AP Macroeconomics, Modules 37-40: Section 7 Test

If an economy experiences long-run economic growth, which of the following is true of its potential output? a. It has increased. b. It has decreased. c. It is greater than actual output. d. It is less than actual output. e. It is no longer equal to LRAS.

a. It has increased.

Which of the following is part of an economy's infrastructure? a. highways b. factories c. banks d. automobiles e. workers

a. highways

The "convergence hypothesis" a. states that low levels of real GDP per capita are associated with higher growth rates. b. has been proven by evidence from all parts of the world. c. contradicts the "Rule of 70." d. states that differences in real GDP per capita among nations widen over time. e. states that differences in real GDP per capita among nations widen over time.

a. states that low levels of real GDP per capita are associated with higher growth rates.

Which of the following statements is true of environmental quality? a. It is typically not affected by government policy. b. There is broad scientific consensus that models suggest rising levels of carbon dioxide and other gases are causing the climates around the world to change. c. Ceteris paribus, it tends to improve with economic growth. d. Most economists believe it is not possible to reduce greenhouse gas emissions while economic growth continues. e. Most environmental success stories involve dealing with global, rather than local impacts.

b. There is broad scientific consensus that models suggest rising levels of carbon dioxide and other gases are causing the climates around the world to change.

The reduction in the value of an asset due to wear and tear is known as a. negative investment. b. depreciation. c. disinvestment. d. net investment. e. economic decline.

b. depreciation.

In the aggregate supply and demand model, a rightward shift of the LRAS curve indicates which of the following? a. an economic recovery b. long-run economic growth c. an increase in unemployment d. a decrease in real GDP e. an increase in the aggregate price level

b. long-run economic growth

The technical means for the production of goods and service is known as a. physical capital. b. technology. c. human capital. d. productivity. e. machinery and equipment.

b. technology.

According to the "Rule of 70", if a country's real GDP per capital grows at a rate of 2% per year, it will take how many years for real GDP per capital to double? a. 70 b. 20 c. 35 d. 3.5 e. It will never double at that rate

c. 35

The following statement describes which area of the world? "This area has experienced growth rates unprecedented in history and now looks like an economically advanced country." a. Latin America b. Africa c. East Asia d. North America e. Europe f.

c. East Asia

Which of the following is true of sustainable long-run economic growth? a. It was predicted by Thomas Malthus. b. It is less likely when we find alternatives to natural resources. c. Long-run growth can continue in the face of the limited supply of natural resources. d. Modern economies handle resource scarcity problems poorly. e. All of the above are true.

c. Long-run growth can continue in the face of the limited supply of natural resources.

According to the convergence hypothesis, over time, international differences in real GDP per capita will a. increase exponentially. b. increase slightly. c. decrease. d. remain the same. e. disappear.

c. decrease.

Which of the following is listed among the key sources of growth in potential output? a. expansionary fiscal policy b. expansionary monetary policy c. investment in human capital d. a rightward shift of the short-run aggregate supply curve e. a rightward shift of the aggregate demand curve

c. investment in human capital

Assuming diminishing returns to physical capital, if physical capital per worker is $50,000, real GDP per worker will most likely equal which of the following? a. more than $60,000 b. $60,000 c. less than $60,000 but greater than $40,000 d. $40,000 e. $0

c. less than $60,000 but greater than $40,000

An outward shift of the production possibilities curve indicates which of the following? a. a decrease in potential output and the natural rate of unemployment b. a decrease in cyclical unemployment c. long-run economic growth d. a reduction in productive resources e. a decrease in opportunity costs

c. long-run economic growth

Long-run economic growth depends almost entirely on a. technological change. b. increased labor force participation. c. rising productivity. d. rising real GDP per capita. e. population growth.

c. rising productivity.

If real GDP grows by 5% per year, approximately how many years will it take for it to double? a. 105 b. 75 c. 35 d. 15 e. 5

d. 15

If a country's real GDP per capita doubles in 10 years, what was its average annual rate of growth of real GDP per capita? a. 3.5% b. 10% c. 700% d. 7% e. 70%

d. 7%

Economies experience more rapid economic growth when they do which of the following? I. add physical capital II. promote technological progress III. limit human capital a. I only b. II only c. III only d. I and II only e. I and III only f. II and III only g. I, II, and III

d. I and II only

Depreciation leads to a. an outward shift of the production possibilities curve. b. a reduction in human capital. c. an increase in human capital. d. a reduction in physical capital. e. an advance in technology.

d. a reduction in physical capital.

Which of the following will lead to long-run economic growth? a. a decrease in nominal wages b. a decrease in aggregate price levels c. an increase in the production of consumer goods d. an increase in total productivity e. actual output that exceeds potential output

d. an increase in total productivity

Which of the following is an example of physical capital? a. health care b. education c. money d. machinery e. all of the above

d. machinery

Which of the following is they key statistic used to track economic growth in terms of the standard of living? a. GDP b. median real GDP c. median real GDP per capita d. real GDP per capita e. real GDP

d. real GDP per capita

When the government spends money to create and implement new technologies, it has invested in a. human capital. b. physical capital. c. infrastructure. d. research and development. e. political stability.

d. research and development.

If long-run economic growth can continue into the future despite limited natural resources, it is considered a. acceptable. b. equitable. c. economical. d. sustainable. e. expandable.

d. sustainable.

Which of the following will shift the production possibilities curve outward? I. technological progress II. an increase in the production of consumer goods III. an increase in the production of investment goods a. I only b. II only c. III only d. I and II only e. I and III only f. II and III only g. I, II, and III

e. I and III only

Which of the following is true about the role of natural resources in productivity growth? a. They are a more important determinant of productivity than human or physical capital. b. They have played an increasingly prominent role in productivity growth in recent years. c. They play no role in determining productivity growth. d. They played a less important role in productivity growth. e. They result in higher productivity, ceteris paribus.

e. They result in higher productivity, ceteris paribus.

Which of the following can lead to increases in physical capital in an economy? a. increased investment spending b. increased savings from foreign households c. an inflow of foreign capital d. increased savings by domestic households e. all of the above

e. all of the above

Which of the following is cited as an important factor preventing long-run economic growth in Africa? a. lack of property rights b. poor health c. political instability d. unfavorable geographic conditions e. all of the above

e. all of the above

In the production possibilities curve model, long-run economic growth is shown by a(n) a. inward shift of the P.P.C. b. movement from a point below the P.P.C. to a point on the P.P.C. c. movement from a point on the P.P.C. to a point below the P.P.C. d. movement from a point on the P.P.C. to a point beyond the P.P.C. e. outward shift of the P.P.C.

e. outward shift of the P.P.C.

Using the graph from question 33, an upward shift of the curve shown could be caused by which of the following? a. an increase in real GDP per worker b. investment in physical capital c. diminishing returns to physical capital d. increase in population e. rising total factor productivity

e. rising total factor productivity

According to the MIT study discussed in Module 39, a cap and trade system to reduce greenhouse gas emissions in the United States would lead to a. no significant costs. b. a loss of roughly three years' real GDP over the next 40 years. c. a loss of 5 years' worth of economic growth over the next 40 years. d. a reduction in real GDP per capita of over 10%. e. significant but not overwhelming costs.

e. significant but not overwhelming costs.

Which of the following is a major reason for productivity growth? a. financial investment b. an increase in the amount of capital available per worker c. a decrease in the amount of capital available per worker d. an increase in the price of capital e. technological progress

e. technological progress

Which of the following is true regarding growth rates for centuries around the world compared to the United States? I. The U.S. growth rate is six times the growth rate in the rest of the world. II. China has only recently attained the same standard of living the U.S. had a century ago. III. More than fifty percent of the world's people live in countries with a lower standard of living than the U.S. had a century ago. a. I only b. II only c. III only d. I and II only e. I and III only f. II and III only g. I, II, and III

f. II and III only

In the aggregate demand-aggregate supply model, long-run economic growth is shown by a a. leftward shift of the aggregate demand curve. b. rightward shift of the aggregate demand curve. c. leftward shift of the short-run aggregate supply curve. d. rightward shift of the short-run aggregate supply curve. e. leftward shift of the long-run aggregate supply curve. f. rightward shift of the long-run aggregate supply curve.

f. rightward shift of the long-run aggregate supply curve.

Which of the following is a source of productivity growth? I. increased human capital II. increased physical capital III. technological progress a. I only b. II only c. III only d. I and II only e. I and III only f. II and III only g. I, II, and III

g. I, II, and III