Macroeconomics Chapter 8

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.

Real GDP per capita:

can grow either more slowly or more rapidly than real GDP.

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

Growth of real GDP per capita.

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:

remain constant.

For a nation’s real GDP per capita to rise during a year:

real GDP must increase more rapidly than population.

Growth is advantageous to a nation because it:

lessens the burden of scarcity.

Refer to the table. Between years 1 and 2, real GDP grew by __________ percent in Alta.

5

Refer to the table. Between years 2 and 3:

Alta’s real GDP grew more rapidly than Zorn’s real GDP.

The number of years required for real GDP to double can be found by:

dividing 70 by the annual growth rate.

If a nation’s real GDP is growing by 5 percent per year, its real GDP will double in approximately:

14 years.

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.

Economic historians date the start of the Industrial Revolution around the year 1776, when James Watt:

invented and built a more powerful and efficient steam engine.

Which of the following economic regions has experienced the least growth in real GDP per capita since 1820?

Africa.

Which of the following economic regions has experienced the most growth in real GDP per capita since 1820?

United States.

Which of the following statements is most accurate about the prospects for poorer ("follower") countries catching up with richer ("leader") countries?

Catching up is possible as "follower countries" tend to grow faster than "leader countries."

Economic growth rates in follower countries:

tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs.

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 arrangements is most likely to promote growth?

Unrestricted trade between nations.

Economic growth can be portrayed as:

an outward shift of the production possibilities curve.

Suppose that an economy’s labor productivity fell by 3 percent and its total worker-hours remained constant between year 1 and year 2. We could conclude that this economy’s:

real GDP declined.

Refer to the graph. Growth of production capacity is shown by the:

shift from AB to CD.

Labor productivity is defined as:

total output/worker-hours.

Which of the following is correct?

Total output = worker-hours × labor productivity.

If the number of worker-hours in an economy is 100 and its labor productivity is $5 of output per worker-hour, the economy’s real GDP:

is $500.

Suppose total output (real GDP) is $4,000 and labor productivity is $8. We can conclude that:

the number of worker-hours must be 500.

The percentage of the working-age population in the labor force (= employed + officially unemployed) is called the:

labor force participation rate.

The largest contributor to increases in the productivity of American labor is:

technological advance.

More than half the growth of real GDP in the United States is caused by:

increases in the productivity of labor.

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.

Human capital refers to:

the skills and knowledge that enable a worker to be productive.

What percentage of the U.S. adult population has at least a high school education (as of 2012)?

88 percent.

What percentage of the U.S. adult population has a college or post-college education (as of 2012)?

31 percent.

Network effects are:

increases in the value of a product to each user, including existing users, as the total number of users rises.

The fundamental invention underpinning the 1995-2012 rise in the average rate of productivity growth is the:

microchip.

(Consider This) Over the past several decades, the percentage of women in the paid U.S. workforce has:

increased due to higher wages, expanded job accessibility, changing preferences and attitudes, and other factors.