Section 7 Multiple Choice

If aggregate real output is growing faster than the total population, then: A. real GDP per capita is rising. B. the standard of living is declining. C. the national income is falling. D. nominal GDP per capita is falling. E. the national income per capita is falling.

real GDP per capita is rising

Productivity is equal to: A. real GDP divided by number of workers. B. real GDP divided by number of capital inputs. C. number of workers per machine. D. total output produced. E. real GDP divided by the unemployment rate.

real GDP divided by number of workers.

If real GDP doubles in 35 years, its average annual growth rate is approximately _______. A. 1% B. 2% C. 3% D. 4% E. 7%

2%

Assume two countries on a peninsula. The first has real GDP per capita growth rate of 2% and its neighbor to the south is growing at 5%. How much more quickly in years will the country in the south double its GDP per capita compared to its neighbor in the north? A. 5 years B. 10 years C. 15 years D. 21 years E. 35 years

21 years

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? A. 35 B. 70 C. 140 D. 20 E. 50

35

If a country has a population of 1000, an area of 100 square miles, and a GDP of $5000000 then its GDP per capita is: A. $500. B. $5,000. C. $50,000. D. $5,000,000. E. $50.

5000

An increase in the capital stock would shift the production function _______. A. upward B. inward C. downward D. to the right E. to the left

upward

Suppose a panel of economists is predicting that a nation's real GDP per capita will double in approximately 10 years. Based upon the Rule of 70, what must be predicted annual growth rate of real GDP per capita? A. 140% B. 7% C. 2.85% D. 14% E. 5%

7%

Which of the following choices would be a factor that contributes to a nation's rapid long-run economic growth? A. Faster technological progress. B. Faster population growth. C. Less physical capital per worker. D. Lower levels of average human capital. E. Fewer environmental regulations on industries.

Faster technological progress.

Which of the following contributes to economic development? A. Low saving and investment rates. B. A command socialist economic system. C. Investment in infrastructure. D. Complete absence of government involvement. E. High rates of absenteeism at the workplace.

Investment in infrastructure.

Use the "Productivity" Figure 38-1. Suppose there has been a considerable improvement in technology with everything else remaining unchanged, then it is shown on the diagram as: A. a movement from B to A. B. a movement from A to B. C. a movement from B to C. D. a movement from A to C. E. a movement from C to B.

a movement from B to C.

Greenhouse gas emission is an example of: A. a negative externality. B. a public good. C. a positive externality. D. a private good. E. a problem that cannot be solved with economic incentives.

a negative externality.

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. a smaller increase in productivity. B. a larger increase in productivity. C. a decrease in productivity. D. negative productivity. E. zero productivity.

a smaller increase in productivity.

From the standpoint of economic growth, banks are important to: A. fight inflation. B. keep interest rates low. C. channel savings into investment. D. channel investment into savings. E. facilitate the use of checking and savings accounts.

channel savings into investment.

Growth accounting estimates the: A. increase in the population rate over time. B. increase in the inflation rate over time. C. contribution of each major factor in the aggregate production function to economic growth. D. increase in the rate of technological progress over time. E. increase in the rate of educational attainment over time.

contribution of each major factor in the aggregate production function to economic growth.

The idea that relatively poor nations should have higher rates of growth of real GDP per capita than relatively rich nations is known as the _____. A. East Asian miracle B. Industrial Revolution C. sustainable development hypothesis D. Malthusian hypothesis. E. convergence hypothesis

convergence hypothesis

The convergence hypothesis says that: A. differences in real GDP per capita among countries tend to narrow over time. B. differences in real GDP per capita among countries tend to increase over time. C. differences in real GDP per capita do not have much affect on living standards in the long run. D. aggregate production functions in different countries will all be the same in the long run. E. differences in real GDP per capita among countries tend to remain constant over time.

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

Growth accounting enables us to: A. discover how long it takes the economy to grow. B. discover the effects of technological progress on economic growth. C. compare growth rates across countries. D. better calculate real GDP per capita. E. analyze the differences in human capital attainment across countries.

discover the effects of technological progress on economic growth.

Long-run economic growth is: A. higher in countries when it has a weak rule of law and excessive government intervention. B. lower in countries when it has a strong government and independent judiciary. C. lower in countries when the courts enforce property rights and a government that protects its citizens. D. higher in countries when it has a strong rule of law and political stability. E. higher in countries when it has a strong rule of law and a corrupt judiciary.

higher in countries when it has a strong rule of law and political stability.

Economic growth will likely involve: A. a reduction in investment. B. a decrease in the capital stock. C. higher saving. D. lower saving. E. a downward shift in the aggregate production function.

higher saving.

The term "Human capital" describes: A. improvement made possible by better machines and equipments available. B. improvement in the technology available to the work force. C. improvement in the worker made possible by education, training and knowledge. D. improvement in the robotics technology that can substitute for a human worker. E. improvement made possible by better information technology systems.

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

Economists say that long-run economic growth is almost entirely due to: A. rising productivity. B. population growth. C. a democratically elected government. D. a balanced budget. E. perfectly competitive markets.

rising productivity.

In the long run an increase in saving will generally: A. reduce the rate of economic growth. B. leave the rate of economic growth unchanged. C. increase the rate of economic growth. D. increase consumption simultaneously. E. decrease the standard of living.

increase the rate of economic growth.

Roads, telephone lines, power facilities, and schools are examples of a nation's: A. technostructure. B. infrastructure. C. physiostructure. D. sociostructure. E. political structure.

infrastructure

A negative externality: A. is not as costly as a positive externality. B. is a cost that individuals or firms impose on others without having to offer compensation. C. is immune to economic incentives. D. is an unavoidable consequence of budget deficits. E. cannot be fixed by market forces.

is a cost that individuals or firms impose on others without having to offer compensation.

Economists generally agree that ____ are the best way for governments to reduce greenhouse gases to address climate change. A. military actions B. trade embargos C. direct pollution controls D. subsidies for off-shore oil exploration E. market-based incentives

market-based incentives

The formula for the rule of 70, where n is number of years and r is growth rate, is expressed as: A. n × 70 = r. B. n ÷ r = 70. C. r ÷ n = 70. D. n × r = 70. E. n + r = 70

n × r = 70.

Real per capita GDP is A. real GDP divided by the population. B. real GDP divided by the amount of capital available in the economy. C. not a good useful measure of human welfare. D. rarely used as a tool to compare countries' possible resources. E. measures the value of the nation's financial markets.

real GDP divided by the population

When measuring a nation's standard of living, of the following, the best measure is: A. nominal GDP. B. market GDP. C. real GDP. D. nominal GDP per capita. E. real GDP per capita.

real GDP per capita

Technological progress is advanced through: A. research and development. B. government regulation. C. consumption. D. infrastructure. E. taxes and transfers.

research and development.

All else equal, a nation that has a high rate of ____ will cause a high rate of _____ and therefore a higher growth rate of _____ capital. A. investment; savings; human B. savings; investment; natural C. savings; investment; physical D. savings; consumption; physical E. consumption; investment; natural

savings; investment; physical

Human capital refers to: A. output per worker. B. the education and knowledge embodied in the workforce. C. society's investment in capital goods. D. people working with capital goods. E. management information systems.

the education and knowledge embodied in the workforce.

The rule of 70 states that: A. the average lifespan of a developed nation should be at least 70 years. B. everyone should retire by age 70. C. the number of years for a variable to double equals 70 divided by its annual growth rate. D. Social Security benefits should increase when people reach 70. E. a nation cannot be considered developed unless at least 70% of the population is literate.

the number of years for a variable to double equals 70 divided by its annual growth rate.

Physical capital would include: A. the education or knowledge a worker has in his or her physical being. B. the tools a worker has to work with. C. the money available for the worker to use. D. shares of stock. E. the natural resources a worker has to work with.

the tools a worker has to work with.

Investment in human capital shifts the aggregate production function: A. downward. B. leftward. C. inward. D. rightward. E. upward.

upward