Econ 102: Chapter 7

If real GDP is $13,000 billion and aggregate hours are 270 billion, labor productivity equals

$48 per hour

Slowdonia's current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person?

35 years.

Labor productivity, real GDP per labor hour, increases if

All of the above answers are correct.

In the illustration above, which figure shows an aggregate production function?

Figure A

Which of the following ideas apply to the neoclassical growth theory? I. The rate of technological change influences the rate of economic growth. II. Technological change promotes saving and investment. III. Convergence of economic growth rates across countries.

I, II and III

Real GDP grows when I. the quantities of the factors of production grow. II. persistent advances in technology make factors of production increasingly productive. III. human capital grows.

I, II, and III

If the nation's capital stock increases so that workers become more productive, the

demand for labor will increase.

All of the following would increase the growth rate of the economy EXCEPT

discouraging international trade.

The Rule of 70 is used to

estimate how long it will take the level of any variable to double

A central proposition of the new growth theory is that

knowledge is not subject to diminishing returns.

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

labor input and real GDP

If capital per worker rises

labor productivity increases

If the quantity of capital per worker in the economy increases

labor productivity increases.

A decrease in population shifts the

labor supply curve leftward

The real wage rate will fall if the

labor supply curve shifts rightward and the labor demand curve does not shift

Human capital is

people's knowledge and skills.

All of the following contribute to labor productivity growth EXCEPT

population growth.

The Industrial Revolution in England in large was the result of

technological innovations encouraged by the patent system.

New growth theory proposes that real GDP per person grows because of ________ and that growth ________.

the pursuit of profit; can persist indefinitely

Which of the following is NOT an important factor affecting growth in labor productivity?

the speed with which prices fall

An advance in technology increases the productivity of labor. As a result, the nation's production function shifts ________ and the ________ labor curve shifts rightward.

upward; demand for

Suppose a nation's population grows by 2 percent and, at the same time, its GDP grows by 5 percent. Approximately how fast will real GDP per person increase?

3 percent per year.

Using the Rule of 70, if the country of Huttodom's current growth rate of real GDP per person was 10 percent a year, how long would it take the country's real GDP per person to double?

7 years.

Slowdonia's current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person?

70 years

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012?

9.0 percent

Which growth theory predicts perpetual growth?

new growth theory

According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE?

India's PPF has been shifting rightward since 1997.

The aggregate production function is graphed as

an upward sloping line that becomes flatter as the quantity of labor increases.

The assumption that population growth will lead to a fall in real GDP per person rate back to subsistence level is

associated with Malthusians

Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is

decreasing.

Classical growth theory states that

growth is followed by increases in the population, eventually leaving real GDP per person unchanged.

A worker's stock of knowledge is known as

human capital

In 2016, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2017, real GDP was $4.59 billion and population was 2.97 million. From 2016 to 2017, Armenia's standard of living

increased.

An increase in saving that leads to more capital accumulation ________ labor productivity.

increases

Which of the following does NOT increase labor productivity?

increases in aggregate hours

Potential GDP per labor hour can increase due to

increases in labor productivity

An increase in education and training

increases labour productivity

As a result of the rightward shift in the demand curve for labor from LD0 to LD1, the equilibrium level of employment ________ and potential GDP ________.

increases; increases

The more education that workers have, the ________ is their human capital and the ________ is their productivity.

larger; higher

The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will

move to point such as X.

The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will

move to point such as Z.

As labor increases, there is a

movement along the aggregate production function and real GDP will increase less with each additional increase in labor.

The figure above shows the U.S. production function. From 1986 to 2008 the United States experienced major advances in technology as well as an increase in the working-age population. The combined effect can best be shown by a

movement from point W to point Z.

Which of the following is NOT associated with the new growth theory?

natural resources

In the labor market, an increase in labor productivity ________ the real wage rate and ________ the level of employment.

raises; increases

Neoclassical growth theory proposes that

real GDP per person grows because technological change increases profit opportunities.

The quantity of labor supplied depends on the

real wage rate not the money wage rate

An advance in technology will

shift the production function upward.

When labor productivity increases, the demand for labor curve ________ and the supply of labor curve ________.

shifts rightward; does not shift

In the above figure, if the real wage is $10 per hour, a labor

shortage will occur and the real wage will rise.