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Economic growth is best defined as an increase in:

A) either real GDP or real GDP per capita. C) total consumption expenditures.

B) nominal GDP. D) wealth in the economy.

Answer: A

Real GDP per capita is found by:

A) adding real GDP and population. C) dividing real GDP by population.

B) subtracting population from real GDP. D) dividing population by real GDP.

Answer: C

Which of the following best measures improvements in the standard of living of a nation?

A) growth of nominal GDP C) growth of real GDP per capita

B) growth of real GDP D) growth of national income

Answer: C

If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million

to 212 million, it real GDP per capita will:

A) remain constant. B) fall by 6 percent. C) rise by 6 percent. D) fall by 12 percent.

Answer: A

Productivity is the ratio of

A) total output to the total number of worker hours.

B) total output to the total population.

C) total output to the total number of unemployed.

D) total capital to the total number of workers.

Answer: A
All of the following explain the growth in output per worker hour during the 20th century

EXCEPT

A) the quality of labor improved during that period.

B) the quantity of labor increased during that period.

C) the quality of capital improved during that period.

D) the worker capital ratio decreased during that period.

Answer: B

All of the following are associated with capital deepening except

a. a rise in the ratio of capital to labor

b. an increase in investment that exceeds an increase in the number of laborers

c. a movement along the labor productivity curve

d. a shift upward in the labor productivity curve

The immediate determinant of the volume of output and employment is the:

A) composition of consumer spending.

B) ratio of public goods to private goods production.

C) level of total spending.

D) size of the labor force.

Answer: C

As it relates to economic growth, the term long-run trend refers to:

A) the long-run increase in the relative importance of durable goods in the U.S. economy.

B) the long-term expansion or contraction of business activity that occurs over 50 or 100 years.

C) fluctuations in business activity that average 40 months in duration.

D) fluctuations in business activity that occur around Christmas, Easter, and so forth.

Answer: B
How do we define labor productivity? How would an increase in the capital-labor ratio affect labor

productivity?

3. As the capital-labor ratio increases,

a. labor productivity will decrease

b. labor productivity will increase

c. the capital-output ratio will increase

Which of the following explains why production rises in most years?

a. increases in the labor force

b. increases in the capital stock

c. advances in technological knowledge

d. All of the above are correct.

ANS: D

In the United States, business cycles have occurred against a backdrop of a long-run trend of:

A) declining unemployment. C) rising real GDP.

B) stagnant productivity growth. D) rising inflation.

Answer: C
For the 1952-2003 period in the United States, output per worker hour

A) increased at a constant rate.

B) decreased during the 1960s.

C) fluctuated around an upward trend.

D) showed the largest increase during the 1980s.

Answer: C

Recurring upswings and downswings in an economy's real GDP over time are called:

A) recessions. B) business cycles. C) output yo-yos. D) total product oscillations.

Answer: B

The phase of the business cycle in which real GDP declines is called:

A) the peak. B) a recovery. C) a recession. D) the trough.

Answer: C

If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million

to 212 million, it real GDP per capita will:

A) remain constant. B) fall by 6 percent. C) rise by 6 percent. D) fall by 12 percent.

Answer: A

Growth is advantageous to a nation because it:

A) promotes faster population growth. C) eliminates the economizing problem.

B) lessens the burden of scarcity. D) slows the growth of wants.

Answer: B
The two main characteristics of the production function are

(a) it slopes downward from left to right, and the slope becomes flatter as the input increases.

(b) it slopes upward from left to right, and the slope becomes steeper as the input increases.

(c) it slopes upward from left to right, and the slope becomes flatter as the input increases.

(d) it slopes downward from left to right, and the slope becomes steeper as the input increases.
Answer: C

Although increases in the capital-labor ratio lead to increases in output per laborer at a decreasing rate,

new technology causes

a. a bigger increase in output per laborer along a labor productivity curve

b. a shift down in the labor productivity curve

c. output per worker to increase at an increasing rate along a labor productivity curve

d. an upward shift in the labor productivity curve

In order for GDP per capita to increase

a. GDP must rise faster than population

b. population growth must be limited

c. capital deepening must occur

d. saving must be high

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