prath darth

In 2011, per capita real gross domestic product (GDP) in Mexico was roughly $10,100. If Mexico experienced economic growth of 4.8% in 2012, per capita real GDP would increase to:

$10,585

You deposit $500.00 into an asset that pays 10 percent annual interest for three years. At the end of the three years, you would have

$665.50.

From 2011 to 2012, U.S. real GDP increased by 2.2% and the U.S. population grew by 1%. Therefore, per capita real GDP in the United States increased by:

1.2%

Based on the figure, if the economy is initially at point B and new technology leads to an increase in labor productivity, then in the long run we will end up at point __________.

D

Based on the figure, a negative supply shock is best represented by a movement from:

D to A

An increase in SRAS in the short run causes what effect to unemployment rate?

Decrease

Based on the figure, if the economy is currently at point B, then in the long run, we can expect the economy to be at point __________.

E

An increase in SRAS in the short run causes what line to shift in the long run

SRAS left

The economy is in long-run equilibrium when:

aggregate demand intersects both long-run and short-run aggregate supply.

The long run is best defined as a period of time such that:

all prices have adjusted

New computer technologies can be expected to:

increase long-run aggregate supply

Krista owns a hair salon. She wants to increase the number of clients she serves each month, so she knows she needs to acquire more resources. Which of the following actions would represent an increase in the human capital resource at her hair salon?

increasing the amount of training for her stylists

Steve owns a bike shop. He wants to increase the number of bikes he sells each month, so he knows he needs to acquire more resources. Which of the following actions would represent an increase in the human capital resource at his bike shop?

increasing the number of shop employees

According to the World Bank, the 31 wealthiest countries in the world tended to have much lower rates of ___________ and much higher rates of ___________ when compared to the 40 poorest countries.

infant mortality; adult literacy

When firms invest less because people are saving less, it is called the:

interest rate effect.

A severe drought hits a country and reduces farm output by 50%. In the short run, this will __________ output and __________ employment.

decrease; decrease

Nathan owns a coffee shop. He wants to increase the weekly number of coffee drinks he sells, and he wants to use a technological advance to do so. ____________ would represent a technological advance at his coffee shop.

Acquiring a new espresso machine that can prepare coffee drinks faster than his current model

Which of the following would cause an upward movement along the aggregate demand curve?

An increase in the price level increases the value of real wealth.

Based on the figure, which points represent short-run equilibrium?

B and D

From 2009 to 2010, nominal gross domestic product (GDP) in the United States grew by 3.8 percent. Given that prices increased by 1 percent and the population grew by 1 percent, we know that per capita real GDP grew by

1.8 percent

From 2006 to 2010, per capita real gross domestic product (GDP) in Egypt grew an average of 4.8% per year. At that rate, according to the Rule of 70, in roughly how many years will the Egyptian economy double in size?

15 years

From 2006 to 2010, per capita real gross domestic product (GDP) in the Philippines grew an average of 3.16% per year. At that rate, according to the Rule of 70, in roughly how many years will the Filipino economy double in size?

22 years

From 2006 to 2010, per capita real gross domestic product (GDP) in China grew an average of 10.62% per year. At that rate, according to the Rule of 70, in roughly how many years will Chinese per capita real GDP double in size, beginning in 2006?

6.6 years

Based on the figure, which points represent long-run equilibrium?

A and C

Based on the figure, starting at point A, if there is an increase in government spending, then in the short run we would move to point __________ and in the long run to point __________.

B; E

Many police officers in Mexico have been found to be working for drug traffickers, providing them with protection and warning them of raids. As a result, crime in Mexico is very high and drug gangs compete for territory, leading to a great loss of life. How would this situation affect Mexico's economic growth?

Economic growth would be harmed because the rule of law no longer applies.

You are an economics consultant and have been contacted by an official from a developing country. She tells you that her country's economy is currently growing at 2% per year. She asks you how long it will take for her country's economy to double in size; you tell her it will take 35 years. She then asks you what the government can do to shorten the time necessary to double the size of the country's economy. What should you tell her?

Encourage the development of growth-positive institutions

Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point __________ and in the long run to point __________.

F; A

Which of the following causes an increase in short-run aggregate supply?

Firms and workers expect the price level to fall.

Recently, Greece underwent an economic crisis. While there are numerous factors that contributed to the crisis, one problem is Greece's tax system, which is very complicated. As a result, numerous Greeks simply choose not to pay their taxes. How would this situation affect Greece's economic growth?

Greece's economy would be harmed by a lack of an efficient tax system.

Krista owns a hair salon. She wants to increase the number of clients she serves each month, and she wants to use a technological advance to do so. ______________ would represent a technological advance at her hair salon.

Installing a new hair dryer that can dry hair in half the time, with less damage to the hair

Per capita real gross domestic product (GDP) is higher in the United States than in Mexico. Based on that, we could predict the United States to have a higher rate of ___________ and a lower rate of ___________.

Internet users; infant mortality

In what way did Henry Ford's use of the assembly-line method of production represent an advance in technology in automobile manufacturing?

It allowed workers to specialize on specific tasks and become more productive

Is having abundant resources an absolute guarantee of economic growth and prosperity?

No; other factors like institutions and technological advances are relevant too

Based on the figure, if the economy is currently at point B because of a shift in short run aggregate supply, than in the long run we can expect we will move to

Point A

Why do institutions such as private property rights promote economic growth?

Private property rights create an incentive to maximize the value of one's property, which is not true when property is collectively owned.

The nation of Singapore has no natural resources to speak of, must import its water, and is very small in land mass. However, it has a very high real per capita gross domestic product (GDP) and a literacy rate of over 95%. How can such a small country with no resources be so prosperous?

Singapore is rich in other resources, like human capital

When long run aggregate supply shifts what causes this shift?

Technology

Based on the figure, which of the following would cause the long-run equilibrium point to change from point B to point D?

The country's overall productivity increased

Based on the figure, which of the following would cause the aggregate demand curve to shift from AD2 to AD1?

There is a reduction in consumer confidence about future growth in the economy.

Assume you put money into an asset that pays you 7 percent interest and inflation is 5 percent. Which statement is correct?

This means the real rate of interest is 2 percent

Based on the figure, which of the following would cause the short-run aggregate supply curve to shift from SRAS1 to SRAS2?

Wages and input prices fall as the economy recovers from a recession

In 1950, residents in Liberia were wealthier than those in Taiwan. Today, per capita gross domestic product (GDP) in Taiwan is more than twenty times that of Liberia. How would private property rights help explain why Taiwan is now so much wealthier than Liberia?

With a well-developed system of property rights, like in Taiwan, people have very strong incentives to improve the value of their assets.

An increase in expected future prices causes:

a decrease in short-run aggregate supply.

An example of physical capital is:

a factory

Assuming the figure represents the market for loanable funds, which of the following would represent an increase in household wealth?

a shift from line 1 to line 4

Assuming the figure represents the market for loanable funds, which of the following would represent a cut in corporate tax rates, causing business owners and managers to become more optimistic?

a shift from line 2 to line 3

Assuming the figure represents the market for loanable funds, which of the following would represent the government running a larger budget deficit?

a shift from line 2 to line 3

Assuming the figure represents the market for loanable funds, which of the following would represent a general economic collapse in the United States, causing foreigners to become fearful about the U.S. economy?

a shift from line 4 to line 1

If you deposit money in the bank, in essence, you are

a supplier of funds, since the bank simply is an intermediary between those who want to borrow loanable funds and those who are willing to lend them (depositors).

The term ___________ is a popular way to describe the recession-expansion pattern followed by the economy.

business cycle

Krista owns a hair salon. She wants to increase the number of clients she serves each month, so she knows she needs to acquire more resources. Which of the following actions would represent an increase in the physical capital resource at her hair salon?

buying more chairs and hair dryers

Shifts in the long-run aggregate supply curve are caused by:

changes in labor productivity

Which of the following would be classified as a natural resource?

coal

Which of the following factors is negatively correlated with economic growth?

collectively owned resources

An interest rate best represents ________ to borrowers and ________ to savers.

cost; return

In the figure, line 2 represents the ________, and at an interest rate of 6 percent a ________ of loanable funds exists.

demand of loanable funds; surplus

When people withdraw funds from their savings, economists call this

dissaving

The real interest rate

equals the nominal rate minus the rate of inflation

One of the most basic reasons why Taiwan is so much wealthier than Liberia is that Taiwan

has institutions that promote economic growth.

Residents of wealthy countries tend to have longer life expectancies because:

higher per capita real gross domestic product (GDP) growth rates allow for more spending on health care.

When the general price level rises and firms decide not to change their prices in the short run, this can be attributed to:

menu costs

An advance in technology allows a firm to produce ___________ output with ___________ resources.

more; the same

Which of the following are the three major categories of resources?

natural resources, physical capital, human capital

Which of the following would be classified as human capital?

obtaining a college degree

Based on the figure, if the economy is currently at point B, then in the long run, we can expect we will move to:

point C

Based on the figure, if the economy is currently at point D becasue of a shift in aggregate demand, than in the long run we can expect we will move to

point C

Which of the following factors is positively correlated with economic growth?

political stability and the rule of law

Which of the following is an example of an institution that promotes economic growth?

private property rights

In the figure, at an interest rate of 5 percent, the

quantity demanded of loanable funds equals the quantity supplied of loanable funds, and equilibrium is reached.

In the figure, at an interest rate of 6 percent, the

quantity demanded of loanable funds is less than the quantity supplied of loanable funds, and there is a surplus of loanable funds.

An increase in the amount of household wealth in an economy would ___________ the average standard of living and would ___________ the spending power experienced by the typical person.

raise; have little effect on

Unemployment rises and real gross domestic product (GDP) growth slows during the:

recession phase of a business cycle.

The long-run output of an economy depends on:

resources, technology, and institutions.

Higher rates of economic growth are negatively correlated with:

shorter life expectancy.

Shifts in the short-run aggregate supply curve are caused by:

supply shocks

Based on the figure, a decrease in _________ could cause the economy to move from point A to point B.

taxes

The supply of loanable funds increases while the demand for loanable funds remains constant. This would cause

the equilibrium quantity of loanable funds to increase and the equilibrium interest rate to decrease.

When decision makers have time to fully adjust to changes in the overall price level, we refer to this as:

the long run.

Economic growth is defined as:

the percent change of real per capita GDP.

Based on the figure, if the economy is at point F, then in the long run, we can expect:

the price level to decrease and output to increase.

If the current short-run equilibrium level of output is less than full employment output, we can then expect that in the long run:

the price level will fall.

Based on the figure, an increase in _________ could cause the economy to move from point A to point D.

the price of oil

Savings represents

the supply of loanable funds.