ISU ECON 102 Test 2 Chapter 6

In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2012 was

$1,545.

During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2014, real GDP per person was

$128.

The real wage rate equals

(money wage rate)/(price level).

Suppose a nation's population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?

3 percent per year

During 2013, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2012, real GDP was 105 billion and the population was 0.85 billion. Economia's growth rate of real GDP per person is

3.4 percent.

Slowdonia's current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person?

35 years

Using the Rule of 70, if the country of Huttodom's current growth rate of real GDP per person was 10 percent a year, how long would it take the country's real GDP per person to double?

7 years

Slowdonia's current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person?

70 years

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012?

9.0 percent

The best definition for economic growth is

a sustained expansion of production possibilities measured as the increase in potential GDP over a given period.

Neoclassical growth theory predicts that

advances in technology increase the productivity of capital, which leads to an increase in investment and rising real GDP per person.

Saving and investment that increase a nation's capital lead to

an increase in labor productivity.

The view that population growth occurs when real GDP per person exceeds the amount necessary to sustain life is part of the ________.

classical growth theory

If capital per hour of labor decreases, real GDP per hour of labor

decreases for a given level of technology.

The gaps between the United States and the Asian countries of Honk Kong, Singapore, Korea and China have been

decreasing

Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is

decreasing.

The decreasing slope of a production function reflects

diminishing returns.

If a nation's population grows, then

growth in real GDP per person will be less than the growth of real GDP.

We are interested in long-term growth primarily because it brings

higher standards of living.

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap?

in 15 years

Labor productivity increases with

increases in capital.

Technological change

increases potential GDP.

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

labor input and real GDP

According to the law of diminishing returns, an additional unit of

labor produces less output than the previous unit.

If capital per worker rises

labor productivity increases.

A decrease in population shifts the

labor supply curve leftward.

A higher saving rate leads to faster growth because

more saving produces greater additions to capital per hour of labor, raising real GDP per person.

Factors that influence labor productivity include ________.

physical capital, human capital, and technology

An increase in labor productivity relates to

producing the same output with fewer labor hours.

If workers' money wage rates increase by 5 percent and the price level remains constant, workers'

quantity of labor supplied will increase.

Labor productivity is defined as

real GDP per hour of labor.

Which of the following is used to calculate the standard of living?

real GDP/population

The quantity of labor demanded depends on the

real wage rate not the money wage rate.

Suppose that in 2015 a country has a population of 1 million and real GDP of $1 billion. In 2016, the population is 1.1 million and the real GDP is $1.1 billion. The real GDP per person growth rate is

zero.

If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double?

17.5

According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE? A) India's PPF has been shifting rightward since 1997. B) India has been moving from a point within its PPF to points beyond its PPF. C) India's PPF has been shifting leftward since 1997. D) India's PPF has not shifted since 1997.

A) India's PPF has been shifting rightward since 1997.

During the last 50 years, which of the following had the lowest level of real GDP per person?

Africa

If the price level increases and workers' money wage rates remain constant,which of the following will occur? I. The quantity of labor supplied will decrease. II. The real wage rate will decrease. III. The labor supply curve will shift rightward.

B) I and II

Which of the following statements regarding human capital is INCORRECT? A) Writing and mathematics, the most basic of human skills, are crucial elements in economic progress. B) The accumulation of human capital is the source of both increased productivity and technological advance. C) Education is the only vehicle for the creation of human capital because training simply reinforces what has already been learned. D) Human capital is the accumulated skill and knowledge of human beings.

C) Education is the only vehicle for the creation of human capital because training simply reinforces what has already been learned.

Which of the following statements is CORRECT? I. Higher savings rates can stimulate economic growth. II. Limiting international trade can stimulate economic growth.

I only

Which of the following ideas apply to the neoclassical growth theory? I. The rate of technological change influences the rate of economic growth. II. Technological change promotes saving and investment. III. Convergence of economic growth rates across countries

I, II and III

Which of the following statements regarding U.S. economic growth is NOT correct?

The growth rate of real GDP per person accelerated between 1973 to 1984.

According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Based on this story, it is most likely that the slowdown reflects a

temporary business cycle slowdown.

Classical growth theory proposes that real GDP growth is ________ and that real GDP per person will ________ the subsistence level.

temporary; temporarily be above

If a rich country grows at a faster rate than a poor one, then

the gap in their standard of living will widen over time.

A movement along the aggregate production function is the result of a change in

the quantity of labor.