Chapter 6 Miracle of Modern Economic Growth

B

At the core of understanding economic growth is the idea that to raise living standards over time, an economy must: A. Produce and consume goods and services B.Save and invest C. Export and import D. Employ resources and earn incomes

B

Before the late 1700's, living standards in the richest part of the world were: A. About five times higher than living standards in the poorest parts of the world B. At most only two to three times higher than living standards in the poorest parts of the world C. About 50 times higher than living standards in the poorest parts of the world D. About the same as living standards in the poorest parts of the world

D

Economists and policy makers are committed to encouraging a high and growing level of real GDP because: A. This implies a lower price level B. This means a higher level of unemployment C. This implies an increase in investment D.This means greater consumption opportunities

A

If a family's income increases by 5% at the same time that inflation is 3.5%, then the: A.Family will need to spend more in order to maintain its standard of living B. Family will need to spend less in order to maintain its standard of living C. Family's standard of living is not affected by inflation D. Family will need to spend the same amount in order to maintain its standard of living

D

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP? A. Nominal and real GDP would both rise. B. Nominal and real GDP would both be unchanged. C. Real GDP would rise, but nominal GDP would be unchanged. D.Nominal GDP would rise, but real GDP would be unchanged.

B

Increased optimism about the future will lead to: A. Less current investment and less future consumption B.More current investment and more future consumption C. More current investment and less future consumption D. Less current investment and more future consumption

C

Macroeconomic models help clarify important questions such as the following, except: A. Can governments reduce the severity of their economies' recessions? B. Is a policy of manipulating interest rates more effective at mitigating short-run economic fluctuations than a policy of changing the tax rates? C. How will OPEC manipulate and maintain the price of crude oil in the world markets? D. Is there a trade-off between lower unemployment and lower inflation?

D

Nominal gross domestic product: A. Is not affected by the level of inflation B. Changes only when there is a change in output C. Changes only when there is a change in the price level D.Can change when there is a change in either output or the price level

C

Purchasing power parity refers to: A. Converting each country's GDP into U.S. dollars B. Dividing each country's GDP by the size of its population C.Adjusting GDP figures for the fact that prices are much lower in some countries than in others D. Adjusting different GDP figures for inflation over time

B

Real GDP measures the: A. total dollar value of all goods and services produced within the borders of a country using current prices. B.value of final goods and services produced within the borders of a country, corrected for price changes. C. total dollar value of all goods and services consumed within the borders of a country, adjusted for price changes. D. value of all goods and services produced in the world, using current prices

D

Suppose a small economy produces only MP3 players. In year 1, 10,000 MP3 players are produce and sold at a price of $100 each. In year 2, 12,000 MP3 players are produced and sold at a price of $80 each. Which of the following statements is true? A. Real GDP and nominal GDP both increase B. Real GDP increases while nominal GDP remains constant C. Real GDP decreases while nominal GDP increases D.Real GDP increases while nominal GDP decreases

A

Suppose that an economy's output does not change from one year to the next, but the price level doubles. What happens to nominal GDP? A. Nominal GDP doubles B. Nominal GDP is halved C. Nominal GDP doesn't change D. There is not enough information to determine what happens to nominal GDP

C

Suppose that an economy's output does not change from one year to the next, but the price level doubles. What happens to real GDP? A. Real GDP doubles B. Real GDP is halved C.Real GDP doesn't change D. There is not enough information to determine what happens to real GDP

D

The Great Recession occurred in: A. 1970-74 B. 1985-87 C. 1992-94 D.2007-09

D

The business cycle depicts: A. fluctuations in the general price level. B. the phases a business goes through from when it first opens to when it finally closes. C. the evolution of technology over time. D.short-run fluctuations in output and employment.

C

There is a trade-off between: A. Saving and investment B. Current production and future consumption C.Current consumption and future consumption D. Consumption and spending

B

Which of the following statements is true? A. Financial investment refers to the creation and expansion of business enterprises B.Economic investment refers to the creation and expansion of business enterprises C. Economic investment refers to the purchase of assets such as stocks, bonds, and real estate D. Both economic investment and financial investment refer to the purchase of assets such as stocks, bonds, and real estate