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Macroeconomics, 9/e

Campbell R. McConnell, University of Nebraska, Lincoln
Stanley L. Brue, Pacific Lutheran University
Thomas P. Barbiero, Ryerson University

Economic Growth and the New Economy

Quick Quiz


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


2	If the real output of an economy were to increase from two billion to 2.1 billion in one 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)	71.75$ billion


4	If a country's real GDP is growing by 2% per year, then about 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 an economy's stock of capital goods
		C)	More natural resources
		D)	Technological progress


6	If the production possibilities curve of an economy shifts outward, it is most likely caused by
		A)	Supply factors
		B)	Demand factors
		C)	Efficiency factors
		D)	Industrial policy


7	Total output or real GDP in any year is equal to
		A)	Labour inputs divided by resource outputs
		B)	Labour productivity multiplied by real output
		C)	Worker-hours multiplied by labour productivity
		D)	Worker-hours divided by labour productivity


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


9	All of the following are supply determinants of real output except
		A)	Average hours of work
		B)	Change in consumer tastes
		C)	Education and training
		D)	Technological advance


10	The rightward shift in LRAS and AD curves is defined as
		A)	Inflationary gap
		B)	Economic growth
		C)	Recessionary gap
		D)	Cost-push inflation


11	Since 1946 real GDP in Canada has increased about
		A)	tenfold
		B)	onefold
		C)	twofold
		D)	fourfold


12	The real GDP of the Canadian economy since 1946 increased at an average annual rate of about
		A)	0.5%
		B)	4%
		C)	3%
		D)	5%


13	Real GDP per capita in Canada since 1946 has increased at an average yearly rate of about
		A)	1%
		B)	2%
		C)	3%
		D)	2.5%


14	Data on real GDP, real GDP per capita, and the respective growth of these measured in Canada take into account only which of the following
		A)	Improvement in product quality
		B)	Increases in available leisure time
		C)	Environmental problems
		D)	Changes in domestic output


15	About what percent of the annual growth in the real output of Canada since 1961 has been due to increases in the quantity of capital?
		A)	10%
		B)	33%
		C)	50%
		D)	45%


16	Public infrastructure includes which of the following
		A)	All of the remaining
		B)	subways
		C)	airports
		D)	schools


17	Th quality of what two Canadian supply factors has been criticised lately as lagging behind world standards
		A)	infrastructure
		B)	Gas and oil deposits
		C)	Public education and private sector job training
		D)	Technological innovation


18	The average yearly Canadian growth rate has been
		A)	Increased in periods of recession
		B)	Increased by periods of inflation
		C)	Decreased by periods of recession
		D)	Unaffected by changes in output


19	In Canada, material advance is thought to be which of the following
		A)	Attainable and desirable
		B)	Contrary to God's wishes
		C)	disrespectful
		D)	inegalitarian


20	The basic element of the "new economy" has been an explosion of
		A)	Innovation involving microchips
		B)	Consumer spending
		C)	Personal debt
		D)	None of the above


21	The following are sources of increasing returns connected with the "New Economy"
		A)	All of the remaining
		B)	Spreading development costs
		C)	Network effects
		D)	More specialised inputs


22	The "new economy" can grow at higher annual rates without igniting demand-pull inflation because of which reasons
		A)	The new economy shifts the production possibilities curve inwards.
		B)	Production capacity rises more rapidly.
		C)	Even when wages rise to match productivity rises, per unit production costs and therefore prices remain stable
		D)	Choices B and C are correct


23	Sceptics of growth say that
		A)	Growth is qualitative as well as quantitative
		B)	Technology will render many people's skills obsolete.
		C)	High rates of economic growth degrade and exhaust the earth's resources.
		D)	All of the above.


24	In the "new economy" frictional unemployment falls because
		A)	Technology creates a lot of jobs
		B)	The business cycle is obsolete in the new economy.
		C)	The new economy creates a lot of educational opportunities
		D)	Information technology enables workers and employers to find each other more easily.


25	Which of the following are supply factors
		A)	Poor allocative efficiency
		B)	Low consumer spending
		C)	Low research and development spending
		D)	None of the above


26	Which of the following shift an economy from within its production possibilities frontier to the curve itself
		A)	Putting previously idle resources to use
		B)	Allocative efficiency
		C)	An advancement in technology
		D)	Consumer spending

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