Macroeconomics Chapter 20

Investment in human capital:

-can be acquired through on-the-job training. -is an important source of economic growth.

A country will roughly double its GDP in twenty years if its annual growth rate is:

3.5 percent.

Assuming a country's economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________.

30

A nation's prosperity is sometimes measured in terms of ___________.

GDP per capita

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

GDP per capita

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.

GDP per capita

Some prominent members of the slow-economic growth country club include a high-income country like _________.

Germany

Which of the following is correct? -An increase in the quantity of labor always leads to economic growth. -Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. -A decrease in the productivity of labour leads to economic growth. -Third World countries are rich in human capital.

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

Which of the following best describes the relationship between economic growth and literacy?

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

____________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

Industrial Revolution

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

The Industrial Revolution

Increased investment alone will guarantee economic growth.

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.

an aggregate production function

Which of the following factors contribute to economic growth? -an increase in the average wage rate paid to workers -an increase in the standard of living -a decrease in the productivity of labor -an increase in the proportion of the population that is college educated

an increase in the proportion of the population that is college educated

When society has a higher level of capital per person, it is called ______________.

capital deepening

Country Able and Country Baker initially have the same real GDP per capita. Country Able experiences no economic growth, while Country Baker grows at a sustained rate of 7 percent. In 12 years, Country Baker's GDP will be approximately ___________ that of Country Able.

double

In the long run, the most important source of increase in a nation's standard of living is a:

high rate of economic growth.

Which of the government policies below is most unlikely to encourage per capita economic growth?

high taxes on companies that spend a lot on capital formation

Which of the following is most likely to contribute to economic growth as measured by GDP per capita? -the imposition of tariffs and quotas on imported goods -increased capital formation -rapid population growth -an increase in marginal tax rates

increased capital formation

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy.

productivity

The value of what is produced per worker, or per hour worked, is called ____________.

productivity

To achieve a high standard of living, a nation should:

promote economic growth.

Economists typically measure economic growth by tracking:

real GDP per capita.

Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.

technology

Which of the following factors contribute to economic growth? -a decrease in the quantity of labor due to emigration -a decrease in the productivity of labor -the discovery of new oil reserves -a decline in the stock of physical capital

the discovery of new oil reserves

Which of the following is unlikely to affect the rate of economic growth?

the level of government spending