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Exam 19: Economic Growth, Productivity, and Living Standards

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Question 21

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In symbolic terms where Y equals real GDP, POP equals total population, and N equals the number of employed workers, Y/POP must equal:

A) Y/N × N/POP.
B) N/Y × POP/N.
C) Y/POP × N/POP
D) N/Y × N/POP

E) A) and D)
F) B) and C)

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Question 22

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Arguing that economic growth will eventually stop because we will run out of natural resources:

A) must be correct because scarcity exists.
B) will only be correct if growth takes the form of newer, more efficient goods and services.
C) ignores the power of markets to recognize shortages and induce changes in behavior.
D) is supported today by the fact that richer countries have fewer natural resources.

E) A) and D)
F) B) and D)

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Question 23

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Suppose that the share of population employed in Country B is 50 percent, and that Countries B and C have the same real GDP per capita. Based on the information in the table, what share of Country C's population must be employed?   $\begin{array}{|c|r|r}\hline \text { Country } & \text { Population (millions) } & \text { Average Labor Productivity (\$) } \\\hline \mathrm{A} & 100 & 2,000 \\\hline \mathrm{B} & 150 & 10,000\\\hline \mathrm{C} & 75 & 25,000 \\\hline \mathrm{D} & 250 & 50,000 \\\hline \mathrm{E} & 95 & 60,000 \\\hline\end{array}$

The key indicator of a country's living standard and economic well-being is:

Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is $10,000. However, Richland's real GDP per person is growing at 1 percent per year, and Poorland's real GDP per person is growing at 3 percent per year. After 50 years, real GDP per person in Richland minus real GDP in Poorland is:

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ________ increases average labor productivity.

Compound interest is:

Most political scientists and economists agree that ________ is detrimental to economic growth.

The principle that if the amount of labor and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of:

If real GDP per person in a country equals $20,000 and 40 percent of the population is employed, then average labor productivity equals:

Diminishing returns to capital is a consequence of firms' incentives to use each piece of capital as productively as possible and illustrates the:

Real GDP per person in Westland is $30,000, while real GDP in Eastland is $10,000, Westland's real GDP per person is growing at 3 percent per year and Eastland's real GDP per person is growing at 3 percent per year. If these growth rates persist indefinitely, then:

Average labor productivity times the proportion of the population employed equals:

Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual compound interest, and you do not withdraw from the account until your retirement at the age of 65, 44 years later. How much more will be in your account if the interest rate is 6 percent rather than 4 percent?

The cost of a higher living standard in the future is giving up:

If the share of population employed in two countries is the same, average living standards will be higher in the country with:

The key variable in determining changes in a country's standard of living is the:

Small differences in annual growth rates of real GDP generate large differences in real GDP over time because of the:

A nation's standard of living, as measured by real GDP per person, increases:

The establishment of well-defined property rights increases: