Ch 19 economics
What is the standard of living?
A measure of a nation's economic well-being
Labor productivity and economic growth will increase when what happens?
A nation invests into education for all
Why is fiscal policy important for the economy?
It influences aggregate demand.
Which of the following BEST defines technology?
A nation's understanding of how the world works
Which of the following would be considered physical capital in agriculture?
A tractor used by the farmer
Which is a characteristic of economic growth?
An economy's long run potential output increases.
Why is productivity significant to economic growth?
Because nations with a higher productivity grow at a faster rate.
Country A has a real GDP of $5,000 and a population of 20, while Country B has a real GDP of $20,000 and a population of 100. Which of the following statements is true?
Country A has a higher standard of living.
Which of the following metrics is used when calculating GDP using the expenditure approach?
Government purchases
_____ refers to the total amount of goods and services are produced within the economy.
Gross domestic product
Why is physical capital important to an economy?
It increases the productivity of goods and services.
Economists call the equipment and structures used to produce goods and services:
Physical capital
n the long run, what is a country's standard of living dependent on?
Productivity
What is human capital?
The education and experience of the labor force
Which of the following metrics is used when calculating GDP using the income approach?
labor and wages
One way to create new technologies is by investing into _____.
research & development
What is the main benefit of investing in human capital?
An increase in productivity, which leads to greater economic output
Which of the following will most likely encourage long-run economic growth?
An increase in the per capita savings rate
Which of the following will likely increase productivity in a corporation?
Availability of influenza vaccines
How can governments encourage savings and investment?
By decreasing tax rates on savings accounts and investment income
How can the government encourage investment in human capital?
By investing in education
Country A invests 25% of GDP into human capital, while Country B invests only 9%. Which country will grow faster and why?
Country A will grow faster because it invested more into human capital
What is the definition of GDP?
Gross domestic product: The total value of all goods and services produced in a country in a given year (or other time period).
Which of the following will most likely occur as a result of an increase in labor productivity?
Higher economic output and lower inflation.
If GDP is calculated by both the expenditure approach and the income approach, what will be the difference in the end values?
If calculated correctly, there is no difference between GDP calculated using the expenditure approach or the income approach.
Which of the following is MOST likely to produce higher economic growth in the long run?
Investment tax credits
Which of the following is FALSE regarding the productivity of a nation?
It cannot be increased because of rising prices.
Which of the following statements is FALSE about long run economic growth?
It is illustrated as a rightward shift in the short-run aggregate supply curve.
How is labor productivity, measured as output per worker, affected by economic drivers?
It rises with increases in technology.
How is savings directly connected to economic growth?
Money in savings accounts gets loaned out to businesses who invest into the economy.
What is the accounting methodology used to calculate the GDP, regardless of the approach used?
National income accounting
Rachel manages a box factory and just hired Franco. Does Franco count as physical capital?
No; he is considered human capital.
Why is real GDP a poor indicator of economic growth?
Real GDP is a short run measure, and economic growth is a long run potential.
Which one of the following scenarios would cause a nation's standard of living to increase?
Real GDP rises faster than the population.
Human capital refers to which of the following?
The education and experience of the labor force.
In the short run, economic growth is measured in terms of which of the following?
The percentage change in real GDP
Economists define Real GDP per capita as which of the following?
The value of economic output of a nation divided by the population
Why is research and development significant?
To discover new knowledge for the purpose of developing new products or processes.
Which of the following is NOT an example of physical capital?
patents
Which of the following is NOT a determinant of the productivity of a nation?
price controls