Macro Ch. 7 Sample Quiz

A nation's standard of living is best measured by its... A) real GDP per person. B) real GDP. C) nominal GDP. D) nominal GDP per person.

A) real GDP per person.

The key determinant of the standard of living in a country is... A) the amount of goods and services produced per worker. B) the total amount of goods and services produced within the country. C) the total amount of its physical capital. D) its growth rate of real GDP.

A) the amount of goods and services produced per worker.

The quantity of goods and services that can be produced by one worker in one hour is referred to as... A) productivity. B) technology. C) real GDP. D) human capital.

A) productivity.

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions? A) A relatively simple way to increase growth rates permanently is to increase a country's saving rate. B) Growth is generally inhibited rather than promoted by policies like protective tariffs. C) Well-established property rights that are enforced by fair and efficient courts are important to economic growth. D) Countries with few domestic natural resources still have opportunities for economic growth.

A) A relatively simple way to increase growth rates permanently is to increase a country's saving rate.

Real GDP per person is $10,000 in Country A, $20,000 in Country B, and $30,000 in Country C. The saving rate increases by the same rate in all three countries. Other things equal, we would expect that... A) Country A will grow the fastest. B) Country B will grow the fastest. C) Country C will grow the fastest. D) All three countries will grow at the same rate.

A) Country A will grow the fastest.

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is NOT one of these conclusions? A) Restricting investment in domestic industries by foreigners promotes economic growth as it ensures that profits stay in the country. B) Growth is generally inhibited rather than promoted by policies like protective tariffs. C) Well-established property rights that are enforced by fair and efficient courts are important to economic growth. D) Countries with few domestic natural resources still have opportunities for economic growth.

A) Restricting investment in domestic industries by foreigners promotes economic growth as it ensures that profits stay in the country.

If an economy is growing at 6% a year while the population is growing at 3% a year, what is true about this economy? A) The standard of living is rising. B) The standard of living is falling. C) The standard of living is not changing. D) There is no way to know.

A) The standard of living is rising.

A country's human capital increases... A) if its workers become better educated and healthier. B) only if its workers become better educated. C) only if its workers become healthier. D) None of the above is correct.

A) if its workers become better educated and healthier.

Human capital is... A) knowledge and skills that workers have acquired. B) the same thing as technological knowledge. C) the same thing as labor. D) the tools and equipment operated by humans.

A) knowledge and skills that workers have acquired.

When a country saves a larger portion of its GDP than it did before, it will have ... A) more capital and higher productivity. B) more capital and lower productivity. C) less capital and higher productivity. D) less capital and lower productivity.

A) more capital and higher productivity.

Last year real GDP in the imaginary town of Springville was $9,075,000 and the population was 3,300. The year before, real GDP was $7,500,000 and the population was 3,000. What was the growth rate of real GDP per person during the year? A) 14% B) 10% C) 21% D) 17%

B) 10%

All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit? A) Output will rise by more than it did when the previous unit was added. B) Output will rise but by less than it did when the previous unit was added. C) Output will fall by more than it did when the previous unit was added. D) Output will fall but by less than it did when the previous unit was added.

B) Output will rise but by less than it did when the previous unit was added.

Which of the following statements is correct? A) Productivity is a determinant of human capital per worker. B) Technological knowledge is a determinant of productivity. C) Human capital and technological knowledge are the same thing. D) All of the above are correct.

B) Technological knowledge is a determinant of productivity.

Other things the same, if saving falls in some period, then in that period... A) consumption falls and investment rises. B) consumption rises and investment falls. C) consumption and investment fall. D) consumption and investment rise.

B) consumption rises and investment falls.

Which of the following will decrease a country's real GDP per person? A) reducing restrictions on foreign trade and imposing restrictions on foreign investment B) imposing restrictions on foreign trade and foreign investment C) reducing restrictions on foreign trade and foreign investment D) imposing restrictions on foreign trade and reducing restrictions on foreign investment

B) imposing restrictions on foreign trade and foreign investment

The catch-up effect refers to the idea that... A) saving will always catch-up with investment spending. B) it is easier for a country to grow fast and so catch up if it starts out relatively poor. C) population eventually catches-up with increased output. D) if investment spending is low, increased saving will help investment to "catch up."

B) it is easier for a country to grow fast and so catch up if it starts out relatively poor.

Pharmaceutical companies often obtain patents on new products, thereby turning new ideas into... A) private goods but decreasing the incentive to engage in research. B) private goods and increasing the incentive to engage in research. C) public goods and increasing the incentive to engage in research. D) public goods but decreasing the incentive to engage in research.

B) private goods and increasing the incentive to engage in research.

A nation's standard of living is best measured by its... A) real GDP. B) real GDP per person. C) nominal GDP. D) nominal GDP per person.

B) real GDP per person.

Other things the same, when an economy increases its saving rate... A) consumption and production rise now. B) consumption rises now and production rises later. C) consumption falls now and production rises later. D) consumption falls now and production falls later.

C) consumption falls now and production rises later.

The logic behind the catch-up effect is that... A) workers in countries with low incomes will work more hours than workers in countries with high incomes. B) the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. C) new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. D) None of the above is correct.

C) new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

Country X and country Y are the same except country X currently has more capital. Assuming diminishing returns, if both countries increase their capital by 1,000 units and the other factors that determine output are unchanged, then... A) output in country X increases by the same amount as in country Y. B) output in country X increases by more than in country Y. C) output in country X increases by less than in country Y. D) output in country X increases and output in country Y decreases.

C) output in country X increases by less than in country Y.

Patents turn new ideas into ... A) public goods, and increase the incentive to engage in research. B) public goods, but decrease the incentive to engage in research. C) private goods, and increase the incentive to engage in research. D) private goods, but decrease the incentive to engage in research.

C) private goods, and increase the incentive to engage in research.

If the economy of Country Z is growing at an annual rate of 5%, how long will it take for the size of this economy to double? A) 7 years B) 5 years C) 70 years D) 14 years

D) 14 years

Last year real GDP in the imaginary nation of Oceania was $5,610,000 and the population was 2,200. The year before, real GDP was $5,000,000 and the population was 2,000. What was the growth rate of real GDP per person during the year? A) 12 percent B) 10 percent C) 4 percent D) 2 percent

D) 2 percent

If the economy of Country Y is growing at an annual rate of 3.5%, how long will it take for the size of this economy to double? A) 70 years B) 7 years C) 10 years D) 20 years

D) 20 years

Productivity increases if... A) saving and investment increase the amount of physical capital per worker. B) improvements in health and education increase the accumulation of human capital. C) there is an increase in technological knowledge. D) All of the above answers are correct.

D) All of the above answers are correct.

If an economy is growing at 4% a year while the population is growing at 5% a year, what is true about this economy? A) There is no way to know. B) The standard of living is not changing. C) The standard of living is rising. D) The standard of living is falling.

D) The standard of living is falling.

The key determinant of the standard living in a country is... A) its growth rate of real GDP. B) total output. C) the total amount of its physical capital. D) productivity.

D) productivity.

Which of the following will increase a country's real GDP per person? A) imposing restrictions on foreign trade and foreign investment B) imposing restrictions on foreign trade and reducing restrictions on foreign investment C) reducing restrictions on foreign trade and imposing restrictions on foreign investment D) reducing restrictions on foreign trade and foreign investment

D) reducing restrictions on foreign trade and foreign investment