Macro Graded Assignmet #5
China was the largest economy for centuries because everyone had the same type of economylong dashsubsistencelong dashand so the country with the most people would be economically biggest. Then the Industrial Revolution sent the West on a more prosperous path. Now the world is returning to a common economy, this time technology- and information-based, so once again population triumphs. Why was China the world's largest economy until 1890? Why did the United States surpass China in 1890 to become the world's largest economy? China was the world's largest economy until 1890 because ______.
people in all countries had approximately the same subsistence level of income and China had the largest population
Explain the influences on the pace of labor productivity growth. Once the preconditions for growth are in place, the influences on the pace of labour productivity growth are _______.
physical capital growth, human capital growth, and technological advances
What determines the demand for labor, the supply of labor, and labor market equilibrium? The demand for labor is the relationship between the quantity of labor demanded and the ______. The supply of labor is the relationship between the quantity of labor supplied and the ______.
real wage rate; real wage rate
What is the relationship between the growth rate of real GDP and the growth rate of real GDP per person? The growth rate of real GDP per person _______.
tells us about changes in the standard of living and the growth rate of real GDP tells us how rapidly the total economy is expanding
In 1890, the United States surpassed China to become the world's largest economy because ______.
the benefits of the Industrial Revolution were greater in the United States than in China
What is economic growth and how do we calculate its rate? Economic growth is _______.
the expansion of production possibilities
What are the two broad sources of potential GDP growth? The two broad sources of potential GDP growth are growth of ______ and growth of ______.
the supply of labor; labor productivity
What determines potential GDP? Potential GDP is determined by ______.
the full-employment quantity of labor
Growth rates are calculated in a similar manner for all variables. Real GDP growth rate = [(Real GDP in ______ yearminusReal GDP in ______ year) divided by Real GDP in ______ year ] times 100.
current; previous; previous
Choose the correct statement
Labor hours are not all equally productive.
China's real GDP per person was 11,480 yuan in 2011 and 12,515 yuan in 2012. India's real GDP per person was 45,045 rupees in 2011 and 47,995 rupees in 2012. The population of China is growing at 1 percent a year and the population of India is growing at 1.4 percent a year. Calculate the growth rate of real GDP in each country.
10% 7.9%
What has been the average growth rate of U.S. real GDP per person over the past 100 years? In which periods was growth most rapid and in which periods was it slowest? Over the past 100 years, the average growth rate of U.S. real GDP per person is 2 percent. Over the past 100 years, growth was most rapid during the ______ and slowest during the ______.
2 1960s; Great Depressio
In 2018 Brazil's real GDP is growing at 1.7 percent a year and its population is growing at 0.7 percent a year. If these growth rates continue, in what year will Brazil's real GDP per person be twice what it is in 2018? If these growth rates continue, Brazil's real GDP per person will be twice what it is in 2018 in _______.
2088
If real GDP per person doubles in 20 years, then the annual growth rate of real GDP per person is ______ percent a year.
3.5
Choose the correct statement.
Each additional hour of labor increases real GDP by successively smaller amounts.
Choose the correct statement
If there is a shortage of labor, the real wage rate rises to eliminate the shortage.
Choose the correct statement
Most technologies are embodied in physical capital.
Argentina's real GDP was 702 billion pesos in 2014 and 721 billion pesos in 2015. Argentina's population growth rate in 2015 was 1.08 percent. Calculate a. The growth rate of real GDP. b. The growth rate of real GDP per person. c. The approximate number of years it takes for real GDP per person in Argentina to double if the 2015 growth rate of real GDP and the population growth rate are maintained.
Picture
Draw a labor supply curve and a labor demand curve. Label them LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Draw and label a curve that shows the effect of an increase in population. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2. An increase in the population ______ potential GDP and ______ potential GDP per hour of labor.
Picture
Explain the processes that will bring the growth of real GDP per person to a stop according to a. Classical growth theory. b. Neoclassical growth theory. c. New growth theory. According to classical growth theory, the growth of real GDP per person stops when _______.
Picture
If a large increase in investment increases labor productivity, explain what happens to a. Potential GDP. b. Employment. c. The real wage rate. When labor productivity increases, there is _____ the production function and _____ in potential GDP.
Picture
Suppose that the United States cracks down on illegal immigrants and returns millions of workers to their home countries. Draw a labor supply curve and a labor demand curve for Mexico. Label the curves LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Now suppose the United States returns millions of illegal immigrant workers to their home countries. Draw a curve that shows the effect of this return of workers in Mexico. Label it. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2. The effect of the United States returning millions of workers to their home countries is _____ Mexico's production function and _____ in potential GDP.
Picture
The first table describes an economy's labor market in 2018 and the second table describes its production function in 2018. What are the equilibrium real wage rate, the quantity of labor employed in 2018, labor productivity, and potential GDP in 2018?
Picture
The graph shows the production function of an economy. Currently, the full-employment quantity of labor is 200 billion hours a year. Population increases and the new full-employment quantity of labor is 300 billion hours. Draw an arrow that shows the effect of this increase in population. Draw a point at the new value of full-employment and potential GDP. Label it B.
Picture
The left graph shows an economy's labor market. Draw a point that shows equilibrium in the labor market. The right graph shows the economy's production function. Draw a point on the production function that shows potential GDP in this economy.
Picture
The table provides some data on real GDP and the population of Europa in 2013 and 2014. What was the growth rate of real GDP in Europa in 2014? What was the growth rate of real GDP per person in Europa in 2014?
Picture
Choose the correct statement about an increase in the population.
Potential GDP per hour of labor decreases.
Choose the correct statement about growth in labor productivity.
Potential GDP per hour of labor increases.
Describe the gaps between real GDP per person in the United States and in other countries. For which countries is the gap narrowing? For which is it widening? For which is it the same? Since 1980, the gap between the United States and _______.
Russia and between the United States and Nigeria narrowed, the gap between the United States and Mexico widened, and the gap between the United States and the Europe Big 4 remained relatively constant
Choose the statements concerning neoclassical growth theory that are true. 1. As incomes increase both the birth rate and the death rate decrease. nothing 2. Economic growth will stop if technology stops advancing. nothing 3. Technological change results from the choices people make in the pursuit of profit. nothing 4. Neoclassical growth theory was developed in the late 19th century. nothing
Statements 1 and 2 are correct
Choose the correct statement
The annual growth rate of real GDP fluctuates widely over the business cycle.
Labor market equilibrium occurs _______.
at the real wage rate at which the quantity of labor demanded equals the quantity of labor supplied
Economic growth is measured by
changes in real GDP.
What are the effects of an increase in the population on potential GDP, the quantity of labor, the real wage rate, and potential GDP per hour of labor? An increase in the population ______ the real wage rate and ______ the equilibrium quantity of labor.
decrease; icreases
Complete the sentence. In new growth theory ______.
discoveries result from choices
We are interested in long-term growth primarily because it brings
higher standards of living
The quantity of labor demanded is the number of labor hours _______ during a given period. The quantity of labor supplied is the number of labor hours _______ during a given period.
hired by all the firms in the economy; that all the households in the economy plan to work
What is the aggregate production function? The aggregate production function is the relationship that tells us ______, when all other influences on production remain the same.
how real GDP changes as the quantity of labor changes
What is the fundamental source of labor productivity growth? The fundamental source of labor productivity growth is ______.
human capital
Potential GDP ______ and potential GDP per hour of labor ______.
increases; decreases
What is the key proposition of new growth theory that makes economic growth persist? The key proposition of new growth theory that makes growth persist is that ______ is not subject to diminishing returns.
knowledge capital
Complete the sentence. Real GDP per person grows when ______.
real GDP grows at a faster rate than the population grows
Complete the sentence. According to classical growth theory, when real GDP per person ______, the population grows.
rises above the subsistence level
Complete the sentence. An increase in labor productivity ______.
shifts the demand for labor curve rightward and the production function upward
What, according to neoclassical growth theory, is the fundamental cause of economic growth? According to neoclassical growth theory, the fundamental cause of economic growth is ______.
technological change, which induces saving and investment that make capital per hour of labor grow
Use the Rule of 70 to calculate the growth rate that leads to a doubling of real GDP per person in 20 years. The Rule of 70 states that the number of years it takes for the level of any variable to ______ is approximately ______.
double; 70 divided by the annual percentage growth rate of the variable
What are the effects of an increase in labor productivity on potential GDP, the quantity of labor, the real wage rate, and potential GDP per hour of labor? An increase in labor productivity _______ potential GDP and ______ potential GDP per hour of labor.
increases; increases
An increase in labor productivity ______ the real wage rate and ______ the equilibrium quantity of labor.
increases; increases;