Page 53
283.
The value of real GDP divided by population for a given country:
A)
is the real GDP per capita.
B)
is always increasing in value for any country.
C)
remains constant for developing countries.
D)
is per capita GDP.
284.
If the population and GDP increase by the same percentage, then real GDP per capita:
A)
stays the same.
B)
increases.
C)
decreases.
D)
may change, but one cannot be sure of the direction.
285.
In 2015, the median U.S. household income was approximately:
A)
$54,000.
B)
$8,000.
C)
$16,000.
D)
$25,000.
286.
In the past 30 years, both China and India have had substantial economic growth:
A)
and as a result, they are almost as rich as the United States today.
B)
but India is still poorer than the United States was in 1900, and China only now
matches the level of income in the United States in 1900.
C)
which was fueled by both countries’ increases in consumption.
D)
which came about because of their relatively low levels of saving.
287.
The rule of 70 tells us that:
A)
it takes most countries 70 years to increase real GDP growth.
B)
the number of years it takes for a variable to double is equal to 70 divided by the
annual growth rate of the variable.
C)
the number of years for real GDP per capita to double is the current growth rate
plus 70.
D)
only 70 countries can have real GDP growth at any given time.
288.
If real GDP in country A is $500 billion one year and $540 billion the following year,
then the growth rate for this country between the two years is:
A)
4%.
B)
8%.
C)
0.8%.
D)
10%.
Page 54
289.
According to the rule of 70, if a country has an average growth rate of 7%, its real GDP
per capita will double in:
A)
7 years.
B)
10 years.
C)
14 years.
D)
2 years.
290.
Long-run economic growth has been MOSTLY dependent on:
A)
rising productivity.
B)
a low unemployment rate.
C)
an increase in the population, which eventually leads to an increase in the labor
population.
D)
countries following the rule of 70.
291.
Education’s effect on productivity:
A)
is believed to be less important than the amount of physical capital a worker has
available.
B)
is even more important than increases in physical capital.
C)
has fallen in the past century in the United States.
D)
depends on the wealth of the country.
292.
Factors that influence productivity and therefore growth are:
A)
physical and human capital per worker and technological advances.
B)
government independence.
C)
more government intervention in the marketplace.
D)
increased consumption and less investment spending.
293.
Historically, development of a new technology often:
A)
results in immediate increases in productivity.
B)
leads to increases in productivity only once firms learn how to use it.
C)
requires a complementary increase in physical and human capital.
D)
has had no impact on changes in productivity.
294.
Technological change:
A)
raises total factor productivity.
B)
is not as important as infrastructure maintenance.
C)
shifts the aggregate production function downward.
D)
relies on consumption increases at the expense of saving.
Page 55
295.
Diminishing returns to physical capital suggest that:
A)
when the amount of human capital per worker and the state of technology are
fixed, successive increases in the amount of physical capital per worker lead to
smaller increases in productivity.
B)
physical capital increases lead to drops in productivity when the amount of human
capital per worker and the state of technology are fixed.
C)
increases in technological progress lead to decreases in productivity.
D)
physical capital must be increased less than human capital and technological
progress for growth to occur.
296.
Diminishing returns to physical capital suggests that:
A)
at some point, increasing the amount of physical capital per worker is not worth the
cost of the additional amount of capital.
B)
after some point, increasing the amounts of physical capital per worker will lead to
decreases in productivity.
C)
increasing the amount of physical capital per worker is always worth the cost of the
capital.
D)
there are increasing returns to technology and human capital.
297.
Total factor productivity:
A)
is the amount of output produced from a given amount of factor inputs.
B)
is not an essential element in long-run growth.
C)
is less important than technological progress.
D)
cannot be used to explain how contributions of factors of production affect a
country’s growth.
298.
Based on historical economic growth, economists have noted that the estimated
aggregate production function:
A)
exhibits constant returns to physical capital.
B)
shows that when holding the amount of human capital and the state of technology
fixed, successive increases in the amount of physical capital per worker lead to
smaller increases in productivity.
C)
depends primarily on physical capital and technology advances.
D)
shows the negative relationship between physical capital and productivity.
299.
When a country utilizes more physical capital per worker over time, there will be:
A)
lower and eventually zero growth rate of productivity.
B)
higher growth rates of productivity.
C)
no change in the growth rate of productivity.
D)
lower but always positive growth rates of productivity.
Page 56
300.
Natural resources:
A)
are still the most important factor in determining the productivity of human or
physical capital for all countries.
B)
are the only factor that consistently shows a positive effect on productivity for
wealthy countries.
C)
are a less significant source of productivity growth in most countries today than in
earlier times.
D)
can be used to explain the differences in productivity growth among countries.
301.
Investment spending:
A)
must be paid for by consumption in domestic households.
B)
comes from the savings of either domestic or foreign households.
C)
is paid for by capital outflows.
D)
must be paid for by government spending.
302.
Japan’s economy:
A)
had higher real GDP per capita than that of most European countries in 2010.
B)
relies on high consumption to spur its economic growth.
C)
grew but not as fast as Mexico’s economy over the long run.
D)
had the same real GDP per capita as Mexico in 1820.
303.
In 2015, China saved:
A)
less than the United States saved.
B)
more and spent more on investment as a percentage of its GDP than did the United
States.
C)
less and spent less on investment as a percentage of its GDP than did the United
States.
D)
more but still had an economic growth rate less than that of the United States.
304.
One of the most important types of infrastructure that a government can provide is:
A)
a good tax system.
B)
basic health measures such as clean water and disease control.
C)
the kind that private companies would provide if they were allowed to.
D)
more intervention in the market mechanism.
305.
To hinder growth, a government might:
A)
provide basic health measures.
B)
support research and development.
C)
not protect property rights.
D)
encourage saving.
Page 57
306.
Factors contributing to differences in countries’ growth rates do NOT include:
A)
adherence to the rule of 70.
B)
differences in savings and investment rates.
C)
the amount of physical capital available.
D)
a lack of spending on infrastructure.
307.
The convergence hypothesis:
A)
apparently applies only to wealthy countries.
B)
seems to hold only when other things such as education and infrastructure are held
equal.
C)
suggests that relatively poor countries will continue to be poor regardless of their
level of saving.
D)
states that countries’ growth depends on the amount of government intervention in
the marketplace.
308.
Many economists view resource scarcity as a:
A)
major obstacle to long-run economic growth.
B)
problem resolved fairly well by the market mechanism.
C)
primary reason for poor countries’ lack of economic growth.
D)
problem for wealthy countries but not for poorer countries.
309.
Many economists agree that environmental damage from economic growth:
A)
is minimal and not serious enough to address through economic channels.
B)
occurs but can be contained with market-based incentives and concerted
government action.
C)
results in a lack of growth in some countries.
D)
occurs only in poorer countries.
310.
An economy initially has 200 units of physical capital per worker. Each year, it
increases the amount of physical capital by 10%. According to the aggregate production
function for this economy, each 1% increase in physical capital per worker, holding
human capital and technology constant, increases output per worker by 0.25%. In three
years’ time, what is the level of physical capital per worker in this economy?
A)
220 units
B)
242 units
C)
266.2 units
D)
200 units
311.
An economy initially has 200 units of physical capital per worker. Each year, it
increases the amount of physical capital by 10%. According to the aggregate production
function for this economy, each 1% increase in physical capital per worker, holding
human capital and technology constant, increases output per worker by 0.25%. If there
is no inflation and output per worker is initially $1,000, what does the estimated output
per worker equal after one year?
A)
$1,250
B)
$2,500
C)
$1,225
D)
$1,025
Answer Key
Page 60
45.
C
46.
C
47.
D
48.
B
49.
C
50.
C
51.
B
52.
B
53.
C
54.
B
55.
A
56.
A
57.
B
58.
A
59.
C
60.
A
61.
A
62.
C
63.
C
64.
A
65.
D
66.
D
67.
B
68.
B
69.
B
70.
C
71.
A
72.
B
73.
C
74.
D
75.
A
76.
A
77.
B
78.
B
79.
B
80.
C
81.
C
82.
C
83.
D
84.
D
85.
D
86.
D
87.
A
88.
D
89.
C
90.
A
Page 61
91.
C
92.
A
93.
C
94.
D
95.
B
96.
C
97.
C
98.
C
99.
C
100.
A
101.
B
102.
D
103.
A
104.
D
105.
B
106.
D
107.
B
108.
A
109.
B
110.
C
111.
B
112.
D
113.
B
114.
A
115.
B
116.
D
117.
D
118.
D
119.
C
120.
C
121.
D
122.
A
123.
B
124.
C
125.
C
126.
C
127.
A
128.
A
129.
B
130.
D
131.
B
132.
D
133.
A
134.
B
135.
B
136.
C
Page 62
137.
B
138.
B
139.
D
140.
C
141.
C
142.
B
143.
A
144.
B
145.
D
146.
C
147.
C
148.
A
149.
A
150.
B
151.
A
152.
D
153.
D
154.
C
155.
D
156.
C
157.
B
158.
D
159.
D
160.
B
161.
C
162.
C
163.
D
164.
D
165.
D
166.
D
167.
D
168.
A
169.
A
170.
A
171.
C
172.
D
173.
A
174.
B
175.
C
176.
D
177.
D
178.
A
179.
C
180.
A
181.
A
182.
D
Page 63
183.
B
184.
B
185.
D
186.
C
187.
B
188.
A
189.
C
190.
C
191.
D
192.
C
193.
C
194.
B
195.
B
196.
C
197.
A
198.
C
199.
A
200.
A
201.
B
202.
A
203.
B
204.
C
205.
A
206.
B
207.
C
208.
B
209.
C
210.
B
211.
D
212.
B
213.
A
214.
B
215.
A
216.
B
217.
A
218.
A
219.
A
220.
A
221.
A
222.
B
223.
A
224.
B
225.
B
226.
A
227.
A
228.
B
Page 64
229.
B
230.
B
231.
A
232.
A
233.
A
234.
B
235.
A
236.
A
237.
A
238.
A
239.
B
240.
A
241.
A
242.
A
243.
A
244.
B
245.
B
246.
B
247.
A
248.
B
249.
A
250.
B
251.
A
252.
A
253.
B
254.
A
255.
B
256.
A
257.
B
258.
B
259.
A
260.
B
261.
A
262.
B
263.
A
264.
B
265.
B
266.
A
267.
A
268.
A
269.
B
270.
A
271.
272.
273.
274.
Page 65
275.
276.
277.
278.
279.
280.
281.
282.
283.
A
284.
A
285.
A
286.
B
287.
B
288.
B
289.
B
290.
A
291.
B
292.
A
293.
B
294.
A
295.
A
296.
A
297.
A
298.
B
299.
D
300.
C
301.
B
302.
A
303.
B
304.
B
305.
C
306.
A
307.
B
308.
B
309.
B
310.
C
311.
D