Which of the following is a measure of economic growth that is most useful for measuring political preeminence?

Decreases in the rate of unemployment

Increases in real GDP per capita

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

Increases in real GDP per capita

Decreases in the rate of unemployment

Increases in real GDP per capita

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?

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

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

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

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

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?

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

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

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

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

One cannot determine GDP per capita from the given data

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?

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

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

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

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

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

The "rule of 70" is a formula for determining the approximate number of:

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

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

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

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

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

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:

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

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

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

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

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

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

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

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

A doubling of real GDP from 1950 to 2009

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

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

Which of the following does not correctly characterize modern economic growth?

It has not affected the average lifespan of human beings

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

It has occurred only in the last 200 or so years

It drastically alters the culture and politics of society

It has not affected the average lifespan of human beings

In the modern economic growth process, it is typical to find that:

Follower countries can grow faster than leader countries

Leader countries continue to grow faster than follower countries

Follower countries can grow faster than leader countries

Large countries cannot grow faster than leader countries

The gap between leader countries and follower countries stays constant

Growth-promoting institutional structures include the following, except:

Protection of domestic firms from foreign rivals

Efficient financial institutions

Protection of domestic firms from foreign rivals

Supply factors in economic growth include the following, except:

Increases in purchases of output

Which of the following is best considered a demand factor in economic growth?

The full employment of resources

The quantity of human resources

The quality of natural resources

The full employment of resources

Which of the following is a demand factor in economic growth?

An increase in total spending in the economy

More human and natural resources

Technological progress and innovation

An increase in the economy's stock of capital goods

An increase in total spending in the economy

Which of the following is the so-called efficiency factor of economic growth?

Reaching full production potential

Having an efficient financial system

Reaching full production potential

Enhanced quantity and quality of human resources

Economic growth can best be portrayed as a:

Rightward shift of the production possibilities curve

Leftward shift of the production possibilities curve

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

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

Rightward shift of the production possibilities curve

World's Toughest Trivia Quiz On Economics

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Questions: 86 | Attempts: 698 | Updated: Mar 21, 2023

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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
Correct Answer
D. Increases in real GDP

Explanation
Increases in real GDP is the most useful measure of economic growth for measuring political preeminence because it takes into account the growth of the economy adjusted for inflation and population changes. Real GDP per capita specifically measures the average economic output per person, which can indicate the overall standard of living and prosperity in a country. Therefore, an increase in real GDP per capita suggests that the country's economy is growing and its citizens are experiencing improved living conditions, which can contribute to political stability and influence on the global stage.

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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
Correct Answer
C. Increases in real GDP per capita

Explanation
Increases in real GDP per capita is the most useful measure of economic growth for comparing living standards. Real GDP per capita takes into account the growth of the economy adjusted for inflation and divides it by the population, giving a measure of the average income and standard of living for individuals in a country. This measure allows for a more accurate comparison of living standards across different countries or over time, as it accounts for changes in both economic output and population size.

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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%
Correct Answer
B. 6.0%

Explanation
The real GDP growth rate in 2010 can be calculated by using the formula: (GDP in 2010 - GDP in 2009) / GDP in 2009 * 100. Plugging in the given values, we get (265 - 250) / 250 * 100 = 15 / 250 * 100 = 0.06 * 100 = 6.0%. Therefore, the real GDP growth rate in 2010 is 6.0%.

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4.

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 is its real GDP per capita in 2010?
- A.
  
  $2,120 per person
- B.
  
  $212 per person
- C.
  
  $21,200 per person
- D.
  
  $205 per person
Correct Answer
A. $2,120 per person

Explanation
The real GDP per capita is calculated by dividing the real GDP by the population. In this case, the real GDP in 2010 is $265 billion and the population is 125 million. Dividing $265 billion by 125 million gives us $2,120 per person.

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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%
Correct Answer
D. 3.4%

Explanation
The growth rate of real GDP per capita in 2010 can be calculated by dividing the change in real GDP by the change in population and then multiplying by 100. In this case, the change in real GDP is $265 billion - $250 billion = $15 billion, and the change in population is 125 million - 122 million = 3 million. Therefore, the growth rate of real GDP per capita in 2010 is ($15 billion / 122 million) * 100 = 12.3%. However, none of the given answer choices match this calculation, so the correct answer is not available.

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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%
Correct Answer
A. Nation A's real GDP growth in 2010 is higher than Nation B's

Explanation
To compare the real GDP growth of Nation A and Nation B, we need to calculate the growth rate for each country. The formula to calculate the growth rate is (final value - initial value) / initial value * 100.

For Nation A, the initial real GDP in 2009 was $520 billion and the final real GDP in 2010 was $550 billion. Using the formula, the growth rate for Nation A is (550 - 520) / 520 * 100 = 5.77%.

For Nation B, the initial real GDP in 2009 was $200 billion and the final real GDP in 2010 was $210 billion. Using the formula, the growth rate for Nation B is (210 - 200) / 200 * 100 = 5%.

Therefore, Nation A's real GDP growth in 2010 (5.77%) is higher than Nation B's (5%).

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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
Correct Answer
B. Nation B's GDP per capita is higher than Nation A's

Explanation
To calculate GDP per capita, we divide the real GDP by the population. In 2009, Nation A's GDP per capita was $520 billion / 150 million = $3,466.67. In 2010, Nation A's GDP per capita was $550 billion / 155 million = $3,548.39. In 2009, Nation B's GDP per capita was $200 billion / 53 million = $3,773.58. In 2010, Nation B's GDP per capita was $210 billion / 55 million = $3,818.18. Therefore, Nation B's GDP per capita is higher than Nation A's.

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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
Correct Answer
D. Nation A's and Nation B's GDP per capita both increased from 2009 to 2010

Explanation
Both Nation A and Nation B experienced an increase in their real GDP from 2009 to 2010. Additionally, both nations also saw an increase in their population during the same period. Therefore, the GDP per capita for both nations increased as well.

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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
Correct Answer
B. Years that it would take for a value (like real GDP) to double

Explanation
The "rule of 70" is a formula used to estimate the number of years it would take for a value, such as real GDP, to double. It is derived by dividing the number 70 by the growth rate of the value. By using this formula, one can get a rough estimate of how long it would take for a value to double based on its growth rate.

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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
Correct Answer
C. 28 years

Explanation
The "rule of 70" is a formula used to estimate the time it takes for a variable to double, given its growth rate. The formula is calculated by dividing 70 by the growth rate. In this case, the nation's average annual real GDP growth rate is 2.5%. By applying the rule of 70, we can estimate that it would take approximately 28 years for the nation's real GDP to double.

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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
Correct Answer
B. 20 years under scenario A, versus 16 years under scenario B

Explanation
In scenario A, with an average annual growth rate of 3.5%, the nation's real GDP would double in about 20 years. In scenario B, with an average annual growth rate of 4.5%, the nation's real GDP would double in about 16 years. This means that scenario B has a faster rate of economic growth compared to scenario A, resulting in a shorter time period for the nation's real GDP to double.

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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
Correct Answer
C. An average growth rate in real GDP that is faster than the growth rate of the population

Explanation
The correct answer is that economic growth in the U.S. since 1950 has been characterized by an average growth rate in real GDP that is faster than the growth rate of the population. This means that the economy has been expanding at a faster pace than the population has been growing, indicating an increase in productivity and living standards. This can be attributed to various factors such as technological advancements, increased investment, and improved efficiency in production.

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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
Correct Answer
B. 3.2 percent and 2 percent

Explanation
From 1950 to 2009, real GDP has grown at an average annual rate of 3.2 percent, while real GDP per capita has grown at an average annual rate of 2 percent. This means that the overall economy has experienced a higher growth rate compared to the growth rate of the population. This indicates that there has been an increase in productivity and economic efficiency over the years, leading to a higher standard of living for the population.

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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
Correct Answer
C. Debasement of the environment

Explanation
The real GDP growth rate measures the increase in the value of goods and services produced in an economy. Factors that tend to make the real GDP growth rate understate the growth of economic well-being include improved product quality, added leisure, and a more stress-free lifestyle. These factors contribute to a higher quality of life and increased well-being, but may not necessarily be reflected in the monetary value of GDP. However, debasement of the environment does not contribute to economic well-being and can have negative consequences for future generations, making it an exception to the factors that understate GDP growth.

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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
Correct Answer
A. Steam engine

Explanation
The steam engine is identified as a major factor that started the Industrial Revolution in Britain. This invention revolutionized the way work was done by providing a reliable and efficient source of power. It enabled factories and industries to mechanize their production processes, leading to increased productivity and economic growth. The steam engine also played a crucial role in the development of transportation systems, allowing for the expansion of railways and steamships. Overall, the steam engine was a key catalyst for the Industrial Revolution, transforming Britain into the world's leading industrial power.

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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
Correct Answer
D. It has not affected the average lifespan of human beings

Explanation
Modern economic growth has had a significant impact on various aspects of society, including culture and politics. It has led to rapid changes in technology, infrastructure, and living standards. However, it has not directly affected the average lifespan of human beings. While economic growth can indirectly contribute to improvements in healthcare and living conditions, factors such as access to healthcare, nutrition, and lifestyle choices have a more direct impact on life expectancy.

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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
Correct Answer
B. Follower countries can grow faster than leader countries

Explanation
In the modern economic growth process, it is possible for follower countries to grow faster than leader countries. This is because follower countries have the advantage of being able to learn from the experiences and mistakes of leader countries, allowing them to adopt successful strategies and skip certain developmental stages. Follower countries can also benefit from access to advanced technologies and knowledge that have already been developed by leader countries. Additionally, follower countries may have lower labor costs and more favorable investment conditions, attracting foreign direct investment and stimulating their economic growth.

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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
Correct Answer
C. Protection of domestic firms from foreign rivals

Explanation
The growth-promoting institutional structures mentioned in the question are patents and copyrights, efficient financial institutions, and a stable political system. These factors contribute to fostering innovation, providing financial stability, and ensuring a conducive environment for economic growth. However, the protection of domestic firms from foreign rivals is not considered a growth-promoting institutional structure as it can hinder competition and limit opportunities for growth and innovation through international trade.

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19.

Patents and copyrights foster the flow of:
- A.
  
  Saving and investment
- B.
  
  Spending and income
- C.
  
  Resources and products
- D.
  
  Inventions and ideas
Correct Answer
D. Inventions and ideas

Explanation
Patents and copyrights foster the flow of inventions and ideas by providing legal protection and exclusive rights to the creators. This encourages innovation and creativity as inventors and creators are incentivized to share their ideas and inventions without the fear of others copying or stealing their work. It also promotes the sharing of knowledge and advancements, leading to the development of new products and technologies.

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20.

Efficient financial institutions foster the flow of:
- A.
  
  Saving and investment
- B.
  
  Spending and income
- C.
  
  Resources and products
- D.
  
  Inventions and ideas
Correct Answer
A. Saving and investment

Explanation
Efficient financial institutions facilitate the movement of savings and investments. These institutions provide individuals and businesses with the necessary tools and platforms to save their money and invest it in various financial instruments such as stocks, bonds, and mutual funds. By doing so, they encourage the accumulation of capital and promote economic growth. Efficient financial institutions also play a crucial role in allocating funds to productive investments, which helps to stimulate innovation, create jobs, and generate income in the economy.

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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
Correct Answer
C. Increases in purchases of output

Explanation
The given answer, "Increases in purchases of output," is the correct answer because it is the only option that does not directly contribute to economic growth. Improvements in technology, expansion of capital stock, and better education and training all lead to increased productivity and efficiency, which in turn promote economic growth. However, increases in purchases of output simply reflect an increase in consumer demand and do not directly contribute to the factors that drive economic growth.

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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
Correct Answer
D. The full employment of resources

Explanation
The full employment of resources is considered a demand factor in economic growth because it refers to the utilization of all available resources in the economy, including labor, capital, and natural resources. When resources are fully employed, it means that there is a high level of economic activity, leading to increased production and consumption. This leads to higher demand for goods and services, which in turn stimulates economic growth. Therefore, the full employment of resources is crucial for driving economic expansion and development.

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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
Correct Answer
D. An increase in total spending in the economy

Explanation
An increase in total spending in the economy is a demand factor in economic growth because when there is an increase in spending, it leads to an increase in demand for goods and services. This, in turn, encourages businesses to produce more, which leads to economic growth. Increased spending can come from various sources such as consumer spending, government spending, or investment spending by businesses. All of these contribute to creating a higher demand for goods and services, which drives economic growth.

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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
Correct Answer
B. Reaching full production potential

Explanation
Reaching full production potential is considered the efficiency factor of economic growth because it implies that an economy is utilizing all of its available resources and producing goods and services at its maximum capacity. This leads to increased productivity, higher output, and ultimately, economic growth. When an economy is operating at full production potential, it is able to meet the demands of its population and generate higher levels of income and employment.

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25.

Economic growth can best be portrayed as a:
- 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
Correct Answer
D. Rightward shift of the production possibilities curve

Explanation
Economic growth is represented by a rightward shift of the production possibilities curve because it signifies an increase in the economy's ability to produce goods and services over time. This shift indicates that the economy is becoming more efficient, utilizing its resources more effectively, or experiencing technological advancements that allow for increased output. As a result, the economy can produce more goods and services, leading to an expansion of its production possibilities.

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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
Correct Answer
A. Shift in the curve from AB to CD

Explanation
A shift in the production possibilities curve from AB to CD indicates economic growth because it implies an increase in the nation's ability to produce goods and services. This shift means that the nation can now produce more of both goods, indicating an expansion of its productive capacity. The shift could be due to factors such as technological advancements, increased investment in capital goods, or improvements in the labor force's skills. Overall, the shift from AB to CD represents an improvement in the nation's economic performance and potential.

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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
Correct Answer
A. A supply factor

Explanation
If the production possibilities curve of an economy shifts from AB to CD, it is most likely the result of a supply factor affecting economic growth. This means that there has been an increase in the economy's ability to produce goods and services, such as advancements in technology, an increase in the quantity or quality of resources, or improvements in productivity. This shift indicates that the economy can now produce more output than before, leading to economic growth.

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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
Correct Answer
B. Demand and efficiency factors

Explanation
If an economy is operating at point 4 on the production possibilities curve AB, it suggests that the economy is not utilizing its resources efficiently and there is a lack of demand for goods and services. This could be due to various factors such as low consumer confidence, inadequate marketing and advertising strategies, ineffective government policies, or a general economic downturn. Additionally, inefficiencies in production processes and resource allocation could also contribute to the economy not reaching its full potential at point 4.

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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
Correct Answer
D. An increase in the quantity and quality of labor resources

Explanation
An increase in the quantity and quality of labor resources is the most likely cause for a shift in the production possibilities curve from AB to CD. This is because an increase in labor resources would lead to an increase in the economy's productive capacity, allowing for more goods and services to be produced. With more labor available, the economy can produce at a higher level of output, resulting in a shift in the production possibilities curve.

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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
Correct Answer
C. Inside its PPC

Explanation
If an economy experiences an expansion in its production capacity but its total spending does not rise as fast as its capacity, it means that the economy is not fully utilizing its increased production capacity. This indicates that the economy is operating below its potential, as it has the capability to produce more goods and services but is not doing so due to lower spending. Therefore, the economy will end up inside its PPC, as it is producing below its maximum potential level.

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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
Correct Answer
C. Technological process

Explanation
The shift from AB to CD on the production possibilities curve indicates an increase in the economy's ability to produce goods and services. This is most likely caused by a technological process, which refers to the introduction of new or improved technology that enhances productivity and efficiency in production. With technological advancements, the economy can produce more output with the same amount of resources, leading to an outward shift in the production possibilities curve.

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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
Correct Answer
D. Unemployment and inefficient allocation of resources

Explanation
The production possibilities curve represents the maximum output an economy can produce with its available resources and technology. If the economy is operating at point X, which is inside the production possibilities curve at CD, it indicates that the economy is not utilizing its resources efficiently and is experiencing unemployment. Inefficient allocation of resources means that resources are not being allocated in the most productive way, leading to a decrease in overall output. Unemployment further suggests that there are available resources that are not being utilized, resulting in a lower level of production than what is possible.

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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
Correct Answer
C. Number of worker hours multiplied by labor productivity

Explanation
The correct answer is "Number of worker hours multiplied by labor productivity." This is because real GDP or total output in any year is calculated by multiplying the number of worker hours by the labor productivity. This formula takes into account both the amount of time spent by workers and their productivity level, resulting in an accurate measure of the total output produced in a given period.

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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
Correct Answer
D. $60 million

Explanation
In order to calculate the total output or real GDP, we need to multiply the number of workers by the number of hours worked by each worker and then multiply that by the average output per worker-hour. Therefore, the calculation would be: 1500 workers * 2000 hours/worker * $20/worker-hour = $60 million.

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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
Correct Answer
B. $15/worker-hour

Explanation
Labor productivity is calculated by dividing the total output by the number of worker-hours. In this case, the total output is $600,000 and the number of worker-hours is 40,000. Therefore, the labor productivity is $600,000/40,000 = $15/worker-hour.

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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
Correct Answer
C. Its resources and the productivity of the resources

Explanation
Increasing the resources available to society and improving the productivity of those resources can lead to an increase in output and income. This can be achieved by investing in new technologies, improving infrastructure, and enhancing the skills and education of the workforce. By doing so, society can effectively utilize its resources and maximize their output, resulting in economic growth and higher incomes. Additionally, increasing the availability of resources can also lead to the expansion of markets and the adjustment of prices, further contributing to increased output and income.

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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
Correct Answer
D. Average price level

Explanation
Increasing the average price level will not directly increase a nation's real GDP. Real GDP is a measure of the value of all final goods and services produced in an economy adjusted for inflation. Increasing the average price level will only result in an increase in nominal GDP, not real GDP. Real GDP is determined by the number of workers, labor productivity, and technological progress, as these factors directly contribute to the production of goods and services in an economy.

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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
Correct Answer
C. Unemployment rate of the workforce

Explanation
The number of worker-hours available in an economy is determined by the size of the labor force, the length of the average workweek, and the labor force participation rate. The unemployment rate of the workforce, however, does not directly determine the number of worker-hours available. While a higher unemployment rate may indicate a smaller labor force or a decrease in the length of the average workweek, it does not directly impact the total number of worker-hours available in the economy.

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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
Correct Answer
D. An increase in the size of the labor force

Explanation
An increase in the size of the labor force will not increase the average productivity of labor because adding more workers without any corresponding increase in capital or technological progress will lead to a dilution of resources. The existing resources will have to be shared among a larger number of workers, resulting in lower productivity per worker. Therefore, increasing the size of the labor force alone will not lead to an increase in average productivity.

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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
Correct Answer
A. Participation rate

Explanation
The size of the labor force is determined by the working-age population and the participation rate. The participation rate refers to the percentage of working-age individuals who are either employed or actively seeking employment. A higher participation rate means a larger labor force, as more people are either working or looking for work. Therefore, the participation rate is a key factor in determining the size of the labor force.

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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
Correct Answer
B. $420,000

Explanation
In year 2, the economy's real GDP was $420,000. This can be determined by looking at the values in the table and identifying the corresponding year. The table does not provide any additional information or context that would affect this determination.

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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%
Correct Answer
C. 5.0%

Explanation
Between Year 1 and Year 2, real GDP increased by 5.0%. This can be determined by comparing the real GDP values for Year 1 and Year 2 in the table. Real GDP for Year 1 is $10,000 and for Year 2 is $10,500. To calculate the percentage increase, we divide the difference between the two values by the initial value and multiply by 100. In this case, the difference is $500 ($10,500 - $10,000) and the initial value is $10,000. Dividing $500 by $10,000 and multiplying by 100 gives us 5.0%. Therefore, the correct answer is 5.0%.

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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%
Correct Answer
C. 10.0%

Explanation
Between Year 2 and Year 3, real GDP increased by 10.0%. This can be determined by comparing the real GDP values for Year 2 and Year 3 in the table. Real GDP increased from $20,000 in Year 2 to $22,000 in Year 3, which is a $2,000 increase. To calculate the percentage increase, we divide the increase ($2,000) by the initial value ($20,000) and multiply by 100. This gives us a percentage increase of 10.0%.

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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
Correct Answer
D. 3.6% and 2.8% respectively

Explanation
During the period 1953-73, U.S. real GDP grew at an average annual rate of 5.1%. This indicates that the economy experienced steady growth during this time. In contrast, during the period 1973-95, U.S. real GDP grew at a slower rate of 2.8% on average per year. This suggests that the economy faced challenges and experienced slower growth compared to the previous period.

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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
Correct Answer
A. 3.8% and 2.6% respectively

Explanation
In the periods 1995-2001 and 2001-2007, U.S. real GDP grew at the average annual rates of about 3.8% and 2.6% respectively. This means that between 1995 and 2001, the U.S. real GDP grew at an average annual rate of 3.8%, while between 2001 and 2007, it grew at an average annual rate of 2.6%. This indicates that the U.S. economy experienced a higher rate of growth in the first period compared to the second period.

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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
Correct Answer
C. Birthrates kept the native-born population growing at a steady rate

Explanation
In the U.S. in the last 50 years, birthrates did not keep the native-born population growing at a steady rate. In fact, birthrates have been declining over the years, leading to a slower growth rate of the native-born population. This can be attributed to various factors such as increased access to contraception, delayed marriage and childbearing, and changing societal norms.

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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%
Correct Answer
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
Correct Answer
B. Increase in labor productivity

Explanation
Increase in labor productivity has been a dominant source of economic growth in the U.S. (except 1973-1995). This means that the ability of workers to produce more output per hour of work has been a significant factor in driving economic growth. When workers become more productive, they can produce more goods and services, leading to increased economic output and overall growth. This can be achieved through technological advancements, improved skills and education, better management practices, and efficient use of resources.

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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
Correct Answer
D. Increase in labor productivity

Explanation
The increase in labor productivity is projected to be the dominant source of economic growth in the U.S. from now until 2020. This means that the efficiency and output per worker is expected to increase, leading to higher economic growth. This can be achieved through technological advancements, improved processes, and better utilization of resources. By increasing labor productivity, businesses can produce more goods and services with the same or fewer resources, leading to overall economic growth.

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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
Correct Answer
D. Technological advance

Explanation
Technological advance has been the factor accounting for the largest increase in the productivity of labor in the United States. This means that advancements in technology, such as automation, improved machinery, and digitalization, have significantly enhanced the efficiency and output of workers. These technological advancements have allowed for faster, more accurate, and more streamlined processes, leading to increased productivity. Additionally, technology has also enabled workers to access and utilize information more effectively, further contributing to productivity gains.

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World's Toughest Trivia Quiz On Economics

Which of the following is a measure of economic growth that is most useful for measuring political preeminence?

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

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 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 is its real GDP per capita in 2010?

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?

The "rule of 70" is a formula for determining the approximate number of:

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:

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:

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

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

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

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

Which of the following does not correctly characterize modern economic growth?

In the modern economic growth process, it is typical to find that:

Growth-promoting institutional structures include the following, except:

Patents and copyrights foster the flow of:

Efficient financial institutions foster the flow of:

Supply factors in economic growth include the following, except:

Which of the following is best considered a demand factor in economic growth?

Which of the following is a demand factor in economic growth?

Which of the following is the so-called efficiency factor of economic growth?

Economic growth can best be portrayed as a:

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:

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?

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:

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?

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:

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?

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:

Real GDP or total output in any year is equal to:

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:

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

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

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

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

Which of the following will NOT increase the average productivity of labor?

The size of the labor force depends on the size of the working-age population and the:

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

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

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

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

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

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

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

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

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

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