Section 7 Economics

Which of the following choices is most likely to create a rightward shift of the production possibilities curve?

Greater investments in human capital

Which of the following is a chief measure of economic growth over time?

Increases in real per capita GDP.

Which of the following contributes to economic development?

Investment in infrastructure.

Which of the following would NOT qualify as physical capital?

Mineral deposits

Which of the following choices is most likely to create a rightward shift of the LRAS curve?

Research and development

Roads, telephone lines, power facilities, and schools are examples of a nation's:

infrastructure.

An action that would hinder growth would be:

the lack of government oversight for property rights.

Rising high school graduation rates are an example of an increase in:

human capital.

Labor productivity growth can be attributed to:

improvement in technological process.

The term "Human capital" describes:

improvement in the worker made possible by education, training and knowledge.

In the long run an increase in saving will generally:

increase the rate of economic growth.

Technological progress is advanced through:

research and development.

Long-run economic growth has been mostly dependent on:

rising productivity.

Sources of funds for investment spending are:

savings by households, government, and foreigners.

The rule of 70 indicates that a 6% annual increase in the potential level of real GDP would lead to the potential output doubling in about _______ years.

12

Suppose a panel of economists is predicting that a nation's real GDP per capita will have an average annual growth rate of 2%. Based upon the Rule of 70, how many years will it take for this nation's real GDP per capita to double?

35

Diminishing returns to physical capital implies that, when human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to:

a smaller increase in productivity.

Diminishing returns to physical capital means that, when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to:

a smaller increase in productivity.

Which of the following movements is considered economic growth?

d to f (shift curve up)

Dave has gone back to school to learn computer programming. Dave's investment in _____ should increase his own labor productivity.

human capital

Workers today are more productive than workers in the past because:

workers now have more physical capital embodying better technology to work with.

If a country has a population of 1,000, an area of 100 square miles, and a GDP of $5,000,000, then its GDP per capita is:

$5,000.

Which of the following will not increase the productivity of labor?

an increase in the size of the labor force

Of the following choices, which combination of investment and consumer goods would provide the greatest potential for future long term growth?

b (most investment least consumer)

From the standpoint of economic growth, banks are important to:

channel savings into investment.

Investment spending:

comes from either savings from domestic households or savings of foreign households.

Southwest Airlines has a fleet of airplanes that requires constant maintenance to make sure that these assets are both productive and safe to operate.Without this maintenance, these assets would

depreciate.

When the value of an asset falls due to age, wear, or obsolescence, it is called:

depreciation.

The convergence hypothesis says that:

differences in real GDP per capita among countries tend to narrow over time.

The economy of Franklandia has invested in research and development of new technologies and production methods. In the long run, how would this be illustrated on the AS/AD model?

economic growth and a rightward shift of LRAS.

Long-run economic growth depends almost entirely on:

labor productivity growth.

Many economists agree that environmental damage from economic growth:

occurs, but can be contained with market-based incentives and concerted government action.

Among the public goods important for economic growth are:

political stability.

Economists are optimistic that growth can continue in the face of resource scarcity because:

prices of scarce resources rise and provide incentives to find alternative energy sources.

Productivity is equal to:

real GDP divided by number of workers.