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Foundations of Macroeconomics, 7e (Bade/Parkin)
Chapter 9 Economic Growth
9.1 The Basics of Economic Growth
1) Economic growth is deined as
A) a decrease in the rate of inlation.
B) an increase in employment.
C) a sustained expansion of production possibilities.
D) an increase in the wage rate.
E) an increase in the nation's population.
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
2) Economic growth is a sustained expansion of production possibilities, as measured by
the increase in ________ over time.
A) real GDP
B) population
C) inlation
D) the price level
E) employment
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
3) A country will likely experience an increase in poverty if
A) its population decreases over time.
B) its real GDP growth rate decreases or slows over time.
C) its inlation rate decreases or slows over time.
D) its real GDP per person growth rate increases over time.
E) it does not receive foreign aid.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
1
4) Economic growth is deined as equal to the increase in
A) employment.
B) population.
C) real GDP.
D) the price level.
E) the inlation rate.
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
5) Which of the following variables is used to determine a country's economic growth?
i. real GDP
ii. wages
iii. inlation
A) i and ii only
B) i, ii and iii
C) ii and iii
D) i only
E) i and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
6) The growth rate of real GDP equals
A) [(employment in the current year - employment in previous year)/employment in
previous year] × 100.
B) [(real GDP in current year - real GDP in previous year) ÷ real GDP in previous year] ×
100.
C) [(real GDP in previous year - real GDP in current year) ÷ real GDP in previous year] ×
100.
D) [(real GDP in current year - real GDP in previous year) ÷ real GDP in current year] ×
100.
E) (real GDP in current year - real GDP in previous year) × 100.
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
2
7) If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate?
A) 15.0 percent
B) -1.5 percent
C) 1.5 percent
D) $0.2 trillion
E) 2.1 percent
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
8) Suppose France's real GDP grew from $750 billion in 2010 to $821 billion in 2011. What
was the growth rate of France's real GDP?
A) 10 percent
B) 9.5 percent
C) 9.1 percent
D) 8.6 percent
E) $71 billion
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
9) U.S. real GDP in 2007 was $13.25 trillion and U.S. real GDP in 2008 was $13.31 trillion.
What was the economic growth rate of the United States during this period?
A) 18 percent
B) -1.36 percent
C) 0.45 percent
D) 6.9 percent
E) $1.8 trillion
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Revised
AACSB: Analytical thinking
3
10) If real GDP in year 1 is $72 million and real GDP in year 2 is $87 million, then the
growth rate of real GDP is
A) 15 percent.
B) $15 million.
C) 20.8 percent.
D) 17 percent.
E) 83 percent.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
11) In 2008, real GDP in the United States was $13,312 billion. In 2009, real GDP in the
United States was $13,112 billion. What was the U.S. economic growth rate from 2008 to
2009?
A) -1.5 percent
B) 1.5 percent
C) 0.98 percent
D) 0.12 percent
E) $200 million
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
12) Using the data in the table above, the growth rate of real GDP for 2010 is equal to
A) 9.09 percent.
B) 7.00 percent.
C) 5.00 percent.
D) 4.76 percent.
E) 10.0 percent.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
4
13) Using the data in the table above, real GDP per person in 2009 is
A) $70,000.
B) $71,429.
C) $75,000.
D) $70 trillion.
E) 7 percent.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
14) Using the data in the table above, the growth rate of real GDP has
A) increased from year to year.
B) increased more rapidly from year to year.
C) remained constant from year to year.
D) slowed from year to year.
E) probably changed, but more information is needed about the price level to determine by
how much it has changed.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
15) Suppose India wants to measure how much the standard of living has changed over the
last decade. Which piece of data should India use?
A) population
B) real GDP per person
C) real GDP
D) wages
E) inlation
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
5
16) To measure the change in the standard of living, it is best to use the growth rate
A) from the Rule of 70.
B) of real GDP.
C) of the population.
D) of real GDP per person.
E) of the price level.
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
17) In growth theory, the change in a country's standard of living is measured by the
change in
A) real GDP per person.
B) real GDP.
C) the nation's capital stock.
D) wages per person.
E) employment.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
18) A measure of growth in the standard of living is the growth in
A) real GDP.
B) population.
C) real GDP minus the growth in population.
D) population minus the growth in real GDP.
E) employment.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
6
19) Growth in the standard of living is measured by the increase in
A) real GDP.
B) the Rule of 70.
C) employment.
D) real GDP per person.
E) consumption.
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
20) The growth rate of real GDP per person equals the
A) population growth rate plus the growth rate of real GDP.
B) change in the economic growth rate divided by the change in the population growth
rate.
C) the economic growth rate per person divided by the change in the population growth
rate.
D) growth rate of real GDP minus the growth rate of the population.
E) population growth rate plus the growth rate of real GDP then divided by the initial level
of real GDP.
Skill: Level 1: Deinition
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
21) If real GDP grows at a faster rate than does population, then the standard of living, as
measured by real GDP per person,
A) improves.
B) worsens.
C) remains the same.
D) cannot be measured.
E) either improves, worsens, or stays the same, depending on the size of the population and
the actual level of real GDP.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Relective thinking
7
22) The population in the current year is 31.5 million and the real GDP is $814 million. The
previous year's statistics were a population of 31 million and a real GDP of $800 million.
The change in the standard of living, measured by growth in real GDP per person, is
A) 1.6 percent.
B) 7.75 percent.
C) 0.13 percent.
D) 6 percent.
E) 0 percent.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
23) Assume the population growth rate is 2 percent and the real GDP growth rate is 5
percent. The change in standard of living, as measured by the growth rate in real GDP per
person, is
A) 7 percent.
B) 2.5 percent.
C) 5 percent.
D) 3 percent.
E) -3 percent.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
24) Real GDP in the country of Oz is growing at 5 percent and its population is growing at 2
percent. In the country of Lilliput, real GDP is growing at 4 percent and its population is
growing at 0.5 percent. Thus,
A) real GDP per person in Oz is growing at a faster rate than in Lilliput.
B) real GDP per person in Lilliput is growing at a faster rate than in Oz.
C) real GDP per person in Lilliput is growing at the same rate as in Oz.
D) real GDP per person in Lilliput is growing at a rate that is not comparable to that in Oz.
E) We need more information to determine if real GDP per person in Lilliput is growing
faster or slower than real GDP per person in Oz.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
8
25) If the U.S. population grew at a 0.9 percent and real GDP grew at a 4.4 percent during
the same period, what was the growth rate of real GDP per person?
A) 3.5 percent
B) 5.3 percent
C) 4.0 percent
D) -3.5 percent
E) 4.4 percent
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
26) If real GDP grows at a rate of 6 percent and population grows at a rate of 2 percent,
then real GDP per person grows at a rate of
A) 4 percent.
B) 2 percent.
C) 0.5 percent.
D) -3 percent.
E) 8 percent.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
27) Iceland's real GDP grows at a rate of 2.6 percent and population grows at a rate of 0.8
percent. Iceland's real GDP per person grows at a rate of
A) 1.8 percent.
B) 2.6 percent.
C) 3.4 percent.
D) 3.0 percent.
E) 3.2 percent.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
9
28) If an economy's growth rate of real GDP is 3 percent per year and the growth rate of
the population is 2.5 percent per year, the growth rate of real GDP per person is
A) 3 + 2.5 = 5.5 percent per year.
B) [(3 - 2.5) ÷ 2.5] × 100 = 20 percent per year.
C) [(2.5 - 3) ÷ 3] × 100 = 16.6 percent per year.
D) 3 - 2.5 = 0.5 percent per year.
E) 2.5 - 3 = -0.5 percent per year.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
29) In 2009, U.S. real GDP decreased by 3 percent and the population grew by 1 percent.
Thus, real GDP per person
A) increased 2 percent.
B) decreased 2 percent.
C) increased 4 percent.
D) decreased 4 percent.
E) decreased 3 percent.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
30) If a country experiences a real GDP growth rate of 1 percent and population growth of
2 percent, then the growth rate of real GDP per person is
A) 3 percent.
B) 2 percent.
C) 1 percent.
D) -1 percent.
E) 0 percent.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Status: Old
AACSB: Analytical thinking
10
