|
Economic growth is best defined as an increase in |
either real GDP or real GDP per capita |
|
Real GDP per capita is found by |
dividing real GDP by population |
|
At an annual growth rate of 7%, real GDP will double in about |
10 years |
|
If the economy’s real GDP doubles in 18 years, we can |
conclude that its average annual rate of growth is about 4% |
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Under what circumstances do rates of economic growth understate the growth of economic well – being? |
product quality has improved |
|
Which of the following statements is most accurate about modern economic growth? |
Modern economic growth is characterized by sustained and ongoing increases in living standards |
|
Countries that have experienced modern economic growth have also tended to |
move toward more democratic forms of government |
|
The Industrial Revolution and modern economic growth resulted in |
the average human lifespan more than doubling |
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Economic historians date the start of the Industrial Revolution around the year 1776, when James Watt |
invented the steam locomotive |
|
Real per capita GDP |
was much more equal across nations in 1820 than it is today |
|
Strong property rights are important for modern economic growth because |
people are more likely to invest if they don’t fear that others can take their returns on investment without compensation |
|
Which of the following institutional structures is most likely to promote growth? |
a well-enforced system of patents and copyrights |
|
Which of the following institutional arrangements is most likely to promote growth? |
unrestricted trade between nations |
|
A competitive market system |
encourages growth by allowing producers to make profitable investment decisions based on market signals |
|
Free trade |
encourages growth by promoting the rapid spread of new inventions & innovations |
|
As distinct from the demand and efficiency factors of economic growth, the supply factors of economic growth are |
Improvements in technology Increases in the supply (stock) of capital goods Increases in the quantity and quality of natural resources Increases in the quantity and quality of human resources |
|
As distinct from the supply factors and efficiency factor of economic growth, the demand factor(s) of economic growth is (are) |
purchases of expanding output |
|
As distinct from the supply factors and demand factor of economic growth, the efficiency factor(s) of economic growth is (are) |
obtaining the optimal combination of goods, each at least-cost production |
|
Which set of items in the above list would shift an economy’s production possibilities curve outward? |
Improvements in technology Increases in the supply (stock) of capital goods Increases in the quantity and quality of natural resources Increases in the quantity and quality of human resources |
|
Which set of items in the above list would move an economy from a point inside its productions possibilities curve to a point on its production possibilities curve? |
purchases of expanding output obtaining the optimal combination of goods, each at least-cost production |
|
Which of the following is not a supply factor in economic growth? |
aggregate expenditures of households, businesses, & government |
|
Suppose that an economy’s labor productivity and total worker-hours each grew by 4% between year 1 and year 2. We could conclude that this economy’s |
production possibilities curve shifted outward |
|
An outward shift of a nation’s productive possibilities curve |
neither ensures a nation of an increase of real GDP nor of an increase in real GDP per capita |
|
Labor productivity is measured by |
real output per worker hour |
|
Labor productivity is defined as |
total output/worker hours |
|
Which of the following is correct? |
total output = worker hours * labor productivity |
|
The percentage of the working age population in the labor force (employed + officially unemployed) is called the |
labor force participation rate |
|
Other things equal, which of the following would decrease the rate of economic growth measured by changes in real GDP? |
a decrease in the labor force participation rate |
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Other things equal, which of the following would increase the rate of economic growth measured by changes in real GDP? |
an increase in the size of the working age population |
|
Which of the following would not be expected to increase labor productivity? |
an increase in the size of the labor force |
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The largest contributor to increases in the productivity of American labor is |
technological advance |
|
The historical reallocation of labor from agriculture to manufacturing in the United States |
increased the average productivity of labor |
|
Which of the following is the largest contributor to the growth of labor productivity in the United States? |
technological advance |
|
A nation’s infrastructure refers to |
public capital goods such as highways and sanitation systems |
|
Economies of scale refer to |
the fact that large producers may be able to use more efficient technologies than smaller producers |
|
Other things equal, if a full-employment economy reallocated a substantial of its resources to capital goods, we would expect |
labor productivity to rise |
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Other things equal, which of the following would increase labor productivity the most? |
the increase in the stock of real capital exceeds the increase in inputs of labor |
|
Human capital refers to |
the skills and knowledge that enable a worker to be productive |
|
The annual growth of US labor productivity |
was greater between 1995 and 2009 than between 1973 and 1995 |
|
Increases in the value of a product to each user, including existing users, as the total number of users rise are called |
network effects |
|
Network effects are |
increases in the value of a product to each user, excluding existing users, as the total number of users rises |
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All of the following are sources of increasing returns and economies of scale except |
the multiplier effect |
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The fundamental invention underpinning the recent rise in the average rate of productivity growth is the |
microchip |
|
All of the following are economic implications of the recent rise in the average rate of productivity growth except |
an end to the business cycle |
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Skeptics of the recent rise in the average rate of productivity growth say that |
it is too soon to judge whether the high productivity advances between 1995 and 2009 are long – lasting are transitory |
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Economists who believe that the recent rise in the average rate of productivity growth may be long – lasting claim that the above-normal economic growth in the United States between 1995 and 2009 was caused by |
increased entrepreneurial activity, application of information technology, & global competition |
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Economists who believe that the recent rise in the average rate of productivity growth will be long – lasting say that |
innovations in computers and communications, together with global capitalism, are greatly boosting US productivity and the economy’s potential economic growth rate |
|
Between 1995 and 2009, the US productivity rate |
grew substantially compared to prior years, leading some economists to predict a long-lasting resurgence of productivity growth |
|
Critics of economic growth |
contend that growth and industrialization reduce pollution |
|
Proponents of economic growth make all of the following arguments except |
there is a direct relationship between a growing real GDP and rising pollution |
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