1. Economic growth is measured as:
a.
the quarterly percentage change in nominal GDP.
b.
total output per year divided by the inflation rate.
c.
total nominal GDP at the end of each year.
d.
the percentage change in population growth per year.
e.
the annual percentage change in real GDP.
2. If real GDP for Mexico was 19.8 trillion pesos at the end of 1999 and 21.3 trillion pesos at the end of 2000, then
Mexico’s economy grew at an annual rate of _____.
a.
-0.015%
b.
4.4 %
c.
4.2%
d.
7.57%
e.
3.8%
d
Moderate
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Application
3. What is the annual rate of economic growth in Japan if real GDP at the beginning of the year is 11.9 trillion yen and
real GDP at the end of the year is 11.1 trillion yen?
a.
0.65%
b.
-6.7%
c.
1.9%
d.
0.008%
e.
-6.25%
b
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
4. If real GDP in Korea amounted to 448.3 trillion wons in 1999 and 473.7 trillion wons in 2000, compute the growth
experienced by this country in 2000?
a.
5.4%
Easy
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Knowledge
b.
5.66%
c.
2.54%
d.
-1.05%
e.
-9.4%
5. Which of the following is true of the rule of 72?
a.
b.
c.
d.
e.
b
Easy
MACR.BOYE.16.83 – ch. 16, 1
United States – Analytic – BB-Legal
Knowledge
6. To calculate the time required for real GDP to double, we _____.
a.
divide the annual growth rate by 72
b.
divide 72 by nominal GDP
c.
divide real output by 72
d.
divide 72 by the annual growth rate
e.
multiply real GDP by 72
d
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Analytic – BB-Legal
United States – Measuring the Economy
Defining Economic Growth
Application
Revised
7. If the average annual growth rate of a developing country is 7.2 percent, real GDP will double in _____.
a.
2 years
b.
7.2 years
c.
14.4 years
b
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Measuring the Economy
Defining Economic Growth
Application
d.
10 years
e.
15 years
8. If you invest $1,000 in a savings account and the annual interest rate is 3.6 percent, your account balance will double in
value in approximately _____.
a.
185 years
b.
72 years
c.
34 years
d.
20 years
e.
3.4 years
Moderate
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Application
9. Using the rule of 72, calculate the average annual growth rate of GDP needed for a country to double its size in just
four years?
a.
12 percent
b.
4 percent
c.
18 percent
d.
72 percent
e.
28 percent
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
10. Assume that you invest $550 in a certificate of deposit that has an annual interest rate of 4.5 percent. According to the
rule of 72, what will your investment be worth after 16 years?
a.
$550
b.
$3,960
c.
$1,100
d.
$797.5
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
e.
$1,200
11. If the real GDP of a developed country doubles in 48 years, the average annual growth rate in real GDP must be
_____.
a.
1.5%
b.
3.5%
c.
0.67%
d.
0.012%
e.
24%
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
Revised
12. If an investment of $400 increases to $800 in 16 years, the annual interest rate of the investment must be _____.
a.
18%
b.
10%
c.
9%
d.
4.5%
e.
1.8%
d
Moderate
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Application
Revised
13. The income of the town of Kennebunkport has been growing by 2 percent per year. If this growth continues into the
future, how long will it take until the town’s income has doubled?
a.
About 36 years
b.
About 24 years
c.
About 96 years
d.
About 50 years
e.
About 144 years
Moderate
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Application
14. If Korea’s average annual growth rate is 9 percent and that of the United States is 4 percent, the time required for
Korea’s real GDP to double will be ____ less than the time required for the GDP of the United States to double.
a.
3 years
b.
6 years
c.
12 years
d.
15 years
e.
10 years
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
15. Per capita real GDP is:
a.
equivalent to the real GDP level.
b.
a measure of the value of output produced and available to an average person.
c.
higher in developing countries than in developed countries.
d.
a measure of an economy’s income distribution.
e.
a measure of the GDP per country.
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
16. In 2000, the real GDP for Malaysia was 93.15 trillion ringgit (MYR) and the population size was 20.5 million, then
per capita real GDP for the year was approximately equal to _____.
a.
MYR 4.54 million
b.
MYR 45.9 million
c.
MYR 1,909.5 million
d.
MYR 191 million
e.
MYR 9,315 million
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
17. Suppose the real GDP in an economy in the year 1999 was $2,000 and the total population was 500. The economy
experienced a 5% growth in real GDP and a 2% growth in its population in 2000. Calculate the change in per capita
income of the economy during this period.
a.
+1%
b.
+2.5%
c.
-3%
d.
+3%
e.
-4%
d
Challenging
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
18. The per capita real GDP in Sri Lanka is likely to be lower than the United States because Sri Lanka’s economy is
characterized by:
a.
a more equitable income distribution system.
b.
a high population growth.
c.
a low regard for political freedom.
d.
a higher level of consumption spending.
e.
a high budget deficit.
b
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Comprehension
Revised
19. What is the approximate per capita income of the US if the population is 3,405,813 and its GDP is $24 million?
a.
$8.17
b.
$1.41
c.
$7.05
d.
$0.08
e.
$6.18
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Application
Reised
20. Which of the following is accounted for when we measure economic growth in terms of per capita real GDP?
a.
Changes in the quality of life
b.
Changes in income distribution
c.
Changes in standards of living
d.
Changes in price level
e.
People’s nonmonetary needs
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
21. If real GDP remains unchanged, the population size is stationary, and people have more leisure time, then per capita
real GDP will _____.
a.
overstate actual economic growth
b.
understate actual economic growth
c.
be the most accurate measure of actual economic growth
d.
show that actual economic growth was negative
e.
show that actual economic growth was positive
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
22. Economic growth measured in terms of an increase in per capita real GDP is a good measure of _____.
a.
the average citizen’s standard of living in a nation
b.
the quality of labor in a nation
c.
the distribution of income in a nation
d.
the quality of life people experience in a nation
e.
economic activity in a nation
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
23. Per capita real GDP is of limited use as a measure of economic well being for all the following reasons, except:
a.
it says nothing about the quality of the environment.
b.
it does not reflect the degree of personal freedom in a society.
c.
it is not adjusted for changes in leisure time.
d.
it is not adjusted for changes in the rate of inflation.
e.
it says nothing about the distribution of income.
MACR.BOYE.16.83 – ch. 16, 1
United States – Measuring the Economy
Defining Economic Growth
24. Per capita real GDP is a questionable indicator of the state of the economy because it does not account for:
a.
growth of national income.
b.
changes in inflation.
c.
income distribution.
d.
changes in the size of the population.
e.
changes in the level of output.
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
25. Long-term economic growth requires a permanent:
a.
decline in the average price level.
b.
leftward shift of the vertical Phillips curve.
c.
rise in the natural rate of unemployment.
d.
leftward shift of the aggregate demand curve.
e.
rightward shift of the vertical aggregate supply curve.
MACR.BOYE.16.84 – ch. 16, 2
United States – Reflective Thinking
The Determinants of Growth
26. Which of the following will shift the long-run aggregate supply curve to the right?
a.
Increase in the price level
b.
Increase in the natural rate of unemployment
c.
Decrease in per capita GDP
d.
Increase in the rate of economic growth
e.
Increase in the rate of inflation
27. Which of the following is considered a determinant of long-run economic growth?
a.
Increase in the interest rates
b.
Changing expectations
c.
Increase in the money supply
d.
Growth in productive resources
e.
Reduction in government spending
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
28. In developing countries, the labor force typically grows _____.
a.
as rapidly as in industrial countries
b.
less rapidly than in industrial countries
c.
more rapidly than in industrial countries
d.
at a diminishing rate
e.
at a constant rate
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
29. Other things equal, a country’s long-run aggregate supply will shift to the left when _____.
a.
the aggregate expenditure on education rises
b.
the productivity of labor rises
c.
the quantity of natural resources rises
d.
the mortality rate rises
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
e.
the amount of investment rises
30. Which of the following is a barrier to economic growth in low-income countries?
a.
A shortage of labor
b.
A declining population
c.
Lack of investment in research and development
d.
Lack of natural resources
e.
An increasing amount of savings
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
31. The baby boom of the post–World War II period had the greatest impact on the size of the U.S. labor force in _____.
a.
the 1980s
b.
the 1970s
c.
the 1960s
d.
the 1950s
e.
the late 1940s
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
32. An expansion in a country’s capital stock is associated with a(n) _____.
a.
increase in potential GDP
b.
decline in future consumption
c.
increase in human capital
d.
decline in the rate of investment
e.
increase in national debt
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
33. The ability of a country to invest in capital goods is tied to _____.
a.
its ability to save
b.
the size of its labor force
c.
its abundance of natural resources
d.
the quality of its labor force
e.
the level of inflation
MACR.BOYE.16.84 – ch. 16, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
The Determinants of Growth
34. Which of the following stands true for the determinants of growth?
a.
b.
c.
d.
e.
MACR.BOYE.16.84 – ch. 16, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
The Determinants of Growth
35. Which of the following statements about the economic concept of land is not true?
a.
b.
c.
d.
e.
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
36. Technological advancement implies:
a.
the increase in the quantity of inputs needed to produce a given quantity of output.
b.
the reduction in the quantity of inputs needed to produce a given quantity of output.
c.
the reduction in the productivity of a sector of the economy that has become obsolete.
d.
an increase in the labor to capital ratio in any production process.
e.
the growth in the natural resource endowment.
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
37. Which of the following statements about technology is true?
a.
It is a sufficient but not necessary condition for economic growth.
b.
Management techniques are irrelevant to technological growth.
c.
Industrial countries follow the lead of developing countries in implementing new technology.
d.
Technological change is inversely related to a nation’s ability to save.
e.
Low levels of education can impede technological progress.
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
38. The total factor productivity of an economy is the ratio of the economy’s _____.
a.
total income to its total population
b.
output to its total stock of labor and capital
c.
stock of capital to its stock of labor
d.
total population to its total labor force
e.
total capital stock to its total population
MACR.BOYE.16.85 – ch. 16, 3
39. Other things remaining equal, total factor productivity will fall if _____.
a.
labor input grows more slowly than total output
b.
capital input grows faster than total output
c.
the economy’s output divided by total inputs increases
d.
the ratio of total output to the stock of labor and capital changes by zero percent
e.
the ratio of total output to the stock of labor and capital increases
MACR.BOYE.16.85 – ch. 16, 3
United States – Reflective Thinking
40. _____ is the ratio of an economy’s output to its stock of labor and capital.
a.
Productive capacity
b.
Multifactor productivity
c.
Marginal product of labor
d.
Workforce productivity
e.
Total factor productivity
MACR.BOYE.16.85 – ch. 16, 3
United States – Measuring the Economy
41. Total factor productivity is the ratio of a:
a.
firm’s marginal revenue to its marginal cost.
b.
firm’s total revenues to its total costs.
c.
nation’s total income to its total output.
d.
nation’s output to its stock of labor and capital.
e.
nation’s savings to its capital stock.
MACR.BOYE.16.85 – ch. 16, 3
United States – Measuring the Economy
United States – Measuring the Economy
42. Growth in total factor productivity equals the _____.
a.
sum of resource growth and economic growth
b.
ratio of total output to total input
c.
ratio of total input to total output
d.
percentage change in per capita real GDP
e.
percentage change in output minus the percentage change in resources
Moderate
MACR.BOYE.16.85 – ch. 16, 3
United States – Reflective Thinking
Productivity
Comprehension
43. If the growth rate of resources is zero and real output is growing at 4 percent, then _____.
a.
the stock of capital has fallen by 4 percent
b.
economic growth has fallen by 4 percent
c.
total factor productivity has risen by 4 percent
d.
the stock of labor has fallen by 4 percent
e.
the percentage share of real GDP received by capital has fallen by 4 percent
Moderate
MACR.BOYE.16.85 – ch. 16, 3
Productivity
Application
44. Suppose that an economy grows by 6 percent, total factor productivity grows by 4 percent, and the capital stock
increases by 2 percent. If labor and capital are the only inputs used in production, and capital contributes 25 percent to
GDP, then the labor force has risen by _____.
a.
1.5%
b.
2%
c.
4%
d.
6%
e.
8%
b
Challenging
MACR.BOYE.16.85 – ch. 16, 3
United States – Reflective Thinking
Productivity
Application
Knowledge