ECON CH. 9

The key measure used to track economic growth is:

real GDP per capita.

U.S. real GDP per capita in 2010 was _____ as much per person as in 1900.

758%

The rule of 70 is most useful in:

estimating the doubling time of real GDP for a given growth rate.

Productivity is declining when:

population growth exceeds real GDP growth.

The skills, training, and education possessed by workers that contribute to economic growth are known as:

human capital.

To acquire human capital a person would:

learn to use a printing press.

Diminishing returns to physical capital means that when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to:

a smaller increase in the marginal product of labor.

An increase in capital stock would:

cause a movement to the right along a stationary production function.

All else equal, a nation that has a high rate of _____ will have a high rate of _____ and therefore a high growth rate of _____ capital.

savings; investment; physical

From the standpoint of economic growth, banks are important to:

channel savings into investment.

Long-run economic growth is:

higher in countries with a strong rule of law and political stability.

Diminishing returns to physical capital suggests that:

when the amount of human capital per worker and the state of technology are fixed, successive increases in the amount of physical capital per worker lead to smaller increases in productivity.

Which of the following contributes to economic development?

investment in infrastructure

Economists mostly agree that the problem of climate change necessitates government action in the form of market-based incentives such as:

a carbon tax or a cap and trade system.

(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in domestic savings?

A to B

(Scenario: Capital) Look at the scenario Capital. In three years’ time, what is the level of physical capital per worker in this economy?

266.2 units

(Figure: Productivity) Look at the figure Productivity. An improvement in technology with everything else remaining unchanged is shown on the diagram as a movement from:

B to C