Question 1

The Lucas Wedge shows

Accepted Answer

A)  the negative impact a slowdown in real GDP growth has on potential GDP.
B)  the increased impact of government spending on real GDP.
C)  the negative impact inflation has on consumer spending.
D)  the positive impact lower taxes have on real GDP.
E)  whether a country needs to slow its real GDP growth rate.F) None of the above
G) A) and E)

Question 2

If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80 billion, labor productivity is

Accepted Answer

A)  $5.00 an hour.
B)  $6.67 an hour.
C)  $15.00 an hour.
D)  $20,000.
E)  $150 an hour.F) None of the above
G) A) and E)

Question 3

Belgium's real GDP per person is $33,000 and Austria's is $34,700. The population growth rate in Belgium is 0.13 percent and the growth rate of real GDP is 3.0 percent. The population growth rate in Austria is 0.08 percent and the growth rate of real GDP is 3.3 percent. If these growth rates continue, how many years will it take for Belgium's real GDP per person to equal Austria's real GDP per person?

Accepted Answer

A)  Belgium's standard of living will never equal Austria's.
B)  Just over 23 years
C)  Just over 24 years
D)  Just over 21 years
E)  Over 230 yearsF) A) and E)
G) C) and E)

Question 4

The production function shows that potential GDP increases when the

Accepted Answer

A)  price level rises.
B)  price level falls.
C)  inflation rate falls.
D)  quantity of labor employed increases.
E)  the wage rate falls.F) A) and D)
G) A) and B)

Question 5

The growth rate of real GDP is measured by the following formula:

Accepted Answer

A)  real GDP in the current year minus real GDP in the previous year.
B)  real GDP in the previous year minus real GDP in the current year.
C)    × 100.
D)  (real GDP in the current year + real GDP in the previous year) ÷ 2.
E)  (real GDP in the current year minus real GDP in the previous year) × 100.F) None of the above
G) C) and E)

Question 6

Retirement savings accounts, such as IRAs, help increase economic growth because

Accepted Answer

A)  people have an incentive to work harder and longer hours to save for the future.
B)  they keep the interest rates high.
C)  savings finances investment.
D)  government invests them.
E)  they encourage international trade.F) None of the above
G) A) and B)

Question 7

Year  Real GDP  (millions of 2005 dollars)   Population  (millions of people)   Year 1 50010 Year 2 55011\begin{array} { l c c } 	ext { Year } & \begin{array} { c } 	ext { Real GDP } \	ext { (millions of 2005 dollars)  }\end{array} & \begin{array} { c } 	ext { Population } \	ext { (millions of people)  }\end{array} \\hline 	ext { Year 1 } & 500 & 10 \	ext { Year 2 } & 550 & 11 \\hline\end{array} Year  Year 1  Year 2 ​ Real GDP  (millions of 2005 dollars)  ​500550​ Population  (millions of people)  ​1011​​ 
-According to the data in the table above,

Accepted Answer

A)  the standard of living improved between year 1 and year 2.
B)  the standard of living worsened between year 1 and year 2.
C)  as measured by real GDP per person, the standard of living remained the same between year 1 and year 2.
D)  real GDP grew more rapidly than population between year 1 and year 2.
E)  real GDP grew more slowly than population between year 1 and year 2. F) B) and C)
G) B) and D)

Question 8

Which of the following lists gives factors that increase labor productivity?

Accepted Answer

A)  saving and investment in physical capital, and wage increases
B)  expansion of human capital, labor force increases, and discovery of new technologies
C)  expansion of human capital, population growth, and discovery of new technologies
D)  saving and investment in physical capital, expansion of human capital, and discovery of new technologies
E)  labor force increases and wage increasesF) B) and C)
G) B) and E)

Question 9

Real GDP is $700 billion, average hours worked per week is 42 and aggregate hours 150 billion hours. What is the economy's labor productivity?

Accepted Answer

A)  $1.80 per hour
B)  $3.75 per hour
C)  $16.67 per hour
D)  $46.67 per hour
E)  $4.50 per hourF) B) and E)
G) None of the above

Question 10

Economic freedom means that

Accepted Answer

A)  firms are regulated by the government.
B)  some goods and services are free.
C)  people are able to make personal choices and their property is protected.
D)  the rule of law does not apply.
E)  the nation's government is a democracy.F) A) and C)
G) B) and E)

Question 11

Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

Accepted Answer

A)  labor is not very productive.
B)  extra labor produces more output.
C)  all other factors are held fixed.
D)  the price level rises as more workers are employed.
E)  additional workers are paid higher wage rates.F) B) and E)
G) None of the above

Question 12

The law of diminishing marginal returns states that

Accepted Answer

A)  output increases at a constant rate as more capital is added.
B)  output decreases at a constant rate as more capital is added.
C)  as both labor and capital are increased, output does not change.
D)  as both labor and capital are increased, output increases at a decreasing rate.
E)  output increases at a decreasing rate as more capital is added.F) A) and D)
G) None of the above

Question 13

List and explain the three factors that can increase labor productivity.

Accepted Answer

The three factors that can increase labo...

Question 14

If Turkey wants to promote faster economic growth, it will need to

Accepted Answer

A)  promote incentive systems to encourage saving, research and development, increased trade and improved education.
B)  restrict economic freedom so the government has better control of markets.
C)  restrict international trade to protects its own workers.
D)  promote government intervention to help markets determine incentives.
E)  restrict property rights so that individuals can better share inventions.F) A) and D)
G) A) and E)

Question 15

Suppose Germany's economy is experiencing full employment. This means that, in Germany,

Accepted Answer

A)  the unemployment rate is equal to zero.
B)  real GDP is equal to potential GDP.
C)  real GDP is greater than potential GDP.
D)  potential GDP is greater than real GDP.
E)  real GDP equals nominal GDP.F) A) and D)
G) A) and B)

Question 16

________ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy.

Accepted Answer

A)  Classical macroeconomics
B)  Keynesian economics
C)  The new macroeconomics
D)  The Lucas Wedge
E)  The Okun GapF) C) and E)
G) A) and E)

Question 17

As the real wage rate rises, the opportunity cost of

Accepted Answer

A)  working rises.
B)  saving rises.
C)  leisure rises.
D)  leisure falls.
E)  buying goods and services rises.F) A) and B)
G) A) and E)

Question 18

For economic freedom to exist,

Accepted Answer

A)  copyright laws must be abolished and markets supervised by the government.
B)  democracy must exist.
C)  property rights must be protected and markets must be free.
D)  human capital must be given away free.
E)  money must be free.F) All of the above
G) A) and E)

Question 19

A surplus in the labor market indicates that the

Accepted Answer

A)  real wage rate is above the equilibrium wage rate but it is too low to eliminate the surplus of labor.
B)  quantity of labor demanded is less than the quantity of labor supplied.
C)  real wage rate has to rise before the labor market will reach equilibrium.
D)  workers are not looking for work because they enjoy their leisure time.
E)  real wage rate is less than the equilibrium wage rate.F) B) and D)
G) C) and D)

Question 20

Potential GDP is the level of

Accepted Answer

A)  GDP that is impossible to achieve.
B)  real GDP that the economy could produce at full employment.
C)  nominal GDP that is smaller than the real GDP.
D)  GDP that fluctuates around actual GDP.
E)  GDP that would be produced if all workers were fully employed and there was no unemployment.F) B) and D)
G) C) and D)

Exam 17: Potential Gdp and Economic Growth

The Lucas Wedge shows

Correct Answer
verified

Which of the following lists gives factors that increase labor productivity?

Correct Answer
verified

Correct Answer
verified

Potential GDP is the level of

Correct Answer
verified

The growth rate of real GDP is measured by the following formula:

Correct Answer
verified

The production function shows that potential GDP increases when the

Correct Answer
verified

Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

Correct Answer
verified

A surplus in the labor market indicates that the

Correct Answer
verified

For economic freedom to exist,

Correct Answer
verified

Correct Answer
verified

Economic freedom means that

Correct Answer
verified

The law of diminishing marginal returns states that

Correct Answer
verified

If Turkey wants to promote faster economic growth, it will need to

Correct Answer
verified

List and explain the three factors that can increase labor productivity.

Correct Answer
verified
The three factors that can increase labo...
View Answer

Real GDP is $700 billion, average hours worked per week is 42 and aggregate hours 150 billion hours. What is the economy's labor productivity?

Correct Answer
verified

________ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy.

Correct Answer
verified

As the real wage rate rises, the opportunity cost of

Correct Answer
verified

If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80 billion, labor productivity is

Correct Answer
verified

Suppose Germany's economy is experiencing full employment. This means that, in Germany,

Correct Answer
verified

Retirement savings accounts, such as IRAs, help increase economic growth because

Correct Answer
verified

Exam 17: Potential Gdp and Economic Growth

The Lucas Wedge shows

Correct AnswerverifiedShow Answer

Which of the following lists gives factors that increase labor productivity?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Potential GDP is the level of

Correct AnswerverifiedShow Answer

The growth rate of real GDP is measured by the following formula:

Correct AnswerverifiedShow Answer

The production function shows that potential GDP increases when the

Correct AnswerverifiedShow Answer

Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

Correct AnswerverifiedShow Answer

A surplus in the labor market indicates that the

Correct AnswerverifiedShow Answer

For economic freedom to exist,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic freedom means that

Correct AnswerverifiedShow Answer

The law of diminishing marginal returns states that

Correct AnswerverifiedShow Answer

If Turkey wants to promote faster economic growth, it will need to

Correct AnswerverifiedShow Answer

List and explain the three factors that can increase labor productivity.

Correct AnswerverifiedThe three factors that can increase labo...View AnswerShow Answer

Real GDP is $700 billion, average hours worked per week is 42 and aggregate hours 150 billion hours. What is the economy's labor productivity?

Correct AnswerverifiedShow Answer

________ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy.

Correct AnswerverifiedShow Answer

As the real wage rate rises, the opportunity cost of

Correct AnswerverifiedShow Answer

If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80 billion, labor productivity is

Correct AnswerverifiedShow Answer

Suppose Germany's economy is experiencing full employment. This means that, in Germany,

Correct AnswerverifiedShow Answer

Retirement savings accounts, such as IRAs, help increase economic growth because

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The three factors that can increase labo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified