Macro Chapter 8

More than half the growth of real GDP in the United States is caused by

increases in the productivity of labor.

The Industrial Revolution and modern economic growth resulted in

the average human lifespan more than doubling

Economies of scale refers to

the fact that large producers may be able to use more efficient technologies than smaller producers.

Human capital refers to

the skills and knowledge that enable a worker to be productive.

Labor productivity is defined as

total output/worker-hours.

For comparing changes in potential military strength and political preeminence, the most meaningful measure of economic growth would be changes in

total real output.

Real per capita GDP

was much more equal across nations in 1820 than it is today.

1. Improvements in technology. 2. Increases in the supply (stock) of capital goods. 3. Purchases of expanding output. 4. Obtaining the optimal combination of goods, each at least-cost production. 5. Increases in the quantity and quality of natural resources. 6. Increases in the quantity and quality of human resources. Which set of items in the accompanying list would shift an economy's production possibilities curve outward?

1, 2, 5, and 6 only

At an annual growth rate of 7 percent, real GDP will double in about

10 years

If the secular trend of labor productivity rises from 2 percent per year to 4 percent, the number of years that it will take for the standard of living to double will decline by about

17.5 years

Between 1950 and 2015, U.S. real GDP per capita grew at an average annual rate of about

2.0%

Between 1950 and 2015, U.S. real GDP grew at an average annual rate of about

3.1%

Which of the following statements is most accurate about the prospects for poorer ("follower") countries catching up with richer ("leader") countries?

Catching up is possible, as "follower countries" tend to grow faster than "leader countries."

Which of the following statements is most accurate about modern economic growth?

Modern economic growth is characterized by sustained and ongoing increases in living standards.

Under what circumstances do rates of economic growth understate the growth of economic well-being?

Product quality has improved.

Which of the following is correct?

Total output = worker-hours × labor productivity.

Which of the following economic regions has experienced the most growth in real GDP per capita since 1820?

United States

Which of the following institutional structures is most likely to promote growth?

a well-enforced system of patents and copyrights

Which of the following would not be expected to increase labor productivity?

an increase in the size of the labor force

The number of years required for real GDP to double can be found by

dividing 70 by the annual growth rate.

Real GDP per capita is found by

dividing real GDP by population

Economic growth is best defined as an increase in

either real GDP or real GDP per capita.

A competitive market system

encourages growth by allowing producers to make profitable investment decisions based on market signals.

Suppose total output (real GDP) is $10,000 and worker-hours are 20,000. We can conclude that

labor productivity must be $0.50.

Suppose that an economy's labor productivity and total worker-hours each grew by 3 percent between year 1 and year 2. We could conclude that this economy's

production possibilities curve shifted outward.

Suppose that an economy's labor productivity fell by 3 percent and its total worker-hours remained constant between year 1 and year 2. We could conclude that this economy's

real GDP declined.

For a nation's real GDP per capita to rise during a year,

real GDP must increase more rapidly than population.

If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will

remain constant.

Empirical studies suggest that

technological advances account for about 40 percent of U.S. productivity growth.