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AP Economics Ch. 8

86 Questions
AP economics ch. 8
Questions and Answers
  • 1. 
    Which of the following is a measure of economic growth that is most useful for measuring political preeminence?
    • A. 

      Growth in nominal GDP

    • B. 

      Decreases in the rate of unemployment

    • C. 

      Increases in real GDP per capita

    • D. 

      Increases in real GDP

  • 2. 
    Which of the following is a measure of economic growth that is most useful for comparing living standards?
    • A. 

      Growth in nominal GDP

    • B. 

      Decreases in the rate of unemployment

    • C. 

      Increases in real GDP per capita

    • D. 

      Increases in real GDP

  • 3. 
    A nation's real GDP was $250 billion in 2009 and $265 billion in 2010. Its population was 120 million in 2009 and 125 million in 2010. What was the real GDP growth rate in 2010?
    • A. 

      15.0%

    • B. 

      6.0%

    • C. 

      5.7%

    • D. 

      1.1%

  • 4. 
    • A. 

      $2,120 per person

    • B. 

      $212 per person

    • C. 

      $21,200 per person

    • D. 

      $205 per person

  • 5. 
    A nation's real GDP was $250 billion in 2009 and $265 billion in 2010. Its population was 122 million in 2009 and 125 million in 2010. What is the growth rate of real GDP per capita in 2010?
    • A. 

      1.1%

    • B. 

      2.5%

    • C. 

      5.0%

    • D. 

      3.4%

  • 6. 
    Nation A's real GDP was $520 billion in 2009 and $550 billion in 2010. Its population was 150 million in 2009 and 155 million in 2010. On the other hand, Nation B's real GDP was $200 billion in 2009 and $210 billion in 2010; and its population was 53 million in 2009 and 55 million in 2010. Which of the following statements is true?
    • A. 

      Nation A's real GDP growth in 2010 is higher than Nation B's

    • B. 

      Nation B's real GDP growth in 2010 is higher than Nation A's

    • C. 

      Nation A's real GDP growth in 2010 is identical to Nation B's

    • D. 

      Nation A's and Nation B's real GDP growth rates in 2010 are both higher than 10%

  • 7. 
    Nation A's real GDP was $520 billion in 2009 and $550 billion in 2010. Its population was 150 million in 2009 and 155 million in 2010. On the other hand, Nation B's real GDP was $200 billion in 2009 and $210 billion in 2010; and its population was 53 million in 2009 and 55 million in 2010. Which of the following statements is true?
    • A. 

      Nation A's GDP per capita is higher than Nation B's

    • B. 

      Nation B's GDP per capita is higher than Nation A's

    • C. 

      Nation A's GDP per capita is equal to Nation B's

    • D. 

      One cannot determine GDP per capita from the given data

  • 8. 
    Nation A's real GDP was $520 billion in 2009 and $550 billion in 2010. Its population was 150 million in 2009 and 155 million in 2010. On the other hand, Nation B's real GDP was $200 billion in 2009 and $210 billion in 2010; and its population was 53 million in 2009 and 55 million in 2010. Which of the following statements is true?
    • A. 

      Nation A's GDP per capita increased from 2009 to 2010, while Nation B's decreased

    • B. 

      Nation B's GDP per capita increased from 2009 to 2010, while Nation A's decreased

    • C. 

      Nation A's and Nation B's GDP per capita both decreased from 2009 to 2010

    • D. 

      Nation A's and Nation B's GDP per capita both increased from 2009 to 2010

  • 9. 
    The "rule of 70" is a formula for determining the approximate number of:
    • A. 

      Years that it would take for a value (like real GDP) to expand 70 times

    • B. 

      Years that it would take for a value (like real GDP) to double

    • C. 

      Times a value (like real GDP) is a multiple of 70

    • D. 

      Times one could double a certain value (like real GDP) over 70 years

  • 10. 
    A nation's average annual real GDP growth rate is 2.5%. Based on the "rule of 70", the approximate number of years it would take for this nation's real GDP to double is:
    • A. 

      175 years

    • B. 

      40 years

    • C. 

      28 years

    • D. 

      17.5 years

  • 11. 
    Consider two scenarios for a nation's economic growth. Scenario A has real GDP growing at an average annual rate of 3.5%; scenario B has an average annual growth of 4.5%. The nation's real GDP would double in about:
    • A. 

      20 years under scenario A, versus 30 years under scenario B

    • B. 

      20 years under scenario A, versus 16 years under scenario B

    • C. 

      12 years under scenario A, versus 16 years under scenario B

    • D. 

      16 years under scenario A, versus 30 years under scenario B

  • 12. 
    Economic growth in the U.S. since 1950 has been characterized by:
    • A. 

      An average growth rate in real GDP that is slower than the growth rate of the population

    • B. 

      A doubling of real GDP from 1950 to 2009

    • C. 

      An average growth rate in real GDP that is faster than the growth rate of the population

    • D. 

      An average growth rate in real GDP per capita of about 6% per year

  • 13. 
    At what average annual rate has real GDP and real GDP per capita, respectively, grown from 1950 to 2009?
    • A. 

      7.5 percent and 5 percent

    • B. 

      3.2 percent and 2 percent

    • C. 

      5.1 percent and 3 percent

    • D. 

      1.1 percent and 0.5 percent

  • 14. 
    The following factors tend to make the real GDP growth rate understate the growth of economic well-being, except:
    • A. 

      Improved product quality

    • B. 

      Added leisure

    • C. 

      Debasement of the environment

    • D. 

      More stress-free lifestyle

  • 15. 
    Economic historians identify which item as a major factor that started the Industrial Revolution in Britain?
    • A. 

      Steam engine

    • B. 

      Automobile

    • C. 

      Telephone

    • D. 

      Electric motor

  • 16. 
    Which of the following does not correctly characterize modern economic growth?
    • A. 

      It spread slowly across the globe, with some societies not having experienced it yet

    • B. 

      It has occurred only in the last 200 or so years

    • C. 

      It drastically alters the culture and politics of society

    • D. 

      It has not affected the average lifespan of human beings

  • 17. 
    In the modern economic growth process, it is typical to find that:
    • A. 

      Leader countries continue to grow faster than follower countries

    • B. 

      Follower countries can grow faster than leader countries

    • C. 

      Large countries cannot grow faster than leader countries

    • D. 

      The gap between leader countries and follower countries stays constant

  • 18. 
    Growth-promoting institutional structures include the following, except: 
    • A. 

      Patents and copyrights

    • B. 

      Efficient financial institutions

    • C. 

      Protection of domestic firms from foreign rivals

    • D. 

      Stable political system

  • 19. 
    Patents and copyrights foster the flow of:
    • A. 

      Saving and investment

    • B. 

      Spending and income

    • C. 

      Resources and products

    • D. 

      Inventions and ideas

  • 20. 
    Efficient financial institutions foster the flow of:
    • A. 

      Saving and investment

    • B. 

      Spending and income

    • C. 

      Resources and products

    • D. 

      Inventions and ideas

  • 21. 
    Supply factors in economic growth include the following, except:
    • A. 

      Improvements in technology

    • B. 

      Expansion of capital stock

    • C. 

      Increases in purchases of output

    • D. 

      Better education and training

  • 22. 
    Which of the following is best considered a demand factor in economic growth?
    • A. 

      The quantity of human resources

    • B. 

      The quality of natural resources

    • C. 

      The stock of capital goods

    • D. 

      The full employment of resources

  • 23. 
    Which of the following is a demand factor in economic growth?
    • A. 

      More human and natural resources

    • B. 

      Technological progress and innovation

    • C. 

      An increase in the economy's stock of capital goods

    • D. 

      An increase in total spending in the economy

  • 24. 
    Which of the following is the so-called efficiency factor of economic growth?
    • A. 

      Having an efficient financial system

    • B. 

      Reaching full production potential

    • C. 

      Having free trade

    • D. 

      Enhanced quantity and quality of human resources

  • 25. 
    • A. 

      Leftward shift of the production possibilities curve

    • B. 

      Movement from a point inside to a point outside of the production possibilities curve

    • C. 

      Movement from a point near the vertical axis to a point near the horizontal axis on the production possibilities curve

    • D. 

      Rightward shift of the production possibilities curve

  • 26. 
    Assume a nation's current production possibilities are represented by the curve AB  in the above diagram. Economic growth would best be indicated by a:
    • A. 

      Shift in the curve from AB to CD

    • B. 

      Shift in the curve from AB to EF

    • C. 

      Movement from point 1 to point 2

    • D. 

      Movement from point 3 to point 4

  • 27. 
    Refer to the above diagram. If the production possibilities curve of an economy shifts from AB to CD, it is most likely the result of what factor affecting economic growth?
    • A. 

      A supply factor

    • B. 

      A demand factor

    • C. 

      An efficiency factor

    • D. 

      An allocation factor

  • 28. 
    Refer to the above diagram. If the production possibilities of an economy are shown by curve AB but the economy is operating at point 4, the reasons are most likely to be because of:
    • A. 

      Supply and environmental factors

    • B. 

      Demand and efficiency factors

    • C. 

      Labor inputs and labor productivity

    • D. 

      Technological process

  • 29. 
    Refer to the above diagram. Which of the following is the most likely cause for a shift in the production possibilities curve from AB to CD?
    • A. 

      The use of the economy's resources in a more efficient way

    • B. 

      An increase in the spending of business and consumers

    • C. 

      An increase in government purchase of the economy's output

    • D. 

      An increase in the quantity and quality of labor resources

  • 30. 
    Suppose that an economy is initially operating at a point on its PPC. If it then experiences an expansion in its production capacity, but its total spending does not rise as fast as its capacity, the economy will end up:
    • A. 

      Still on its PPC

    • B. 

      Outside its PPC

    • C. 

      Inside its PPC

    • D. 

      On one of the axes of its PPC

  • 31. 
    Refer to the above graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by which of the following factors?
    • A. 

      A decrease in the price level

    • B. 

      Allocative efficiency

    • C. 

      Technological process

    • D. 

      Full employment of resources

  • 32. 
    Refer to the above graph. If the production possibilities curve for an economy is at CD by the economy is operating at point X, the reasons are most likely to be because of:
    • A. 

      Technological process and industrial change

    • B. 

      Increases in the quantity and quality of resources

    • C. 

      Improvement in labor productivity and the number of work-hours

    • D. 

      Unemployment and inefficient allocation of resources

  • 33. 
    Real GDP or total output in any year is equal to:
    • A. 

      Labor productivity divided by the number of worker-hours

    • B. 

      Labor productivity multiplied by real output

    • C. 

      Number of worker hours multiplied by labor productivity

    • D. 

      Number of worker-hours divided by labor productivity

  • 34. 
    Assume that an economy has 1500 workers, each working 2000 hours per year. If the average output per worker-hour is $20, then the total output or real GDP will be: 
    • A. 

      $3 million

    • B. 

      $30 million

    • C. 

      $45 million

    • D. 

      $60 million

  • 35. 
    If 40,000 worker-hours produced a total output of $600,000 in an economy, the labor productivity is:
    • A. 

      $10/worker-hour

    • B. 

      $15/worker-hour

    • C. 

      $24/worker-hour

    • D. 

      $240/worker-hour

  • 36. 
    Society can increase its output and income by increasing basically one or both of two factors:
    • A. 

      Its spending and investment

    • B. 

      Its private and public sectors of the economy

    • C. 

      Its resources and the productivity of the resources

    • D. 

      Its markets and prices

  • 37. 
    A nation's real GDP will increase by increasing the following, except:
    • A. 

      Number of workers

    • B. 

      Labor productivity

    • C. 

      Technological progress

    • D. 

      Average price level

  • 38. 
    The number of worker-hours available in an economy is determined by the following, except:
    • A. 

      Size of the labor force

    • B. 

      Length of the average workweek

    • C. 

      Unemployment rate of the workforce

    • D. 

      Labor force participation rate

  • 39. 
    Which of the following will NOT increase the average productivity of labor?
    • A. 

      An increase in the stock of real capital

    • B. 

      Improvement in the education and health of the population

    • C. 

      Technological progress

    • D. 

      An increase in the size of the labor force

  • 40. 
    The size of the labor force depends on the size of the working-age population and the:
    • A. 

      Participation rate

    • B. 

      Employment rate

    • C. 

      Unemployment rate

    • D. 

      Inflation rate

  • 41. 
    Refer to the above table. In year 2, the economy's real GDP was:
    • A. 

      $400,000

    • B. 

      $420,000

    • C. 

      $462,000

    • D. 

      $500,000

  • 42. 
    Refer to the above table. Between Year 1 and Year 2, real GDP increased by:
    • A. 

      1.5%

    • B. 

      2.5%

    • C. 

      5.0%

    • D. 

      6.0%

  • 43. 
    Refer to the above table. Between Year 2 and Year 3, real GDP increased by:
    • A. 

      2.0%

    • B. 

      5.0%

    • C. 

      10.0%

    • D. 

      15.0%

  • 44. 
    In the periods 1953-73 and 1973-95, U.S. real GDP grew at the average annual rates of about:
    • A. 

      5.1% and 7.4% respectively

    • B. 

      2.8% and 3.6% respectively

    • C. 

      7.4% and 5.1% respectively

    • D. 

      3.6% and 2.8% respectively

  • 45. 
    In the periods 1995-2001 and 2001-2007, U.S. real GDP grew at the average annual rates of about:
    • A. 

      3.8% and 2.6% respectively

    • B. 

      2.6% and 3.8% respectively

    • C. 

      8.7% and 6.2% respectively

    • D. 

      6.2% and 8.7% respectively

  • 46. 
    In the U.S. in the last 50 years or so, we saw the following trends, except:
    • A. 

      The average length of the workweek remained relatively constant

    • B. 

      The size of the labor force expanded

    • C. 

      Birthrates kept the native-born population growing at a steady rate

    • D. 

      Women's labor force participation rate surged

  • 47. 
    About what percentage of the growth in real output in the United States from 2001 to 2007 was due to increases in labor productivity?
    • A. 

      25%

    • B. 

      33.3%

    • C. 

      50%

    • D. 

      100%

  • 48. 
    Which of the following factors has been a dominant source of economic growth in the U.S. (except 1973-1995)?
    • A. 

      Increase in population

    • B. 

      Increase in labor productivity

    • C. 

      Increase in labor hours

    • D. 

      Increase in labor force

  • 49. 
    Which of the following factors is projected to be the dominant source of economic growth in the U.S. from now until 2020?
    • A. 

      Increase in labor hours

    • B. 

      Increase in labor force

    • C. 

      Increase in population

    • D. 

      Increase in labor productivity

  • 50. 
    The factor accounting for the largest increase in the productivity of labor in the United States has been:
    • A. 

      The education and training of workers

    • B. 

      Improved resource allocation

    • C. 

      The quantity of capital

    • D. 

      Technological advance

  • 51. 
    Technological advances that contribute to economic growth include the following, except:
    • A. 

      Innovative production techniques

    • B. 

      New managerial methods

    • C. 

      Innovative digital gadgets for consumers

    • D. 

      New forms of business organization

  • 52. 
    Labor productivity can only increase if:
    • A. 

      Labor increases faster than capital

    • B. 

      Capital increases faster than labor

    • C. 

      Labor increases while capital decreases

    • D. 

      Labor and capital increase at the same rate

  • 53. 
    In the U.S. economic-growth experience:
    • A. 

      Most capital substitute for labor

    • B. 

      Most capital is complementary to labor

    • C. 

      The amount of capital available per worker has been relatively constant

    • D. 

      The amount of capital available per worker has been decreasing

  • 54. 
    Which is the single most important source of U.S. economic growth?
    • A. 

      Stability of the socio-cultural-political environment

    • B. 

      Improvement in the legal and human environment

    • C. 

      Increases in the quantity of labor

    • D. 

      Increases in labor productivity

  • 55. 
    Historically, the total amount of real capital per worker in the United States has:
    • A. 

      Provided financing for the industrial expansion of business

    • B. 

      Increased significantly and made labor more productive

    • C. 

      Been the single most important determinant of economic growth

    • D. 

      Remained relatively constant, although the quality of capital has improved dramatically

  • 56. 
    Human capital refers to the:
    • A. 

      Tools and equipment available to workers

    • B. 

      Amount of financing available to start-up firms

    • C. 

      Number of workers available in the economy

    • D. 

      Education, training, and skills of workers.

  • 57. 
    Trends in the educational attainment in the U.S. since 1960 indicate that the percentage of adults:
    • A. 

      Completing high school has been rising, and so has the percentage who do not go to high school nor complete elementary school

    • B. 

      Completing college has been rising, and so has the percentage completing high school

    • C. 

      Completing college has been constant, but the percentage completing high school has been rising

    • D. 

      Who do not go to high school has been falling, but the percentage who do not complete elementary school has been rising

  • 58. 
    In 2009, about how many percent of adults in the U.S. were college graduates or more?
    • A. 

      10%

    • B. 

      30%

    • C. 

      50%

    • D. 

      70%

  • 59. 
    One concern regarding educational attainment in the U.S. is that:
    • A. 

      The percentage of adults finishing college is falling

    • B. 

      There are fewer college graduates in science and engineering

    • C. 

      Students are graduating later and later

    • D. 

      Fewer high school graduates are going on to college

  • 60. 
    What economic concept would be most closely associated with a situation where an aluminum plant expands its operations and uses extensive computerization in the production line to reduce per-unit costs of production?
    • A. 

      Infrastructure

    • B. 

      Human capital

    • C. 

      Network effects

    • D. 

      Economies of scale

  • 61. 
    The movement of workers from lower productivity jobs to higher productivity jobs would be an example of a(n):
    • A. 

      Technological advance

    • B. 

      Network effects

    • C. 

      Simultaneous consumption

    • D. 

      Improved resource allocation

  • 62. 
    The shift of labor out of agriculture to industry in the United States has tended to:
    • A. 

      Reduce the rate of productivity growth

    • B. 

      Increase unemployment in the agriculture sector

    • C. 

      Reduce unemployment in the agriculture sector

    • D. 

      Increase labor productivity

  • 63. 
    One major aspect of the socio-cultural-political environment of the United States which has generally been conducive to economic growth is the:
    • A. 

      Enforcement of contracts by the market

    • B. 

      Denial of the rights of property ownership

    • C. 

      Favorable attitude toward work and risk-taking

    • D. 

      Strict social regulation of production and progress

  • 64. 
    Labor productivity in the U.S. in the periods 1973-1995 and 1995-2009 grew at average rates of:
    • A. 

      1.5% and 5.2% respectively

    • B. 

      1.5% and 2.8% respectively

    • C. 

      2.6% and 4.8% respectively

    • D. 

      4.1% and 5.2% respectively

  • 65. 
    If the annual growth in a nation's productivity is 2.8 percent rather than 1.5 percent, then the nation's standard of living will double in about
    • A. 

      20 years instead of 40 years

    • B. 

      25 years instead of 47 years

    • C. 

      46 years instead of 70 years

    • D. 

      55 years instead of 115 years

  • 66. 
    Factors that contribute to the higher U.S. labor productivity growth in 1995-2009 relative to the earlier period include the following, except:
    • A. 

      Microchip and information technologies

    • B. 

      New start-up firms and increasing returns

    • C. 

      Global competition

    • D. 

      Population growth

  • 67. 
    A major effect of the rise in the rate of productivity growth in the United States is a(n):
    • A. 

      Rise in the rate of inflation

    • B. 

      Rise in the growth of living standards

    • C. 

      Increase in the relative price of U.S. goods in foreign markets

    • D. 

      Increase in the competitiveness of U.S. goods in foreign markets

  • 68. 
    Compared with the period from 1973-1995, the annual rate of productivity growth from 1995-2009 was about:
    • A. 

      The same

    • B. 

      Double

    • C. 

      Triple

    • D. 

      Quadruple

  • 69. 
    Increasing returns would be a situation where a firm increases its workforce and other outputs by:
    • A. 

      8% and its output increases by 5%

    • B. 

      5% and its output increases by 8%

    • C. 

      8% and its output increases by 8%

    • D. 

      12% and its output increases by 10%

  • 70. 
    Sources of increasing returns that help raise productivity growth include the following, except:
    • A. 

      More specialized outputs

    • B. 

      Spreading of development costs

    • C. 

      Network effects

    • D. 

      Low unemployment

  • 71. 
    Increases in the value of the product to each user, including existing users, as the total number of users rises is called:
    • A. 

      Network effects

    • B. 

      Simultaneous consumption

    • C. 

      Learning by doing

    • D. 

      The spreading of development costs

  • 72. 
    A piece of software that benefits many users at the same time would be an example of:
    • A. 

      Network effects

    • B. 

      Learning by doing

    • C. 

      Multiple production

    • D. 

      Simultaneous consumption

  • 73. 
    Which of the following is a main source of increasing returns in recent years?
    • A. 

      More learning by doing

    • B. 

      The concentration of development costs

    • C. 

      The use of less specialized inputs as firms grow

    • D. 

      More resources devoted to agricultural production

  • 74. 
    One major economic benefit of global competition is:
    • A. 

      Lower unemployment

    • B. 

      Increased protection of domestic firms

    • C. 

      Pressure to innovate

    • D. 

      More leisure opportunities

  • 75. 
    Which of the following countries ranked highest in the Global Competitiveness Index?
    • A. 

      Japan

    • B. 

      Switzerland

    • C. 

      Germany

    • D. 

      Canada

  • 76. 
    The rapid productivity growth experienced in 1995-2009:
    • A. 

      Is believed by most economists to be a permanent shift in the economy

    • B. 

      Is still debated among many economists as to whether it represents a permanent shift in the economy

    • C. 

      Suggests that prospects for lasting increases in productivity growth are rather poor

    • D. 

      Suggests that productivity growth can occur without raising the nation's standard of living

  • 77. 
    Critics of growth policies focus on the following arguments, except:
    • A. 

      Growth has resulted in resource degradation and pollution

    • B. 

      Sociological problems like poverty have not been solved by growth

    • C. 

      Growth may have given us the good life, but we cannot better it anymore

    • D. 

      Rapid growth is not sustainable in the long term due to resource limitations

  • 78. 
    One of the main arguments against further growth for industrialized nations focuses on the problem of:
    • A. 

      Technological knowledge

    • B. 

      Environmental quality

    • C. 

      Feedback mechanisms

    • D. 

      Infrastructure

  • 79. 
    An antigrowth view would be that there may be a significant tradeoff between productivity and:
    • A. 

      Education

    • B. 

      Employment

    • C. 

      Economies of scale

    • D. 

      The quality of life

  • 80. 
    One of the basic economic defenses of economic growth rests on the conclusion that:
    • A. 

      Growth makes workers less obsolete and more secure in employment

    • B. 

      Growth reduces the cost to society of "common property" resources

    • C. 

      Growth makes the gap between unlimited wants and scarce resources less acute

    • D. 

      A growth-oriented society confers a "work and look to the future" attitude on the members of society

  • 81. 
    "Show me a pastoral society with an untouched environment, and abundance of leisure, and nonsecular values, and I will show you an underdeveloped, poverty-ridden country." This statement is most likely to be made by a(n):
    • A. 

      Advocate of learning by doing

    • B. 

      Advocate of network effects

    • C. 

      Proponent of economic growth

    • D. 

      Critic of economic growth

  • 82. 
    Rising real wages for women in the U.S. workforce since the 1960s have:
    • A. 

      Reduced access to job opportunities for women

    • B. 

      Increased the opportunity cost of staying at home

    • C. 

      Led to a rise in the number of lifetime births per woman

    • D. 

      Reallocated labor resources from urban to rural areas of the nation

  • 83. 
    The entry of women into the workforce since the 1960s have resulted in:
    • A. 

      A shift downward in the production possibilities curve of the United States

    • B. 

      A shift inward in the production possibilities curve in the United States

    • C. 

      A movement along the existing production possibilities curve in the United States

    • D. 

      A falling real wage for women workers of the United States

  • 84. 
    Over the past twenty-five years China has experienced nearly a:
    • A. 

      3 percent annual growth rate and real output has more than doubled

    • B. 

      5 percent annual growth rate and real output has more than tripled

    • C. 

      9 percent annual growth rate and real output has more than quadrupled

    • D. 

      16 percent annual growth rate and real output has more than quintupled

  • 85. 
    Which of the following statements is true?
    • A. 

      China's real GDP and real income have grown so much slower than its population

    • B. 

      China's real GDP and real income have grown so much faster than its population

    • C. 

      China's real GDP has grown faster than its population, but its real income has grown slower than its population

    • D. 

      China's real GDP has grown slower than its population, but its real income has grown faster than its population

  • 86. 
    The growth of per capita income in China is largely the result of:
    • A. 

      Less government spending

    • B. 

      Less international trade

    • C. 

      More agricultural employment

    • D. 

      An increased use of capital goods