Econ 204 Chapter 1 Quiz

According to the World Bank, real per capita income in the U.S. increased from $57,640 in 2015 to $58,030 in 2016. What was the approximate annual growth rate?

0.7%

People are more productive when they specialize (focus on a limited range of activities) due to:

Difference in ability Learning by doing Economies of scale ^All of the above

Which of the following statements is correct regarding disposable income?

Disposable income is the maximum amount of expenditure possible without having to borrow or sell possessions.

Which of the following variables has NOT followed the so-called 'hockey-stick' trajectory? Recall, the 'hockey-stick' trajectory refers a situation where there has been little to no growth for most of history, followed by a sudden and sharp change to a positive growth rate

Inequality

Consider a world of just two individuals, Gonzalo and Leila, who each need two goods to survive, apples and wheat. They differ in how productive they are in growing apples and wheat: Gonzalo: 2000 apples or 60 tons of Wheat Leila: 1000 apples or 50 tons of Wheat

Leila has a comparative advantage in producing wheat. Gonzalo can produce twice as much apples and 1.2 times more wheat than Leila. Therefore Leila has a comparative advantage in producing wheat and a comparative disadvantage in producing apples.

Capitalism is an economic system based on

Private property, markets, and firms

Look again at Figure 1.10, which shows a graph of GDP per capita for West and East Germany, Japan and Spain between 1950 and 1990. Which of the following statements is correct?

Spain was able to grow at a higher growth rate than Germany between 1950 and 1990.

Figure 1.2 shows the distribution of income across and within countries in 2014. The height of each bar represents the annual income of the population (for each decile), measured in 2005 US$, while the width of each country's bar represents its population. The red countries were the poorest countries in 1980, while the green countries were the richest in 1980

The poorest decile in the US earns more than the richest decile in some poor countries.

The historical process which led to requiring fewer inputs to produce the same output is referred to as

The technological revolution

What does US GDP per capita measure?

The total output of the US's economy, divided by the country's population.