17 Questions

Questions and Answers

- 1.Economic growth is best defined as an increase in:
- A.
Either real GDP or real GDP per capita.

- B.
Nominal GDP

- C.
Total consumption expenditures

- D.
Wealth in the economy

- 2.Real GDP per capita:
- A.
Cannot grow more rapidly than real GDP.

- B.
Cannot grow more slowly than real GDP.

- C.
Necessarily grows more rapidly than real GDP.

- D.
Can grow either more slowly or more rapidly than real GDP.

- 3.Real GDP per capita is found by:
- A.
Adding real GDP and population.

- B.
Subtracting population from real GDP.

- C.
Dividing real GDP by population.

- D.
Dividing population by real GDP.

- 4.Which of the following best measures improvements in the standard of living of a nation?
- A.
Growth of nominal GDP.

- B.
Growth of real GDP.

- C.
Growth of real GDP per capita

- D.
Growth of national income

- 5.If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, it's real GDP per capita will:
- A.
Remain constant.

- B.
Fall by 6 percent.

- C.
Rise by 6 percent

- D.
Fall by 12 percent.

- 6.For a nation's real GDP per capita to rise during a year:
- A.
Consumption spending must increase.

- B.
Real GDP must increase more rapidly than population.

- C.
Population must increase more rapidly than real GDP.

- D.
Investment spending must increase.

- 7.Growth is advantageous to a nation because it:
- A.
Promotes faster population growth.

- B.
Lessens the burden of scarcity.

- C.
Eliminates the economizing problem.

- D.
Slows the growth of wants.

- 8.For comparing changes in potential military strength and political preeminence, the most meaningful measure of economic growth would be:
- A.
Changes in total nominal output.

- B.
Changes in total real output

- C.
Changes in per capita output.

- D.
Changes in per family output

- 9.Given the annual rate of economic growth, the "rule of 70" allows one to:
- A.
Determine the accompanying rate of inflation.

- B.
Calculate the size of GDP gap.

- C.
Calculate the number of years required for real GDP to double.

- D.
Determine the growth rate of per capita GDP.

- 10.The number of years required for real GDP to double can be found by:
- A.
Dividing the annual growth rate by 0.07

- B.
Multiplying the annual growth rate by 70.

- C.
Dividing 70 by the annual growth rate.

- D.
Adding 14 to annual growth rate.

- 11.At an annual growth rate of 4 percent, real GDP will double in about:
- A.
17.5 years.

- B.
20 years

- C.
13.5 years

- D.
15 years

- 12.At an annual growth rate of 7 percent, real GDP will double in about:
- A.
11.5 years

- B.
10 years

- C.
13.5 years

- D.
9 years

- 13.If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately:
- A.
22 years

- B.
20 years

- C.
14 years

- D.
8 years

- 14.If the economy's real GDP doubles in 18 years, we can:
- A.
Not say anything about the average annual rate of growth.

- B.
Conclude that its average annual rate of growth is about 5.5 percent.

- C.
Conclude that its average annual rate of growth is about 2 percent.

- D.
Conclude that its average annual rate of growth is about 4 percent

- 15.About _____ of US economic growth comes from improved productivity (as opposed to added inputs.)
- A.
1/4

- B.
1/3

- C.
1/2

- D.
2/3

- 16.Between 1950 and 2002, US real GDP grew at an average annual rate of about:
- A.
1.3%

- B.
4.2%

- C.
3.5%

- D.
2.1%

- 17.Recurring upswings and downswings in an economy's real GDP over time are called:
- A.
Recessions.

- B.
Business cycles.

- C.
Output yo-yos.

- D.
Total product oscillations.