Question 1

Research confirms that government provision of infrastructure:

Accepted Answer

A)   hinders economic growth.
B)   promotes economic growth.
C)   increases human capital.
D)   leads to reduced spending on research and development.E) A) and B)
F) None of the above

Question 2

Long-run increases in living standards, as measured by real GDP per person, are primarily the result of increases in:

Accepted Answer

A)   population.
B)   the money supply.
C)   government budget surpluses.
D)   average labor productivity.E) A) and B)
F) A) and C)

Question 3

In order to promote growth, the poorest countries-in contrast to the middle-level and rich countries-need most to:

Accepted Answer

A)   invest in human capital.
B)   improve their infrastructure.
C)   improve their legal and political environments.
D)   increase their capital stock.E) A) and B)
F) All of the above

Question 4

An example of a government policy to provide a framework within which the private sector can operate productively is:

Accepted Answer

A)   the taxation of savings.
B)   the suppression of political dissent.
C)   establishing well-defined property rights.
D)   government ownership of capital.E) A) and B)
F) None of the above

Question 5

If 50 percent of the population in a country is employed and average labor productivity equals $30,000, then real GDP per person equals:

Accepted Answer

A)   $15,000.
B)   $30,000.
C)   $50,000.
D)   $60,000.E) B) and C)
F) All of the above

Question 6

The major economic cost of growth is:

Accepted Answer

A)   higher interest rates.
B)   consumption sacrificed for capital formation.
C)   higher inflation rates.
D)   investment in stocks and bonds.E) B) and C)
F) A) and D)

Question 7

Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years, real GDP per person grows at a 1.5 percent annual rate in Alpha and at a 2.5 percent annual rate in Omega. After 100 years, real GDP per person in Alpha is ______ smaller than real GDP per person in Omega.

Accepted Answer

A)   $2,000
B)   $5,410
C)   $8,864
D)   $14,763E) A) and C)
F) A) and B)

Question 8

An example of a government policy to increase physical capital formation is:

Accepted Answer

A)   the construction of an interstate highway system.
B)   government support for basic research.
C)   maintaining a well-functioning legal system.
D)   the provision of publicly-funded education.E) A) and D)
F) None of the above

Question 9

The cost of a higher living standard in the future is giving up:

Accepted Answer

A)   current consumption.
B)   current investment.
C)   future consumption.
D)   future investment.E) A) and B)
F) A) and C)

Question 10

Each of the following increases average labor productivity except:

Accepted Answer

A)   more human capital.
B)   more physical capital.
C)   more central planning.
D)   more natural resources.E) All of the above
F) A) and B)

Question 11

Developing new products and services as well as introducing new production methods are among the ways that ______ increases average labor productivity.

Accepted Answer

A)   human capital
B)   physical capital
C)   an entrepreneur
D)   a managerE) C) and D)
F) All of the above

Question 12

At the time it collapsed in 1991, the Soviet Union possessed all of the factors that promote increases in economic growth except:

Accepted Answer

A)   a highly educated worker force.
B)   a large stock of capital.
C)   abundant natural resources.
D)   a political and legal environment that promoted economic productivity.E) A) and B)
F) All of the above

Question 13

If the share of population employed in two countries is the same, average living standards will be higher in the country with:

Accepted Answer

A)   the smaller population.
B)   the larger population.
C)   higher average labor productivity.
D)   lower average labor productivity.E) B) and C)
F) A) and D)

Question 14

Suppose that average labor productivity in Country C is $5,000, and that Countries C and E have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country E?

Accepted Answer

A)   $1,000
B)   $1,500
C)   $4,500
D)   $6,250E) None of the above
F) All of the above

Question 15

In Econland, 500,000 of the 2 million people in the country are employed. Average labor productivity in Econland is $15,000 per worker. Real GDP per person in Econland totals:

Accepted Answer

A)   $1,250.
B)   $3,750.
C)   $11,250.
D)   $60,000.E) A) and B)
F) C) and D)

Question 16

In order to promote growth through increased quantities of physical capital, governments must promote:

Accepted Answer

A)   a better educational system.
B)   job training programs.
C)   high rates of saving and investing.
D)   funding for basic science.E) A) and C)
F) B) and D)

Question 17

Higher future living standards require:

Accepted Answer

A)   reduced rates of current consumption.
B)   increased rates of population growth.
C)   increased rates of current consumption.
D)   reduced rates of current investment.E) B) and D)
F) A) and C)

Question 18

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ______ increases average labor productivity.

Accepted Answer

A)   human capital
B)   physical capital
C)   an entrepreneur
D)   a managerE) A) and C)
F) C) and D)

Question 19

A nation's standard of living, as measured by real GDP per person, increases:

Accepted Answer

A)   only if average labor productivity increases.
B)   only if the share of population employed increases.
C)   only if both average labor productivity and the share of population employed increase.
D)   if either average labor productivity and/or the share of population employed increase.E) A) and B)
F) A) and C)

Question 20

Real GDP is not a perfect measure of economic well-being because it excludes the value of all of the following except:

Accepted Answer

A)   leisure time.
B)   goods and services available in the market economy.
C)   nonmarket economic activity.
D)   goods and services produced in the underground economy.E) A) and B)
F) A) and C)

Exam 6: Economic Growth, Productivity, and Living Standards

Higher future living standards require:

Correct AnswerverifiedShow Answer

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ______ increases average labor productivity.

Correct AnswerverifiedShow Answer

In order to promote growth, the poorest countries-in contrast to the middle-level and rich countries-need most to:

Correct AnswerverifiedShow Answer

Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years, real GDP per person grows at a 1.5 percent annual rate in Alpha and at a 2.5 percent annual rate in Omega. After 100 years, real GDP per person in Alpha is ______ smaller than real GDP per person in Omega.

Correct AnswerverifiedShow Answer

A nation's standard of living, as measured by real GDP per person, increases:

Correct AnswerverifiedShow Answer

In order to promote growth through increased quantities of physical capital, governments must promote:

Correct AnswerverifiedShow Answer

The major economic cost of growth is:

Correct AnswerverifiedShow Answer

Research confirms that government provision of infrastructure:

Correct AnswerverifiedShow Answer

An example of a government policy to increase physical capital formation is:

Correct AnswerverifiedShow Answer

Each of the following increases average labor productivity except:

Correct AnswerverifiedShow Answer

Suppose that average labor productivity in Country C is $5,000, and that Countries C and E have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country E?

Correct AnswerverifiedShow Answer

Developing new products and services as well as introducing new production methods are among the ways that ______ increases average labor productivity.

Correct AnswerverifiedShow Answer

If the share of population employed in two countries is the same, average living standards will be higher in the country with:

Correct AnswerverifiedShow Answer

Real GDP is not a perfect measure of economic well-being because it excludes the value of all of the following except:

Correct AnswerverifiedShow Answer

An example of a government policy to provide a framework within which the private sector can operate productively is:

Correct AnswerverifiedShow Answer

At the time it collapsed in 1991, the Soviet Union possessed all of the factors that promote increases in economic growth except:

Correct AnswerverifiedShow Answer

In Econland, 500,000 of the 2 million people in the country are employed. Average labor productivity in Econland is $15,000 per worker. Real GDP per person in Econland totals:

Correct AnswerverifiedShow Answer

If 50 percent of the population in a country is employed and average labor productivity equals $30,000, then real GDP per person equals:

Correct AnswerverifiedShow Answer

Long-run increases in living standards, as measured by real GDP per person, are primarily the result of increases in:

Correct AnswerverifiedShow Answer

The cost of a higher living standard in the future is giving up:

Correct AnswerverifiedShow Answer

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