macro test

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

the first but not the second

Which of the following statements is correct about the relationship between inflation and interest rates?

In order to fully understand interest rates, we need to know how to correct for the effects of inflation.

Other things the same, an increase in population growth

decreases capital per worker. However, there is some evidence that a higher population growth rate may increase the pace of technological progress.

If there are diminishing returns to capital, then

increases in the capital stock increase output by ever smaller amounts.

On a production function, as capital per worker increases, output per worker

increases. This increase is smaller at larger values of capital per worker.

If a country's saving rate declined, then other things the same, in the long run the country would have

lower productivity and lower real GDP per person

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied by 100

Which of the following terms is used to refer to the ability of people to exercise authority over the resources they own?

property rights

A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 105 in 2009. Between 2009 and 2010,

real output fell and the price level rose.

The dictator of a country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

reduce real GDP per person and productivity.