Macroeconomics chapter 9 practice/review #3

_____ estimates the contribution to economic growth of each major factor in the aggregate production function.

Growth accounting

An inventor creates a new type of communication device and the government takes his idea and distributes it without crediting the inventor. What has happened here?

The inventor's intellectual property rights were not protected.

If real GDP is constant and the population increases, real GDP per capita will:

decrease.

Real GDP for Macronesia was $300 million in 2014 and population was 200,000. If the population growth rate was 10% in 2015 while real GDP increased to $320 million, then real GDP per capita in Macronesia in 2015:

decreased

During the twentieth century in the United States, employment grew _____ the population.

faster than

Which of the following is an example of poor infrastructure?

highways that are not properly maintained

Compared to a century ago, the amount of capital per worker has:

increased, because workers are better educated, and there are more buildings and machines.

Diminishing returns to physical capital means that real GDP per worker eventually _____ as physical capital per worker increases.

increases

Data for the economy of Nirvana is shown in the table. Assume that human capital and the level of the technical means of the production of goods and services are fixed. If the physical capital per worker increases from $15,000 to $20,000, then real GDP per worker in Nirvana will be:

less than $90,000

If a country is looking to increase economic growth quickly, it should:

make investments from domestic savings and adopt new technology.

If a country experiences increases in the technical means of the production of goods and services, then _____ output will be produced using the same inputs.

more

A robot that can perform surgery is an example of:

physical capital, because its a tool created by people.

Long-run economic growth depends almost entirely on:

productivity.

Real GDP for Xanadu is $200 million in 2014 and population was 100,000. If population increased to 105,000 in 2015 while real GDP increased by 5%, then real GDP per capita in Xanadu in 2015:

remained constant.

Which is an example of infrastructure?

the interstate highway system

If a present-day worker and a worker from the past had the same access to physical and human capital:

the modern worker would be more productive.

A country's real GDP increases from $400,000 in 2014 to $450,000 in 2015. In 2015, the real GDP per capita is $4,500, making the population in 2015 _____.

100

A country's economy initially has 100 units of physical capital per worker. Each year, it increases the amount of physical capital by 5%. According to the aggregate production function for this economy, each 1% increase in physical capital per worker, holding human capital and the technical means of the production of goods and services constant, increases output per worker by 0.20%. In two years' time, the level of physical capital per worker in this economy is:

110.25 units

According to the Rule of 70, if real GDP per capita grows at 5% per year, then it will double in about _____ years.

14

If the average family makes $40,000 and the real GDP per capita increases 5%, that will increase the family's total income by $_____.

2,000

In _____ India reached a standard of living comparable to the United States in 1900.

2015

The amount of human capital per worker grows by 6% a year in a country. Estimates of the aggregate production function for the country show that holding physical capital per worker and technology constant, for each 1% increase in human capital per worker, output per worker increases by one-half of 1%. The growth in human capital per worker in the country accounts for approximately _____% of productivity growth per year

3

GDP has grown in a country at 4% per year for the last 30 years. The labor force has grown at 1% per year and the quantity of physical capital has grown at 5% per year. Average education has not changed. How much has productivity per worker grown?

3%

If the economy of a country doubles in size in 20 years, then its economy's annual growth rate is about _____%.

3.5

In the nation of Lanticore, real GDP per capita grows at 2% per year. For Lanticore's real GDP per capita to approximately double, it will take about:

35 years, because the Rule of 70 states that the number of years it takes for a variable to double is equal to 70 divided by the annual growth rate of the variable.

GDP has grown in a country at 4% per year for the last 30 years. The labor force has grown at 1% per year and the quantity of physical capital has grown at 5% per year. Physical capital per worker in this country has grown by _____%.

4

If an amount doubles in 14 years, its growth rate must be about _____%.

5

If the average family makes $50,000 and the real GDP per capita increases 4%, that will increase the family's total income to $_____.

52,000

What is the mathematical formula used by economists to determine how many years it will take the real GDP per capita to double?

70 divided by annual percentage growth rate

In which of the following cases could the Rule of 70 NOT be applied?

A country's real GDP per capita is decreasing.

Which of the following situations represents physical capital?

Ann's tractor that she uses to plow her fields