Exam Name___________________________________ MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswers thequestion. 1) upposeanationspopulationgrowsby2percentand,atthesametime,itsGDP S growsby5percent.ApproximatelyhowfastwillrealGDPperpersonincrease? A) 0percentperyear 1 B) percentperyear 2 C) percentperyear 3 D) percentperyear 5 2) hichofthefollowingisusedtocalculatethestandardofliving?

g? W A) (realGDPinthecurrentyear-realGDPinpreviousyear)/realGDPin ( previousyear)x100 B) ealGDP/aggregatehours r C) heone-thirdrule t D) ealGDP/population r 3) upposeacountryisproducing$20millionofrealGDP.Iftheeconomygrowsat10 S percentperyear,approximatelyhowmanyyearswilltotakeforrealGDPtogrow to$80million? A) 0 3 B) 4 1 C) 7 D) 4 4) hebestmeasureoflong-termeconomicgrowthpotentialischangesin T A) ominalGDP. n B) ealGDPperperson. r C) ealGDP. r D) ominalGDPperperson. n 5) verthelast100years,theaverageU.S.growthrateinrealGDPperpersonwas O about A) 2.5percentperyear. 1 B) percentperyear. 1 C) percentperyear. 6 D) percentperyear. 2 6) ince1960,thecountrywiththehighestlevelofrealGDPperpersonis S A) anada. C B) apan. J C) heUnitedStates. t D) ermany. G 7) nderdevelopedcountriesinwhichrealGDPperpersonhasnotgrownasfastasin U theUnitedStatessince1960include A) apan. J B) ongKong. H C) ountriesinAfrica. c D) anada. C 8) hichofthefollowingstatementsaboutworldgrowthduringthelasthalfofthe W 20thcenturyiscorrect? A) rowthratesinSouthAmericancountrieshaveexceededthoseinNorth G America. B) uetorapidgrowth,realGDPperpersoninChinaisnowabout50percentof D thatintheUnitedStates. C) ealGDPperpersoninHongKongandSingaporeareapproachingthatinthe R UnitedStates. D) neverydecade,JapanhasexperiencedfastergrowththantheUnitedStates. I 9) hegapsbetweentheUnitedStatesandtheAsiancountriesofHonkKong, T Singapore,TaiwanandChinahavebeen

A) ncreasing i B) ecreasing d C) herearenogapsbetweentheseAsiancountriesandtheUnitedStates t D) emainingfairlyconstant r 10) etween1905to2005,theaveragegrowthrateofrealGDPperpersonintheUnited B Stateswas2percentayear.Duringthisperiod,________grewatafasterratethan ________. A) hepopulation;realGDP t B) DP;thepopulation G C) ealGDP;thepopulation r D) nflation;realGDP i 11) ealGDPgrowswhen R I. thequantitiesofthefactorsofproductiongrow II. persistentadvancesintechnologymakefactorsofproduction increasinglyproductive III. humancapitalgrows A) ,II,andIII. I B) nlyI. O C) nlyII. O D) othIandIII. B 12) aborproductivityrises L A) ffirmsinvestinhiringmoreworkersratherthanbuyingmorecapital. i B) ntheabsenceoftechnologicalprogress. i C) ftheamountofcapitalperworkerdecreases. i D) ftheamountofcapitalperworkerincreases. i 13) fthequantityofcapitalperworkerintheeconomyincreases, I A) hestockofhumancapitalnecessarilyincreases. t B) hestockoffinancialassetsheldbythepublicincreases. t C) aborproductivityincreases. l D) heamountofmoneyheldbyworkersincreases. t 14) hatincreasedlaborproductivityduringtheIndustrialRevolution? W A) ncreasesinaveragehoursperworker i B) slowdownintechnologicaladvances a C) ncreasesintheamountofcapitalperworker i D) ecreasesinaveragehoursperworker d 15) nincreaseineducationandtraining A A) ncreasestheemployment-to-populationratio. i B) ecreasesrealGDPgrowth. d C) ncreaseslaborproductivity. i D) ncreasesaggregatehours. i 16) _______istheknowledgeandskillthatpeoplehaveobtainedfromeducationand _ on-the-jobtraining. A) aborproductivity L B) apital C C) umancapital H D) echnology T 17) umancapitalis,inpart,the H A) tockoffinancialassetsheldbythepublic. s B) mountofmoneyheldbyaworker. a C) tockofplantandequipment. s

D) tockofknowledgeofaworker. s 18) echnologicalchangecanbeembodiedin T A) umancapital. h B) hysicalcapital. p C) inancialcapital. f D) othanswersAandBarecorrect b 19) ngoingeconomicgrowthinrealGDPperpersonrequiresallofthefollowing O except________. A) hediscoveryofnewtechnologies t B) opulationgrowth p C) avingandinvestmentinnewcapital s D) nvestmentinhumancapital i 20) hichofthefollowinghasNOTbeenoneoftheprimarysourcesofeconomic W growthoverthelast200years? A) nvestmentinnewcapital i B) esourceconservation r C) iscoveriesofnewtechnology d D) nvestmentinhumancapital i 21) hepreconditionsforeconomicgrowthincludeallthefollowingexcept________. T A) ropertyrightsthatareproperlyenforcedbytheruleoflaw p B) iggovernmentsthatspendmoreandmoreofthenationsincome b C) oneysothatallsortsoftransactionscantakeplace m D) arketsthatenablepeopletodobusinesswitheachother. m 22) conomicgrowthrequirespreconditions,whichinclude E A) ropertyrights. p B) monetaryexchangesystem. a C) arkets. m D) lloftheaboveanswersarecorrect. A 23) hichofthefollowingwouldbeleastlikelytopromotegrowth? W A) ecreasetheamountofcapitalperhouroflabor d B) mprovethequalityofeducation i C) stablishmentofastrong,fairlegalsystem e D) timulatesaving s 24) arketsprovideallofthefollowingbenefitstosocietyEXCEPT M A) nablingpeopletospecialize. e B) llowingbuyersandsellerstoacquireinformation. a C) ermittingmarketpricestosendsignalstobuyersandsellers. p D) liminatingincentivestochangethequantitiessuppliedanddemanded. e 25) ropertyrightsare P A) herightstousemoneyinexchangeforgoodsandservices. t B) ocialarrangementsthatgoverntheownership,use,anddisposalofgoodsand s factors. C) ightsthatdonotincludetherighttoownfinancialassets. r D) ightsthatincludetherighttoownfinancial,butnotphysical,assets. r 26) ontinuingeconomicgrowthrequiresallofthefollowingactivitiesEXCEPT C A) idespreadrestrictionsonpropertyrights. w B) avingandinvestmentinnewcapital. s

C) echnologicalprogress. t D) nvestmentinhumancapital. i 27) aborproductivityismeasuredby L A) ealGDPperhouroflabor. r B) apitalperhouroflabor. c C) ealGDP. r D) ealGDPperunitofcapital. r 28) ftheleveloftechnologyrises,realGDPperhouroflabor I A) ecreasesforagivenlevelofcapitalperhouroflabor. d B) ncreasesbecausetheamountofcapitalperhouroflaborincreases. i C) ecreasesbecausethelevelofcapitalperhouroflabordecreases. d D) ncreasesforanylevelofcapitalperhouroflabor. i 29) hichofthefollowingpolicyactionscouldspeedproductivitygrowth? W I. Taxincentivestoencouragesaving. II. Encouraginginternationaltrade. III. Directingpublicfundstowardfinancingbasicresearch. A) only. I B) Ionly. I C) andIII. I D) ,II,andIII. I 30) highersavingrateleadstofastergrowthbecause A A) oresavingproducesgreateradditionstocapitalperhouroflabor,raising m realGDPperperson. B) opulationgrowthwouldaccelerate. p C) eoplecouldconsumemoreofaneconomysoutput. p D) apitalwouldwearoutfaster. c 31) llofthefollowingwouldincreasethegrowthrateoftheeconomyEXCEPT A A) timulatingresearchanddevelopment. s B) iscouraginginternationaltrade. d C) aisingthesavingrate. r D) oneoftheaboveanswersiscorrectbecausetheyallwouldincreasethe N growthrate. 32) nepolicythatwouldincreasethesavingratewouldbe O A) aisingtaxesonsaving. r B) axingconsumption. t C) aisingtaxesonthereturnstoinvestment. r D) aisingtaxesonthereturnstosaving. r 33) countrywouldachievefastergrowthby________. A A) ncreasingunionmembership i B) ncouragingfreetrade e C) ncreasingthecostofeducation i D) axingincomeandnotconsumption t 34) oincreasethepaceofeconomicgrowthwemustincreasethegrowthrateof T ________orincreasethegrowthrateof________. A) ggregatedemand;therealwagerate a B) apitalperhouroflabor;technologicalprogress c C) ggregatesupply;thepricelevel a D) ggregateworkhours;consumption a

35) echnologicalchange T A) ncreasespotentialGDP. i B) asnoeffectonemployment. h C) ecreaseslaborproductivity. d D) owerstherealwagerate. l 36) actorsthatinfluencelaborproductivityinclude________. F A) heinflationrate,therealwagerate,andtheexchangerate t B) hysicalcapital,therealwagerate,andtechnology p C) hysicalcapital,humancapital,andtechnology p D) helabordemandcurve t 37) nincreaseinphysicalcapitaloratechnologicaladvance A A) hiftstheproductionfunctiondownward. s B) ecreasesdemandforlabor. d C) aisestherealwagerate. r D) ecreasesthequantityoflaboremployed. d 38) lassicalgrowththeoryassertsthat C A) heeconomycangrowindefinitely. t B) opulationgrowthisdeterminedbythelevelofincomeperperson. p C) ealwageratesfallovertimeand,astheyfall,theyincreasethepopulation r growthrate. D) nincreaseinthelaborsupplyraisesrealwagerates. a 39) hesubsistencerealwagerateisthe T A) ealwageratethatproducesanexcesssupplyoflabor. r B) ealwageratethatproducesanexcessdemandforlabor. r C) inimumrealwageratenecessarytosustainlife. m D) ealwageratethatcausestechnologicalprogresstooccur. r 40) ccordingtotheclassicalgrowththeoryofThomasMalthus, A A) echnologicaladvancesleadtopermanentincreasesinrealGDPperperson. t B) aborproductivityincreasescontinuously. l C) ncreasesinrealGDPperpersonareonlytemporary. i D) hepopulationgrowthrateisfixed. t 41) lassicaleconomistsbelievedthat C A) ealwagerateswouldriseabovetheirsubsistencelevelinthelongrun. r B) hepopulationgrowthwoulddecreaseasrealwageratesrise. t C) helaborsupplywouldincreasebecauserealwagerateswouldfallasaresult t oftechnologicalprogress. D) ealwagerateswouldneverriseabovetheirsubsistencelevelinthelongrun. r 42) conomicsbecameknownastheDismalSciencebecauseofthe E A) eoclassicalgrowththeorypredictionthatgrowthwouldnotpersistinthe n longrun. B) lassicalgrowththeorypredictionofsubsistencewageratesinthelongrun. c C) roublestudentshaveearninggoodgradesintheirIntroductoryEconomics t classes. D) endencyofcompetitivemarketstokeeppricesandprofitslow. t 43) eoclassicalgrowththeorypredictsthat N A) rowthinrealGDPcanincreasewithoutanyincreaseininvestmentdemand. g

B) dvancesintechnologyarearesultofdiscoveriesmotivatedbythepursuitof a profits. C) dvancesintechnologyincreasetheproductivityofcapital,whichleadstoan a increaseininvestmentandrisingpercapitaGDP. D) rowthinrealGDPcancontinueindefinitely. g 44) eoclassicalgrowththeorypredictsthat N A) hegrowthratesofallnationswilldiverge. t B) hegrowthratesofallnationswillconverge. t C) apitalisconstantovertime. c D) utputisconstantovertime. o 45) henotionthattechnologicalchangeisnotrandombutinsteadisdrivenbythe T pursuitofprofitsisanessentialelementof A) erpetualgrowththeory. p B) henewgrowththeory. t C) lassicalgrowththeory. c D) eoclassicalgrowththeory. n 46) ccordingtothenewgrowththeoryofPaulRomer, A A) helabordemandcurvedoesnotshiftupwardovertime. t B) nowledgeisnotsubjecttodiminishingreturns. k C) herateoftechnologicalprogressisdeterminedbychance. t D) heconceptofalabormarketisnotnecessary. t 47) ecauseofthechoicespeoplemakeinthepursuitofprofit,newgrowththeory B arguesthat A) hecapitalstockexperiencesdiminishingreturns. t B) heeconomycanenjoyaperiodofindefinitegrowth. t C) opulationgrowthincreaseswillbringtherealwageratebacktosubsistence p level. D) echnologygrowthslowsdowninthelong-run. t 48) equals I A) +T+G. S B) +T+G+NX. C C) +T-G-NX. S D) +S+T. C 49) hetermcrowdingoutrelatesto T A) neffectofagovernmentbudgetdeficit. a B) ecreasesinprivateinvestmentbecauseofagovernmentbudgetdeficit. d C) ncreasesintherealinterestrateduetogovernmentbudgetdeficit. i D) lloftheaboveanswersarecorrect. A 50) he________theinterestrate,the________thepresentvalueofagivenfuture T amount. A) igher;larger h B) ower;lower l C) igher;smaller h D) oneoftheaboveanswersiscorrectbecausetheinterestratehasnothingto N dowiththepresentvalue. 51) omparingthefiscalimbalanceforthecurrentgenerationversusfuturegenerations, C itisthecasethat A) hecurrentgenerationpaysalargershareofthefiscalimbalance. t

B) uturegenerationspayalargershareofthefiscalimbalance. f C) achgenerationpaysallofitsfiscalimbalance. e D) achgenerationpayshalfofthefiscalimbalance. e

 1) C 2) D 3) B 4) B 5) D 6) C 7) C 8) C 9) B 10) C 11) A 12) D 13) C 14) C 15) C 16) C 17) D 18) D 19) B 20) B 21) B 22) D 23) A 24) D 25) B 26) A 27) A 28) D 29) D 30) A 31) B 32) B 33) B 34) B 35) A 36) C 37) C 38) B 39) C 40) C 41) D 42) B 43) C 44) B 45) B 46) B 47) B 48) C 49) D 50) B 51) B