Question 1

Refer to the above diagram. Which of the following is the most likely cause for a shift in the production possibilities curve from AB to CD?

Accepted Answer

A)   The use of the economy's resources in a more efficient way
B)   An increase in the spending of business and consumers
C)   An increase in government purchase of the economy's output
D)   An increase in the quantity and quality of labor resourcesE) None of the above
F) B) and C)

Question 2

If the annual growth in a nation's productivity is 2.8 percent rather than 1.5 percent, then the nation's standard of living will double in about:

Accepted Answer

A)   20 years instead of 40 years
B)   25 years instead of 47 years
C)   46 years instead of 70 years
D)   55 years instead of 115 yearsE) All of the above
F) A) and D)

Question 3

Which of the following is the so-called efficiency factor of economic growth?

Accepted Answer

A)   Having an efficient financial system
B)   Reaching full production potential
C)   Having free trade
D)   Enhanced quantity and quality of human resourcesE) A) and B)
F) A) and C)

Question 4

Assume that an economy has 1500 workers, each working 2000 hours per year. If the average real output per worker-hour is $20, then total output or real GDP will be:

Accepted Answer

A)   $3 million
B)   $30 million
C)   $45 million
D)   $60 millionE) B) and D)
F) All of the above

Question 5

A shift outward in the production possibilities curve is the direct result of improvements in the efficiency factor of economic growth.

Accepted Answer

A) True 
 B)False

Question 6

The problematic trend in the "inverse dependency ratio" in the U.S. is likely to show up first in:

Accepted Answer

A)   The manufacturing sector
B)   Agriculture
C)   Social security
D)   National defenseE) A) and B)
F) A) and C)

Question 7

The shift of labor out of agriculture to industry in the United States has tended to:

Accepted Answer

A)   Reduce the rate of productivity growth
B)   Increase unemployment in the agriculture sector
C)   Reduce unemployment in the industrial sector
D)   Increase labor productivityE) None of the above
F) A) and C)

Question 8

A nation's real GDP will increase by increasing the following, except:

Accepted Answer

A)   Number of workers
B)   Labor productivity
C)   Technological progress
D)   Average price levelE) A) and B)
F) A) and C)

Question 9

What economic concept would be most closely associated with a situation where an aluminum plant expands its operations and uses extensive computerization in the production line to reduce per-unit costs of production?

Accepted Answer

A)   Infrastructure
B)   Human capital
C)   Network effects
D)   Economies of scaleE) A) and B)
F) A) and C)

Question 10

Increases in the value of the product to each user, including existing users, as the total number of users rises is called:

Accepted Answer

A)   Network effects
B)   Simultaneous consumption
C)   Learning by doing
D)   The spreading of development costsE) None of the above
F) A) and B)

Question 11

Assume a nation's current production possibilities are represented by the curve AB in the above diagram. Economic growth would best be indicated by a:

Accepted Answer

A)   Shift in the curve from AB to CD
B)   Shift in the curve from AB to EF
C)   Movement from point 1 to point 2
D)   Movement from point 3 to point 4E) A) and B)
F) None of the above

Question 12

Critics of growth policies focus on the following arguments, except:

Accepted Answer

A)   Growth has resulted in resource degradation and pollution
B)   Sociological problems like poverty have not been solved by growth
C)   Growth may have given us the good life, but we cannot better it anymore
D)   Rapid growth is not sustainable in the long term due to resource limitationsE) None of the above
F) All of the above

Question 13

If real GDP grows at an average annual rate of 2.0% instead of 3.5%, then it would take about 35 years - instead of 20 years - for real GDP to double.

Accepted Answer

A) True 
 B)False

Question 14

In the U.S. economic-growth experience:

Accepted Answer

A)   Most capital substitutes for labor
B)   Most capital is complementary to labor
C)   The amount of capital available per worker has been relatively constant
D)   The amount of capital available per worker has been decreasingE) A) and D)
F) None of the above

Question 15

Refer to the above diagram. If the production possibilities curve of an economy shifts from AB to CD, it is most likely the result of what factor affecting economic growth?

Accepted Answer

A)   A supply factor
B)   A demand factor
C)   An efficiency factor
D)   An allocation factorE) A) and D)
F) A) and C)

Question 16

There tends to be a high positive correlation between the rate of productivity growth and the rate of economic growth.

Accepted Answer

A) True 
 B)False

Question 17

One of the main arguments against further growth for industrialized nations focuses on the problem of:

Accepted Answer

A)   Technological knowledge
B)   Environmental quality
C)   Feedback mechanisms
D)   InfrastructureE) A) and D)
F) A) and C)

Question 18

The "inverse dependency ratio" is defined as the ratio of:

Accepted Answer

A)   The average number of dependents per head of household
B)   The working-age population to the number of dependents
C)   The number of dependents to the number of the total population
D)   The number of parents and grandparents to the number of childrenE) A) and C)
F) B) and C)

Question 19

Consider two scenarios for a nation's economic growth. Scenario A has real GDP growing at an average annual rate of 3.5%; scenario B has an average annual growth of 4.5%. The nation's real GDP would double in about:

Accepted Answer

A)   20 years under scenario A, versus 30 years under scenario B
B)   20 years under scenario A, versus 16 years under scenario B
C)   12 years under scenario A, versus 16 years under scenario B
D)   16 years under scenario A, versus 30 years under scenario BE) All of the above
F) A) and C)

Question 20

Real GDP or total output in any year is equal to:

Accepted Answer

A)   Labor productivity divided by number of worker-hours
B)   Labor productivity multiplied by real output
C)   Number of worker-hours multiplied by labor productivity
D)   Number of worker-hours divided by labor productivityE) A) and B)
F) A) and C)

Exam 8: Economic Growth

Real GDP or total output in any year is equal to:

Correct AnswerverifiedShow Answer

A shift outward in the production possibilities curve is the direct result of improvements in the efficiency factor of economic growth.

Correct AnswerverifiedShow Answer

Assume a nation's current production possibilities are represented by the curve AB in the above diagram. Economic growth would best be indicated by a:

Correct AnswerverifiedShow Answer

The "inverse dependency ratio" is defined as the ratio of:

Correct AnswerverifiedShow Answer

One of the main arguments against further growth for industrialized nations focuses on the problem of:

Correct AnswerverifiedShow Answer

Refer to the above diagram. If the production possibilities curve of an economy shifts from AB to CD, it is most likely the result of what factor affecting economic growth?

Correct AnswerverifiedShow Answer

The problematic trend in the "inverse dependency ratio" in the U.S. is likely to show up first in:

Correct AnswerverifiedShow Answer

There tends to be a high positive correlation between the rate of productivity growth and the rate of economic growth.

Correct AnswerverifiedShow Answer

If the annual growth in a nation's productivity is 2.8 percent rather than 1.5 percent, then the nation's standard of living will double in about:

Correct AnswerverifiedShow Answer

If real GDP grows at an average annual rate of 2.0% instead of 3.5%, then it would take about 35 years - instead of 20 years - for real GDP to double.

Correct AnswerverifiedShow Answer

Critics of growth policies focus on the following arguments, except:

Correct AnswerverifiedShow Answer

Refer to the above diagram. Which of the following is the most likely cause for a shift in the production possibilities curve from AB to CD?

Correct AnswerverifiedShow Answer

Consider two scenarios for a nation's economic growth. Scenario A has real GDP growing at an average annual rate of 3.5%; scenario B has an average annual growth of 4.5%. The nation's real GDP would double in about:

Correct AnswerverifiedShow Answer

The shift of labor out of agriculture to industry in the United States has tended to:

Correct AnswerverifiedShow Answer

Increases in the value of the product to each user, including existing users, as the total number of users rises is called:

Correct AnswerverifiedShow Answer

What economic concept would be most closely associated with a situation where an aluminum plant expands its operations and uses extensive computerization in the production line to reduce per-unit costs of production?

Correct AnswerverifiedShow Answer

Assume that an economy has 1500 workers, each working 2000 hours per year. If the average real output per worker-hour is $20, then total output or real GDP will be:

Correct AnswerverifiedShow Answer

A nation's real GDP will increase by increasing the following, except:

Correct AnswerverifiedShow Answer

Which of the following is the so-called efficiency factor of economic growth?

Correct AnswerverifiedShow Answer

In the U.S. economic-growth experience:

Correct AnswerverifiedShow Answer

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