MODULE 40: Economic Growth in Macroeconomic Models

Multiple-Choice Questions

Question

If real GDP grows by 5% per year, approximately how many years will it take for it to double?
A.
150
B.
75
C.
35
D.
15
E.
5

If real GDP grows by 5% per year, approximately how many years will it take for it to double?
Question

What is the most important ingredient in long-run economic growth?
A.
increased labor productivity
B.
increased population
C.
low price level
D.
expansionary monetary and fiscal policies
E.
deficit spending

What is the most important ingredient in lon
Question

The technical means for the production of goods and services is known as
A.
physical capital.
B.
technology.
C.
human capital.
D.
productivity.
E.
machinery and equipment.

The technical means for the production of goods and services is known as
Question

Which of the following is a major reason for productivity growth?
A.
financial investment
B.
an increase in the amount of capital available per worker
C.
a decrease in the amount of capital available per worker
D.
an increase in the price of capital
E.
technological progress

Which of the following is a major reason for productivity growth?
Question

Refer to the following figure for Questions 5–6.

Assuming diminishing returns to physical capital, if physical capital per worker is 50,000, real GDP per worker will most likely equal which of the following?
A.
more than 60,000
B.
60,000
C.
less than 60,000 but greater than 40,000
D.
40,000
E.
0

Assuming diminishing returns to physical capital, if physical capital per worker is 50,000, real GDP per worker will most likely equal which of the following?
Question

An upward shift of the curve shown could be caused by which of the following?
A.
an increase in real GDP per worker
B.
investment in physical capital
C.
diminishing returns to physical capital
D.
increases in population
E.
rising total factor productivity

An upward shift of the curve shown could be caused by which of the following?
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Question

Which of the following is true about the role of natural resources in productivity growth?
A.
They are a more important determinant of productivity than human or physical capital.
B.
They have played an increasingly prominent role in productivity growth in recent years.
C.
They play no role in determining productivity growth.
D.
They played a less important role in productivity growth in the 1800s.
E.
They result in higher productivity, other things equal.

Which of the following is true about the role of natural resources in productivity growth?
Question

According to the convergence hypothesis, over time, international differences in real GDP per capita will
A.
increase exponentially.
B.
increase slightly.
C.
decrease.
D.
remain the same.
E.
disappear.

According to the convergence hypothesis, over time, international differences in real GDP per capita will
Question

When the government spends money to create and implement new technologies, it has invested in
A.
human capital.
B.
physical capital.
C.
infrastructure.
D.
research and development.
E.
political stability.

When the government spends money to create and implement new technologies, it has invested in
Question

Which of the following is part of an economy’s infrastructure?
A.
highways
B.
factories
C.
banks
D.
automobiles
E.
workers

Which of the following is part of an economy’s infrastructure?
Question

If long-run economic growth can continue into the future despite limited natural resources, it is considered
A.
acceptable.
B.
equitable.
C.
economical.
D.
sustainable.
E.
expandable.

If lon
Question

An outward shift of the production possibilities curve indicates which of the following?
A.
a decrease in cyclical unemployment
B.
long-run economic growth
C.
a reduction in productive resources
D.
a decrease in opportunity cost
E.
a decrease in potential output and the natural rate of unemployment

An outward shift of the production possibilities curve indicates which of the following?
Question

In the aggregate supply and demand model, a rightward shift of the LRAS curve indicates which of the following?
A.
long-run economic growth
B.
an increase in unemployment
C.
a decrease in real GDP
D.
an increase in the aggregate price level
E.
an economic recovery

In the aggregate supply and demand model, a rightward shift of the
Question

Which of the following will lead to long-run economic growth?
A.
a decrease in nominal wages
B.
a decrease in the aggregate price level
C.
an increase in the production of consumer goods
D.
an increase in total factor productivity
E.
actual output that exceeds potential output

Which of the following will lead to lon
Question

If an economy experiences long-run economic growth, which of the following is true of its potential output?
A.
It has increased.
B.
It has decreased.
C.
It is greater than actual output.
D.
It is less than actual output.
E.
It is no longer equal to LRAS.

If an economy experiences lon
Question

Depreciation leads to
A.
a reduction in human capital.
B.
an increase in human capital.
C.
a reduction in physical capital.
D.
an advance in technology.
E.
an outward shift of the production possibilities curve.

Depreciation leads to