macroeconomics exam 2

The long-run average annual compound rate of growth for the United States between 1800 and 2019 was _____________ per year. -1.7% -2.6% -.4% -6%

1.7%

Real GDP per capita is usually used to compare the standard of living of -b. two different individuals at one point in time. -c. two different countries at one point in time. -a. the same country at different points in time. None of the above. -a & c only.

a- the same country at different points in time c-two different countries at one point in time

The proximate or immediate components that contribute to the rate of economic growth in an economy include the quantity and quality of -none of these -technical knowledge -organizational methods -human capital -all of the above -physical capital

all the above -technical knowledge -organizational methods -human capital -physical capital

The money needed to purchase more physical capital can also come from companies ________________ directly from financial institutions.

borrowing

The financial system is the _______________ connecting those doing the saving with those doing the investing.

bridge

Sometimes the percentage change in real GDP from one period to the next is less than the long-run trend in economic growth and at other times it is more. These departures from the long-run trend in economic growth are known as _________________________.

business cycles

Spending on services declines less during contractions than does spending on _____________________.

durables

The accumulated knowledge from education and experience, skills, and expertise that the average worker in an economy possesses is called _________________.

human capital

An economy-wide improvement in technology will result in an _______________ in the demand for loanable funds; putting _____________ pressure on interest rates moving the market for loanable funds toward exchanging a greater quantity of loanable funds.

increase upward

Firms purchase additional physical capital to ___________ their production costs.

lower

The financial system is a general term for all transactions that occur in financial ______________ or through financial ________________.

market intermediaries

Annual economic growth is defined as the -percentage change in real GDP per capita from one year to the next -difference from one year to the next in nominal GDP per person. -percentage change in nominal GDP per capita from one year to the next. -difference from one year to the next in real GDP per person.

percentage change in real GDP per capita from one year to the next

Total savings in a closed economy equals the sum of ____________ and ___________ savings.

private public

GDP plus transfer payments minus total consumption expenditure minus total tax payments equal total ________________________.

private savings

Savers _____________ funds through the financial system to those wanting to borrow.

provide

When there is positive economic growth, it tends to -raise the the standard of living for everyone in the country experiencing it. -only benefit the highest income individuals in the country experiencing it. -decrease the quality of life. -increase the level of criminal activity in the country experiencing it.

raise the standard of living for everyone in the country experiencing it

Periods of economic expansion are followed by periods of economic contraction, also called ______________________.

recessions

Unexpected events to which an economy has difficulty quickly adjusting to are called economic __________________.

shocks

For thousands of millenium prior to about 1700 a.d. people's real incomes were the equivalent of about _________ per day. -$20-$30 -$100 -$2-$3 -$14-$16

$2-$3

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. -2% -12% -32% -22%

2%

In 2018 the U.S. real GDP was $18.69 trillion ($2012 dollars). In 2019, it was $19.09 trillion ($2012 dollars). What was the percentage rate of growth in real GDP from 2018 to 2019 ( to 2 decimal places, e.g., X.XX%)_______________.

2.14%

If the U.S. real GDP per capita had grown just 0.5% faster since 1800 a.d., today's real GDP per capita would be about ______ times greater than it is. -4 -5 -3 -2

3

Assuming a country's economy maintains an 8% rate of growth, the earliest young adults starting at age 20 would see a doubling in the average standard of living in their country would be by the time they had reached age __________. -30 -40 -50 -60

30

There is a positive correlation between real GDP per capita and: -a measure of the average level of happiness in a country -none of the above -the average life expectancy in a country -all of the above -the average level of education in a country

all the above

Economies that extensively rely on voluntary exchanges of private property have grown more slowly than average. -True -False

false

Random 'luck' does not help explain variations in economic growth rates between economies. -True -False

false

Slow growing economies do not benefit from the technical advances of fast growing economies. -True -False

false

The growth in employment and incomes decline during recessions but not the growth in total production (real GDP). -True -False

false

The higher the average level of real income per person in a country is, the lower is the average level of environmental quality. -True -False

false

When someone purchases an existing share of stock, investment, in the economic sense of the word, has increased. -True -False

false

A well-functioning financial system is necessary for an economy to sustain high rates of economic _______________.

growth

Typically, those economies having the highest standards of living also have -high tariffs -a relatively large export sector -a relatively large import sector -high labor productivity

high labor productivity

Which of the following best describes the relationship between economic growth and literacy? -There is no correlation between economic growth and literacy. -Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education. -Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. -As the economy grows, literacy declines because it becomes less and less useful in a developed economy.

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

The widespread use of power-driven machinery and the economic and social changes that occurred in the first half of the nineteenth century is referred to as _______________.

industrial revolution

As an economy approaches a business cycle peak, _______________ often takes hold and becomes an economic problem.

inflation

Increases in the physical capital stock from one period to the next defines ______________.

investment

Real GDP per capita is an imperfect measure of the average standard of living in a country because: -it does not account for how income is distributed to people. -money cannot buy happiness. -it includes things that are not good for people. -it includes luxury goods and services.

it does not account for how income is distributed to people

Real GDP per hour worked in an economy over the year defines ______________________. -economic efficiency -the capital utilization rate. -labor productivity -consumers' surplus

labor productivity

The money needed to purchase more physical capital can come from companies issuing and selling new ___________ and/or new ____________.

stocks bonds

The meteoric rise in real GDP per capita that has occurred in many countries of the world since about 1750 to 1800 a.d. is described as -the Great Depression. -the collapse of capitalism. -the rise of the welfare state. -The Great Enrichment.

the great enrichment

Which of the following is unlikely to affect the rate of economic growth? -the quality of available resources -the level of government spending -the quantity of available resources -technological change

the level of government spending

Most economists agree that the proximate cause of cyclical variations in the level of real GDP is unexpected variations in the level of _________________.

total spending

Although world standards of living have been rising over time, still about 75% of the world's population earns less than the world's average real income per capita. -True -False

true

Honest government, a non-corrupt judicial system, and political stability all help to promote higher economic growth rates. -True -False

true

Real GDP per capita is probably the best single measure of the average standard of living in a country. -True -False

true

The ability to take economic advantage of the innovations of others is one reason why less developed economies can grow faster than can highly developed economies. -True -False

true

The money needed to purchase more physical capital can come from a company's undistributed profits. -True -False

true

Those economies that use more and better physical capital, experience higher labor productivity than those using less and poorer physical capital. -True -False

true

When governments collect more in taxes than they spend or transfer to others, there is positive public savings. -True -False

true

Comparing real GDP per capita today with real GDP per capita 100 years ago will _______________ the improvements in standards of living. -fully reflect -neglect -over estimate -under estimate

under estimate