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Name: __________________________ Date: _____________
1.
A key input for measuring economic growth is:
A)
the size of the government’s budget.
B)
real GDP per capita.
C)
life expectancy.
D)
the Dow Jones stock market index.
2.
Which factor is the MOST widely accepted measure of economic growth over time?
A)
inflation
B)
increases in real per capita GDP
C)
decline in real interest rates
D)
increases in the available labor supply
3.
The BEST available measure of the standard of living in a country is:
A)
nominal GDP per capita.
B)
real GDP per capita.
C)
the unemployment rate.
D)
the growth rate of productivity.
4.
The key measure used to track economic growth is:
A)
real GDP per capita.
B)
nominal GDP.
C)
real GDP.
D)
nominal GDP per capita.
5.
If a country has a population of 1,000 people, an area of 100 square miles, and a GDP of
$5 million, then its GDP per capita is:
A)
$500.
B)
$5,000.
C)
$50,000.
D)
$5 million.
6.
Real GDP per capita in the United States increased almost _____ times between 1900
and 2015.
A)
2
B)
3
C)
8
D)
10
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7.
Today, more than _____ of the world’s population lives in countries poorer than the
United States was a century ago.
A)
one-fifth
B)
one-third
C)
one-half
D)
two-fifths
8.
A typical family in the United States in 1900 had a purchasing power equal to _____%
of the real U.S. GDP per capita in 2015.
A)
1
B)
12
C)
70
D)
136
9.
Output per capita in the United States in 2015 was about _____ as high as it was in
1900.
A)
twice
B)
3 times
C)
8 times
D)
10 times
10.
In the popular press, we see many pictures of affluent people in Indian cities. Yet the
average person in India today is poorer than the average person in the United States was
in:
A)
2000.
B)
1970.
C)
1950.
D)
1900.
11.
The standard of living in a country can be BEST measured by:
A)
nominal GDP per capita.
B)
real GDP per capita.
C)
the productivity growth rate.
D)
the business cycles.
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12.
In an economy whose aggregate real output is growing faster than the total population:
A)
real GDP per capita is rising.
B)
standard of living is declining.
C)
national income is falling.
D)
nominal GDP per capita is decreasing.
13.
Economists use real GDP per capita to measure economic growth:
A)
because it ignores the effect of price changes.
B)
because poor nations have a large population and the population of richer nations is
declining.
C)
because it is the inflation-adjusted value of a country’s production of goods and
services corrected for the change in a country’s population.
D)
even though nominal GNP per capita is a far superior measure of economic growth.
Use the following to answer questions 14-15:
14.
(Table: South Korea’s Real GDP per Capita) Use Table: South Korea’s Real GDP per
Capita. As a percentage of real GDP per capita in 1960, approximately how much did
South Korea produce in 2000?
A)
10%
B)
15%
C)
151%
D)
1,011%
15.
(Table: South Korea’s Real GDP per Capita) Use Table: South Korea’s Real GDP per
Capita. As a percentage of real GDP per capita in 2000, approximately how much did
South Korea produce in 1960?
A)
10%
B)
15%
C)
151%
D)
1,011%
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16.
China has much higher rate of growth than the United States, but the average Chinese
household is _____ a typical U.S. household. China’s real GDP per capita is _____ that
of the United States.
A)
as well off as; catching up with
B)
richer than; much higher than
C)
still a bit poorer than; catching up with
D)
still far poorer than; much lower than
17.
U.S. real GDP per capita in 2015 was _____% as much per person as it was in 1900.
A)
16
B)
189
C)
46
D)
804
18.
Suppose that a panel of economists predicts that a nation’s real GDP per capita will
double in approximately 20 years. According to the rule of 70, what must be the
predicted annual growth rate of real GDP per capita?
A)
140%
B)
3.5%
C)
2.85%
D)
14%
19.
Suppose that a panel of economists predicts that a nation’s real GDP per capita will have
an average annual growth rate of 2%. According to 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
20.
The rule of 70 indicates that a 6% annual increase in the level of real GDP would lead to
the output doubling in approximately _____ years.
A)
6
B)
12
C)
24
D)
30
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21.
The rule of 70 states that a variable’s approximate doubling time equals:
A)
70 times the growth rate.
B)
the growth rate divided by 70.
C)
70 divided by the doubling time.
D)
70 divided by the growth rate.
22.
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.
23.
The rule of 70 is MOST useful in:
A)
identifying the causes of economic growth.
B)
identifying the sources of economic growth.
C)
estimating the productivity of labor.
D)
estimating the doubling time of real GDP for a given growth rate.
24.
If real GDP grows at an annual rate of 1%, it will double in approximately _____ years.
A)
11
B)
23
C)
35
D)
70
25.
If real GDP grows at an average rate of 3% per year, it will double in _____ years.
A)
less than 10
B)
approximately 17
C)
approximately 23
D)
approximately 36
26.
If real GDP doubles in 35 years, its average annual growth rate is approximately:
A)
1%.
B)
2%.
C)
3%.
D)
4%.
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27.
If real GDP doubles in 12 years, its average annual growth rate is approximately:
A)
6%.
B)
5%.
C)
4%.
D)
3%.
28.
India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500,
while the United States is growing at a rate of 3% per year, and its real GDP per capita
is about $47,000. How long will it take India to double its real GDP per capita?
A)
7.8 years
B)
10.2 years
C)
14.6 years
D)
90 years
29.
India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500,
while the United States is growing at a rate of 3% per year, and its real GDP per capita
is about $47,000. How long will it take the United States to double its real GDP per
capita?
A)
10.5 years
B)
23.3 years
C)
30 years
D)
50 years
30.
India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500,
while the United States is growing at a rate of 3% per year, and its real GDP per capita
is about $47,000. About how much will India’s real GDP per capita be in 20 years?
A)
approximately $20,000
B)
approximately $56,000
C)
approximately $14,000
D)
approximately $30,000
31.
India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500,
while the United States is growing at a rate of 3% per year, and its real GDP per capita
is about $47,000. About how much will U.S. real GDP per capita be in 14 years?
A)
$71,000
B)
$28,000
C)
$112,000
D)
$224,000
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32.
Suppose that real GDP per capita of the United States is $32,000 and its growth rate is
2% per year and that real GDP per capita of China is $4,000, and its annual growth rate
is 7%. How long will it take real GDP per capita of the United States to double?
A)
35 years
B)
50 years
C)
2.25 years
D)
14 years
33.
Suppose that real GDP per capita of the United States is $32,000 and its growth rate is
2% per year and that real GDP per capita of China is $4,000, and its annual growth rate
is 7%. How long will it take China’s real GDP per capita to double?
A)
14 years
B)
10 years
C)
35 years
D)
50 years
34.
Suppose that real GDP per capita of the United States is $32,000 and its growth rate is
2% per year and that real GDP per capita of China is $4,000, and its annual growth rate
is 7%. How many years will it take for China’s real GDP per capita to be larger than real
GDP per capita in the United States?
A)
70 to 75 years
B)
40 to 45 years
C)
15 to 20 years
D)
5 to 10 years
35.
Suppose that real GDP per capita of the United States is $32,000 and its growth rate is
2% per year and that real GDP per capita of China is $4,000, and its annual growth rate
is 7%. According to the rule of 70, how large will China’s real GDP per capita be in 20
years?
A)
$5,600
B)
$8,000
C)
$16,000
D)
$28,000
36.
The rule of 70 states that:
A)
the average score on standardized tests is normally distributed with a mean of 70
and a standard deviation of 10.
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.
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37.
If output is growing at 5% annually, how many years will it take for output to
quadruple?
A)
14 years
B)
10 years
C)
20 years
D)
28 years
38.
Real GDP per capita, growing at a constant rate over a 35-year period, has doubled at
the end of that period. What must the annual growth rate of real GDP per capita be for
this economy?
A)
1%
B)
2%
C)
4%
D)
15%
39.
If real GDP per capita grows at 5% per year consistently over time, how many years
will it take for it to double?
A)
5
B)
10
C)
14
D)
70
40.
There are two countries on a peninsula. The first has a per capita annual growth rate of
2%, and its neighbor to the south has an annual growth rate of 5%. How much sooner
will the country in the south double its GDP per capita than will its neighbor in the
north?
A)
5 years
B)
10 years
C)
15 years
D)
21 years
41.
According to the rule of 70, if a country doubles its real GDP per capita every 20 years,
that country must be growing at an annual rate of:
A)
2%.
B)
3.5%.
C)
35%.
D)
70%.
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42.
According to the rule of 70, if a country’s real GDP per capita grows at an annual rate of
2% instead of 3%, it will take _____ additional years for that country to double its level
of real GDP per capita.
A)
35
B)
11.67
C)
23.3
D)
30
43.
To find the approximate number of years it takes the economy to double:
A)
divide its growth rate by 70.
B)
divide 70 by its growth rate.
C)
divide its growth rate by 100.
D)
multiply its growth rate by 20.
44.
According to the rule of 70, if real GDP per capita is growing at 2% a year, in 100 years
it will have increased by:
A)
about 4 times.
B)
about 7 times.
C)
almost 30 times.
D)
almost 60 times.
45.
The Rule of 70 applies:
A)
only to GDP.
B)
only to GDP per capita.
C)
to any growth rate.
D)
only to developed countries.
46.
Which country had the FASTEST growth rate of real GDP per capita between 1980 and
2015?
A)
the United States
B)
Ireland
C)
China
D)
France
47.
Which country had the LOWEST growth rate of real GDP per capita between 1980 and
2015?
A)
Ireland
B)
France
C)
Argentina
D)
Zimbabwe
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48.
From 2010 to 2011, nation A’s real GDP increased from $100 billion to $106 billion and
its population grew from 50 million to 51 million. As a result, real GDP per capita
_____ because real GDP rose _____ than the population.
A)
increased; more slowly
B)
increased; faster
C)
decreased; more slowly
D)
decreased; faster
49.
From 2010 to 2011, nation A’s real GDP increased from $100 billion to $106 billion and
its population grew from 50 million to 51 million. Its annual growth rate in real GDP
per capita was approximately _____%.
A)
1
B)
–3
C)
4
D)
6
Use the following to answer questions 50-54:
50.
(Table: Kenya’s Economy in 2010) Use Table: Kenya’s Economy in 2010. Aggregate
output per capita at the beginning of 2010 was:
A)
$5,000.
B)
$10,000.
C)
$775.
D)
$7,750.
51.
(Table: Kenya’s Economy in 2010) Use Table: Kenya’s Economy in 2010. Aggregate
output at the end of 2010, assuming no changes in the price level, was about:
A)
$326 billion.
B)
$32.612 billion.
C)
$3,635 billion.
D)
$6,500 billion.
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52.
(Table: Kenya’s Economy in 2010) Use Table: Kenya’s Economy in 2010. The
population at the end of 2010 was about:
A)
400 million.
B)
41 million.
C)
14 million.
D)
401 million.
53.
(Table: Kenya’s Economy in 2010) Use Table: Kenya’s Economy in 2010. Aggregate
output per capita at the end of 2010, assuming no changes in the price level, was:
A)
$7,000.
B)
$7,005.
C)
$795.
D)
$7,490.
54.
(Table: Kenya’s Economy in 2010) Use Table: Kenya’s Economy in 2010. During 2010,
assuming no changes in the price level, aggregate output per capita in Kenya grew at a
rate of:
A)
0.6%.
B)
2.6%.
C)
5.2%.
D)
7.8%.
55.
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.
56.
Long-run economic growth depends almost entirely on:
A)
labor productivity growth.
B)
population growth.
C)
agricultural production growth.
D)
the number of hours worked.
57.
Productivity is declining when:
A)
the number of hours worked exceeds the number of workers.
B)
population growth exceeds real GDP growth.
C)
the ratio of adult civilians employed outside the home rises.
D)
real GDP growth exceeds the population growth.
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58.
Productivity is equal to:
A)
real GDP divided by the number of workers.
B)
real GDP divided by the population.
C)
the number of workers per machine.
D)
the total output produced.
59.
Over the course of the twentieth century, real GDP per capita in the United States rose
MOSTLY as a result of:
A)
rising population.
B)
rising employment.
C)
rising productivity.
D)
reduced vacation time.
60.
Which change would contribute 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
61.
Labor productivity growth can be attributed to:
A)
improvement in technology.
B)
a decline in university attendance.
C)
an increase in population growth.
D)
a decline in the physical capital per worker.
62.
The term human capital describes improvement:
A)
made possible by better machines and equipment.
B)
in the technology available to the work force.
C)
in a worker’s skills made possible by education, training, and knowledge.
D)
in the robotics technology that can substitute for a human worker.
63.
The MOST important driver for economic growth appears to be:
A)
increase in physical capital.
B)
increase in human capital.
C)
technological progress.
D)
foreign investment.
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64.
Human capital is:
A)
the improvement in labor made possible by education and knowledge that is
embodied in the workforce.
B)
the machinery and tools that each worker owns.
C)
robots that can perform tasks that only humans could do in the past.
D)
not as important as physical capital.
65.
Which change will NOT increase the productivity of labor?
A)
technological improvements
B)
an increase in the capital stock
C)
improvements in education
D)
an increase in the size of the labor force
66.
Which factor will NOT increase labor’s productivity?
A)
education
B)
technology
C)
new capital
D)
growth in the population
67.
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.
68.
The skills, training, and education possessed by workers that contribute to economic
growth are known as:
A)
saving.
B)
human capital.
C)
natural resources.
D)
output of labor.
69.
The improvement in labor made possible by education and knowledge that is embodied
in the work force is known as _____ capital.
A)
physical
B)
human
C)
financial
D)
real
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70.
For developed countries, which factor is considered the MOST important driver in
productivity growth?
A)
the level of educational attainment
B)
the amount of physical capital
C)
technological progress
D)
the abundance of natural resources
71.
A factor that does NOT drive productivity growth is:
A)
growth convergence.
B)
physical capital.
C)
technological progress.
D)
human capital.
72.
Rising high school graduation rates are an example of an increase in:
A)
technological progress.
B)
human capital.
C)
population stock.
D)
fertility rates.
73.
Technological progress allows workers to produce more:
A)
because it increases the amount of physical capital available.
B)
because it increases the amount of human capital available.
C)
even when the amount of physical capital and human capital do not change.
D)
only if the amount of physical capital grows at the same rate.
74.
A reason that does NOT explain why average workers in the United States today
produce more than their counterparts did a century ago is that the modern worker:
A)
is better educated.
B)
has more physical capital to work with.
C)
has better technology to work with.
D)
works longer hours.
75.
An example of physical capital is a:
A)
truck that a company purchases for deliveries.
B)
worker who physically learns to work on a truck his company buys.
C)
truck that a worker buys for personal use.
D)
a truck a company purchases for work, a worker who physically learns to work on
a truck his company buys, or a truck a worker buys for personal use.
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76.
If technology advances,:
A)
more output can be obtained from the same inputs.
B)
more inputs are needed to produce the same output.
C)
less output can be obtained from the same inputs.
D)
less output can be produced even with more inputs.
77.
Workers today are more productive than workers were in the past because:
A)
they now are physically stronger on average.
B)
they now have more physical capital embodying better technology.
C)
more of them use the same number of machines as in the past.
D)
they are paid more.
78.
Physical capital includes:
A)
a worker’s education or knowledge.
B)
machine tools.
C)
money.
D)
shares of stock.
79.
An example of human capital is a person’s:
A)
money.
B)
job skills.
C)
capital goods or machines.
D)
stocks and bonds.
80.
If technology advances:
A)
GDP per capita declines.
B)
physical capital is less productive.
C)
workers can produce more with fixed amounts of physical and human capital.
D)
human capital is less useful.
81.
To acquire human capital a person would:
A)
save to buy a printing press.
B)
purchase a printing press rather than a very large television.
C)
learn to use a printing press.
D)
sell the books that the printing press produces.
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82.
Workers today are more productive than they were in the past because they:
A)
have more natural resources to use.
B)
work a four-day week.
C)
are better educated and so have more human capital.
D)
are physically larger than were their parents.
83.
Which sector is responsible for MOST of the growth in the United States during the
1990s?
A)
service
B)
manufacturing
C)
mining
D)
retail
84.
According to the text, productivity is NOT driven by:
A)
physical capital.
B)
human capital.
C)
technological progress.
D)
natural resources.
85.
Which item does NOT qualify as physical capital?
A)
a shovel
B)
a factory
C)
a tractor
D)
mineral deposits
86.
The aggregate production function does NOT depend on:
A)
the quantity of physical capital per worker.
B)
human capital per worker.
C)
the state of technology.
D)
the amount of natural resources.
87.
Diminishing returns to physical capital implies that, when the human capital per worker
and the state of technology remain fixed, each successive increase in physical capital
leads to _____ productivity.
A)
a smaller increase in
B)
a larger increase in
C)
a decrease in
D)
negative
Page 17
88.
During the latter half of the twentieth century, the Soviet Union made more physical
capital available to its workers, but this increase resulted in successively smaller
increases in productivity. This example illustrates:
A)
diminishing returns to human capital.
B)
a decline in technology.
C)
a declining standard of living.
D)
diminishing returns to physical capital.
89.
Investment in human capital causes _____________the aggregate production function.
A)
a downward shift of
B)
a leftward movement along
C)
an upward shift of
D)
a rightward movement along
90.
The aggregate production function exhibits _____ returns to physical capital.
A)
diminishing
B)
constant
C)
increasing
D)
negative
91.
An increase in the amount of physical capital per worker _____, while technological
progress _____.
A)
makes the aggregate production function steeper; changes the slope of the
aggregate production function
B)
makes the aggregate production function steeper; makes the aggregate production
function flatter
C)
moves the economy along the aggregate production function; shifts up the
aggregate production function
D)
shifts up the aggregate production function; moves the economy along the
aggregate production function
92.
Diminishing returns to physical capital means that, when the amount of human capital
per worker and the state of technology are held fixed, each increase in the amount of
physical capital per worker leads to:
A)
a smaller increase in the marginal product of labor.
B)
a decrease in the total amount of output.
C)
negative marginal product.
D)
a constant amount of total output.
Page 18
93.
Which statement accurately describes what is happening along a typical aggregate
production function?
A)
At some point, increasing the amount of physical capital per worker will reduce
productivity.
B)
Increases in physical capital per worker will always bring about an increase in
productivity that is worth the cost of the additional physical capital.
C)
Because of diminishing returns, increasing the amount of physical capital per
worker will eventually bring smaller and smaller increases in productivity.
D)
Adding workers results in real GDP per worker rising at an increasing rate
throughout the function.
Use the following to answer question 94:
94.
(Table: Hypothetical Relationship) Use Table: Hypothetical Relationship. This economy
is undergoing:
A)
increasing returns to physical capital per worker.
B)
decreasing total productivity.
C)
constant total productivity.
D)
diminishing returns to physical capital per worker.
95.
Because of diminishing returns to capital, doubling the amount of physical capital
available for one worker to use will _____ output by _____ a factor of two.
A)
decrease; less than
B)
increase; less than
C)
increase; exactly
D)
increase; more than
96.
Diminishing returns to physical capital means that as more and more physical capital is
combined with a fixed amount of human capital and a fixed technology, eventually:
A)
aggregate output or real GDP declines.
B)
aggregate output or real GDP grows.
C)
additions to aggregate output or real GDP decline.
D)
additions to aggregate output or real GDP increase.
Page 19
97.
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)
contribution of the technology factor in the aggregate production function to
economic growth.
Use the following to answer questions 98-99:
98.
(Figure: Productivity) Use Figure: Productivity. An improvement in technology with
everything else remaining unchanged is shown on the diagram as a movement from:
A)
B to A.
B)
A to B.
C)
B to C.
D)
A to C.
99.
(Figure: Productivity) Use Figure: Productivity. An increase in physical capital per
worker with everything else remaining unchanged is shown on the diagram as a
movement from:
A)
B to C.
B)
A to C.
C)
A to B.
D)
B to A.
100.
Holding the human capital per worker and technology unchanged, the estimated
aggregate production function in Jamaica is Y / L = 50 * K / L, where Y = real output, L
= number of workers, and K = quantity of physical capital. If K / L = $81, then real GDP
per worker is:
A)
$4,050.
B)
$4,000.
C)
$4,096.
D)
$40,500.
101.
Holding the human capital per worker and technology unchanged, the estimated
aggregate production function in Jamaica is Y / L = 50 * K / L, where Y = real output, L
= number of workers, and K = quantity of physical capital. If real GDP per worker
equals $3,200, physical capital per worker equals:
A)
$81.
B)
$64.
C)
$49.
D)
$100.
Use the following to answer questions 102-104: