 c. $1,850 d. $5,000

b. $150

Which of the following policies would not help promote economic growth? Select one: a. a law that funds prenatal care for all expectant mothers b. a law requiring that the funds in an individual retirement account be taxed c. a law that subsidizes research in nanotechnology d. a law restricting elected officials from accepting expensive gifts and trips from private individuals

b. a law requiring that the funds in an individual retirement account be taxed

The total amount of physical capital available in a country is known as the country's Select one: a. labor productivity. b. capital stock. c. investment. d. savings.

b. capital stock.

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects. Select one: a. banks b. firms c. government d. households

b. firms

In 2014, GDP per capita was ________ in the United States than in China. Since 1980, the growth rate of real GDP per capita has been ________ in the United States than in China. Select one: a. lower; lower b. higher; lower c. lower; higher d. higher; higher

b. higher; lower

Which of the following increases labor productivity? Select one: a. decreases in the availability of computers and factory buildings b. inventions of new machinery, equipment, or software c. a decline in the health of the population d. an increase in the aggregate hours of work

b. inventions of new machinery, equipment, or software

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as Select one: a. human capital. b. labor productivity. c. real GDP. d. technology.

b. labor productivity.

Since 1900, real GDP in the United States has grown Select one: a. in a random unpredictable manner relative to the population. b. more rapidly than the population. c. more slowly than the population. d. as rapidly as the population.

b. more rapidly than the population.

The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________. Select one: a. population; production b. production; population c. population; GDP per capita d. population; income

b. production; population

Disease, poor nutrition, and substandard health care in developing nations can reduce growth in an economy by Select one: a. reducing physical capital. b. reducing human capital. c. increasing labor productivity. d. increasing technological change.

b. reducing human capital.

What two factors are the keys to determining labor productivity? Select one: a. the growth rate of real GDP and the interest rate b. technology and the quantity of capital per hour worked c. the average level of education of the workforce and the price level d. the business cycle and the growth rate of real GDP

b. technology and the quantity of capital per hour worked

What is "brain drain"? Select one: a. increased recruiting efforts that attempt to raise the average level of education in developed nations b. the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries c. the tendency for highly educated workers in high-income countries to move to low-income countries to volunteer their services d. foreign direct investment that flows from a developed country to a developing country

b. the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries

Growth in real GDP per hour worked in the United States was slowest during what period of time? Select one: a. 1900-1949 b. 1974-1995 c. 2006-2014 d. 1950-1973

c. 2006-2014

year Real GDP 2013 $8,700 2014 $8,875 2015 $9,000 2016 $9,280 Refer to Table 10-1. Using the table above, what is the approximate growth rate of real GDP from 2015 to 2016? Select one: a. 4% b. 2% c. 3% d. 1%

c. 3%

If you invest $10,000 in a bond that earns 8% interest per year, how many years will it take to double your money? Select one: a. 1 year and 3 months b. 8 years c. 8 years and 9 months d. 2 years and 6 months

c. 8 years and 9 months

Which of the following accurately describes growth rates in the United States from 1900 to the present? Select one: a. Growth rates rose until the 1970s and then fell until the present. b. Growth rates have risen continuously from 1900 to the present. c. Growth rates rose until the 1970s, slowed until the 1990s, rose again until 2005, and then slowed again to the present. d. Growth rates have fallen continuously from 1900 to the present.

c. Growth rates rose until the 1970s, slowed until the 1990s, rose again until 2005, and then slowed again to the present.

Which of the following is an example of human capital? Select one: a. a factory building b. a computer c. a college education d. a software program

c. a college education

The United States Select one: a. currently is one of the most corrupt countries. b. has never had a significant problem with corruption. c. currently ranks among the least corrupt countries. d. had a significant problem with corruption in the 1930s.

c. currently ranks among the least corrupt countries.

Corruption Select one: a. raises the rate of growth as bribes enhance income. b. acts as a magnet for foreign direct investment. c. curtails economic growth. d. is eliminated by foreign direct investment.

c. curtails economic growth.

All of the following policies are ways for a country to promote long-run economic growth except Select one: a. increasing vaccinations against infectious diseases. b. enacting stronger laws to protect property rights. c. imposing stricter regulations to limit foreign direct investment. d. undergoing political reform to decrease corruption.

c. imposing stricter regulations to limit foreign direct investment.

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth. Select one: a. increase; decrease b. decrease; increase c. increase; increase d. decrease; decrease

c. increase; increase

Which of the following statements describes the experiences of Corning, Inc. since it was established in 1851? Select one: a. little or no growth in the long run, but very vulnerable to the business cycle b. strong uninterrupted growth in demand c. long-run growth interrupted by periods of business cycle recession d. little or no growth in the long run, and unaffected by the business cycle

c. long-run growth interrupted by periods of business cycle recession

The supply of loanable funds has a ________ slope because the greater the interest rate, the ________ the reward to saving, and the ________ the quantity of loanable funds supplied. Select one: a. negative; lesser; greater b. positive; greater; lesser c. positive; greater; greater d. positive; lesser; lesser

c. positive; greater; greater

Enforcing property rights in an economy will Select one: a. cause the market system to work less efficiently. b. encourage corruption and expand the underground economy. c. raise the level of investment. d. decrease the level of foreign portfolio investment.

c. raise the level of investment.

Human capital refers to which of the following? Select one: a. physical equipment that is made by human laborers, not machines b. manufactured goods that are used to produce other goods and services c. the accumulated knowledge and skills workers acquire from education and training or from their life experiences d. the quantity of goods and services that can be produced by one worker or by one hour of work

c. the accumulated knowledge and skills workers acquire from education and training or from their life experiences

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%? Select one: a. less than 1 year b. 35 years c. 5 years d. 14 years

d. 14 years

If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from Select one: a. 23.3 years to 20.6 years. b. 11.2 years to 10.8 years. c. 28.0 years to 21.0 years. d. 23.3 years to 17.5 years.

d. 23.3 years to 17.5 years.

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita? Select one: a. 15% b. 21% c. 10.5% d. 4.7%

d. 4.7%

If real GDP per capita in the United States is $8,000 in 2016, and if real GDP per capita is $12,000 in 2026, what is the average annual percent change in the growth rate of GDP per capita between 2016 and 2026? Select one: a. 33% b. 3.33% c. 50% d. 5%

d. 5%

If real GDP per capita in the United States is $8,000 in 2016, and if real GDP per capita is $12,000 in 2026, what is the total percent change in GDP per capita between 2016 and 2026? Select one: a. 5% b. 3.33% c. 33% d. 50%

d. 50%

How can freedom of the press promote economic growth? Select one: a. A free press can be more easily swayed to report only one side of any issue. b. A free press reduces the likelihood that judges will protect private property rights. c. A free press does not promote economic growth. d. A free press can act as a watchdog for corruption, increasing chances for economic growth.

d. A free press can act as a watchdog for corruption, increasing chances for economic growth.

How can economic growth help a country combat "brain drain"? Select one: a. Economic growth allows highly skilled persons to earn more in a foreign country than in their native country. b. Economic growth combined with decreasing returns to human capital require workers to achieve steadily higher and higher levels of education over time. c. Economic growth increases the incomes of low-skilled workers relative to high-skilled workers. d. Economic growth opens up opportunities for better jobs and higher incomes for skilled workers.

d. Economic growth opens up opportunities for better jobs and higher incomes for skilled workers.

If property rights are not enforced in a country, Select one: a. that country's growth rate will not be affected. b. the market system will still work smoothly. c. that country will grow more rapidly because of the reduction of law suits. d. entrepreneurs are unlikely to risk their own funds investing in such an economy.

d. entrepreneurs are unlikely to risk their own funds investing in such an economy.

Since 1900, real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time. Select one: a. decreased; overstates b. decreased; understates c. increased; overstates d. increased; understates

d. increased; understates

The "new economy" that emerged in the mid-1990s is based on Select one: a. retail sales. b. financial services. c. manufacturing. d. information technology.

d. information technology.

If real GDP in a small country in 2015 is $8 billion and real GDP in the same country in 2016 is $8.3 billion, the growth rate of real GDP between 2015 and 2016 Select one: a. is 3.6%. b. is 3.0%. c. cannot be determined from the information given. d. is 3.75%.

d. is 3.75%.

One of the primary reasons that Mexico has experienced relatively low rates of economic growth is that for Mexican entrepreneurs, Select one: a. the government has a history of nationalizing all successful domestically-owned industries. b. incentives from its neighboring Central American countries has attracted most of the foreign investment in the region. c. there is a shortage of low-skilled labor to fill manufacturing jobs. d. problems in the banking system have made it difficult to obtain the funding needed to finance expansion.

d. problems in the banking system have made it difficult to obtain the funding needed to finance expansion.

Because of the productivity slowdown in the United States from the mid-1970s through the mid-1990s, Select one: a. the standard of living did not change. b. real GDP per capita grew more rapidly. c. the standard of living increased in the United States. d. real GDP per capita grew more slowly.

d. real GDP per capita grew more slowly.

A good measure of the standard of living is Select one: a. total real GDP. b. total nominal GDP. c. nominal GDP per capita. d. real GDP per capita.

d. real GDP per capita.

Economists who believe that real GDP may grow slowly because of insufficient demand for investment spending cite three main reasons for the low demand for loanable funds. Which of the following is not one of those reasons? Select one: a. a reduced demand for housing due to slowing population growth b. the falling price of capital relative to other goods c. a smaller capital requirement for modern information technology firms d. the continued decrease in the value of the dollar relative to the currencies of major U.S. trading partners

d. the continued decrease in the value of the dollar relative to the currencies of major U.S. trading partners

Increases in real GDP since 1900 can actually underestimate growth in the standard of living for Americans since 1900 because Select one: a. the level of pollution in 1900 was much higher than it is today. b. the crime rate was higher in 1900 than it is today. c. goods and services are more expensive today as compared to 1900. d. the quality of health care that exists today was not available in 1900.

d. the quality of health care that exists today was not available in 1900.

The lower-income industrial countries are catching up to the higher-income industrial countries in terms of economic growth. Select one: True False

true