Chapter 18

1. Which of the following is a benefit of real economic growth to a society?
A.Everyone enjoys a greater nominal income.
B.The standard of living increases.
C.The burden of scarcity increases.
D.The society is less able to satisfy new wants.


2. If the real output of an economy were to increase from $2,000 billion to $2,100 billion in 1 year, the rate of growth of real output during that year would be
A.0.5%
B.5%
C.10%
D.50%


3. Suppose an economy has a real GDP of $700 billion and an annual growth rate of 5%. Over a 2-year period real GDP will increase by
A.$14 billion
B.$35 billion
C.$70 billion
D.$71 3/4 billion


4. If a nation's real GDP is growing by 2% per year, then approximately how many years will it take for real GDP to double?
A.25 years
B.30 years
C.35 years
D.40 years


5. Which of the following is not a supply factor in economic growth?
A.an expansion in purchasing power
B.an increase in the economy's stock of capital goods
C.more natural resources
D.technological progress


6.
R-1 18a

If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by
A.supply factors
B.demand factors
C.efficiency factors
D.industrial policy



7.
R-1 18a

If the production possibilities curve for an economy is at CD but the economy is operating at point X, 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 progress



8. Total output or real GDP in any year is equal to
A.labor inputs divided by resource outputs
B.labor productivity multiplied by real output
C.worker-hours multiplied by labor productivity
D.worker-hours divided by labor productivity


9. Assume that an economy has 1,000 workers, each working 2,000 hours per year. If the average real output perworker-hour is $9, then total output or real GDP will be
A.$2 million
B.$9 million
C.$18 million
D.$24 million


10.
.
R-2 18b

A shift from Q1 to Q2 is caused by a shift in the
A.level of prices
B.aggregate demand curve
C.short-run aggregate supply curve
D.long-run aggregate supply curve



11.
.
R-2 18b

Which combination would best explain a shift in the price level from P1 to P2 and an increase in real domestic output from Q1 to Q2?
A.an increase in the long-run aggregate supply (AS1 to AS2) and in short-run aggregate supply (AD1 to AD2).
B.an increase in aggregate demand (AD1 to AD2) and a decrease in long-run aggregate supply (AS2 to AS1).
C.an increase in the long-run aggregate supply (AS1 to AS2), an increase in aggregate demand (AD1 to AD2), and an increase in short-run aggregate supply (AS'1 to AS'2).
D.a decrease in the long-run aggregate supply (AS2 to AS1), a decrease in aggregate demand (AD2 to AD1), and a decrease in short-run aggregate supply (AS'2to AS'1)



12. Since 1940 real GDP in the United States has increased about
A.onefold
B.twofold
C.fourfold
D.sixfold


13. The real GDP of the U.S. economy since 1948 increased at an average annual rate of about
A..5%
B.2.1%
C.3.1%
D.5.4%


14. Real GDP per capita in the United States since 1948 increased at an average annual rate of about
A.1%
B.2%
C.3%
D.4%


15. Data on real GDP, real GDP per capita, and the respective growth rates of those measured in the United States take into account
A.improvement in product quality
B.increases in available leisure time
C.environmental problems
D.changes in domestic output


16. About what fraction of the growth in the real national income of the United States since 1929 has been due to increases in the quantity of labor employed?
A.one-fourth
B.one-third
C.one-half
D.two-thirds


17. The factor accounting for the largest increase in the productivity of labor in the United States since 1929 has been
A.economies of scale
B.technological advance
C.the quantity of capital
D.the education and training of workers


18. A major factor that has negatively affected economic growth since 1929 has been
A.the decreased quantity of labor
B.education and training
C.diseconomies of scale
D.government regulation


19. The average annual growth rate in the United States has been
A.increased by periods of recession
B.increased by periods of inflation
C.decreased by periods of recession
D.not affected by periods of inflation


20. Which labor factor contributed to the slowdown in the growth rate of productivity in the 1970s and 1980s?
A.a decline in the number of high school dropouts
B.a decline in the level of work experience
C.a decline in the size of the labor force
D.a rise in the number of jobs


21. Which best explains why there was a lower level of capital investment in the United States in the 1970s and 1980s?
A.less regulation of business practices
B.less competition from imported goods
C.greater spending for infrastructure
D.lower rates of saving


22. A factor that helped slow the growth rate of productivity in the 1970s and 1980s was
A.a rise in the growth rate of manufacturing productivity
B.a fall in the growth rate of service productivity
C.a rise in the quality of labor
D.a fall in energy prices


23. Which factor has contributed to the resurgence of productivity growth in recent years?
A.increased inflation
B.higher energy prices
C.more experienced workers
D.greater government regulation


24. If the Federal Reserve acted to cut interest rates to stimulate investment, this would be an example of
A.a supply-side policy
B.a demand-side policy
C.an industrial policy
D.a fiscal policy


25. A program which provides tuition tax credits that are designed to increase college enrollment would be an example of
A.monetary policy
B.regulatory policy
C.supply-side policy
D.demand-side policy



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