Economics 252- Chapter 17 Review Questions – Growth & Productivity, Long Run Possibilities

(1) In the short run, economic growth comes from:

(a) expansion of the production possibilities curve.

(b) shifting of aggregate demand to the left.

(c) decreased use of our productive capabilities.

(d) an increase in population.

(2) Long run economic growth:

(a) shifts the production possibilities curve outward.

(b) shifts the aggregate supply curve to the left.

(c) shifts the aggregate demand curve to the left.

(d) All of the above.

(3) Which of the following measures the growth rate of an economy?

(a) The percentage change in real GDP from one period to another.

(b) Investment as a percentage of GDP.

(c) Real GDP divided by nominal GDP.

(d) GDP per worker.

(4) Which of the following is the best measure of living standards?

(a) The ration of current GDP to GDP in the base period.

(b) Investment as a percentage of GDP.

(c) GDP per capita.

(d) GDP per worker.

(5) Growth in GDP per capita is attained only when:

(a) there is growth in population.

(b) there is growth in output.

(c) the growth of output exceeds population growth.

(d) population is held constant.

(6) If the real U.S. GDP was $6,339 billion in 1995 and the U.S. population was 263 million, the per capita real GDP would have been closest to:

(a) $4,150 per person.

(b) $24,100 per person.

(c) $41,500 per person.

(d) $6,339 per person.

(7) Labor productivity is measured as:

(a) the dollar value of output per unit of labor.

(b) the output per unit of labor input.

(c) the hourly wage rate divided by output per labor hour.

(d) the dollar value of inputs per unit of output.

(8) The growth rate of total output equals:

(a) gross investment minus depreciation.

(b) the real GDP per capita growth rate.

(c) the growth rate of the labor force plus the growth rate of productivity.

(d) real GDP per worker.

(9) Human capital is:

(a) the ratio of labor to capital.

(b) able to increase only if the labor force grows.

(c) insignificant in productivity advances.

(d) the knowledge and skills possessed by the labor force.

(10) Which of the following policy levers definitely enhances productivity?

(a) Tax credits or tax deductions for expenses for higher education.

(b) More government regulation.

(c) Higher labor to capital ratio.

(d) More government regulation.

(11) Which of the following would accelerate long-run economic growth?

(a) Crowding out.

(b) Tax credits for new investments.

(c) Elimination of government subsidized college loans.

(d) Elimination of infrastructure development.

(12) Crowding out occurs when the government:

(a) increases taxes, thus causing a decrease in consumption.

(b) issues debt, thus making it more difficult for the private sector to issue debt.

(c) prints money.

(d) Does all the above.

Consider Figure 1 in answering Questions (13) and (14).

Figure 1

(13) Short run economic growth can be illustrated in Figure 1 by a movement from:

(a) point D to point C.

(b) point D to point B.

(c) point A to point B.

(d) point C to point D.

(14) Long run economic growth can be illustrated in Figure 2 by a:

(a) movement from point B to point D.

(b) shift outward of the production possibilities curve.

(c) shift inward of the production possibilities curve.

(d) movement from point A to point B.

Consider Figure 2 in answering Question (15).

Figure 2

(15) In Figure 2, long run economic growth implies a:

(a) shift from AD(1) to AD(2).

(b) shift from LRAS(1) to LRAS(2).

(c) move from point A to point B.

(d) move from point D to point C.