 |
1 | |
The upward-sloping aggregate supply curve for an economy shows: |
|
| | A) | A negative relationship between the inflation level and the level aggregate output. |
| | B) | The amount of aggregate output that firms are able to supply at each inflation level falls as the level rises. |
| | C) | When wages are completely flexible, aggregate supply is positively related to the inflation level. |
| | D) | There is some quantity of real output that firms are willing and able to produce and offer at each inflation level. |
|
2 | |
According to the classical model, the long-run aggregate supply schedule: |
|
| | A) | Is highly sensitive to changes in the general price level. |
| | B) | Shows that aggregate supply in the long-run is equal to the economy's full employment potential output. |
| | C) | Shows a positive relationship between the price level and the level of aggregate real output. |
| | D) | Shows that regardless of the level of aggregate output, there is some equilibrium price level. |
|
3 | |
Which one of the following will cause a decrease in aggregate supply? |
|
| | A) | The marginal tax rates fall |
| | B) | The level of government spending increases |
| | C) | The overall level of labour productivity falls |
| | D) | The level of private investment spending rises |
|
4 | |
Classical economics promotes the theory that: |
|
| | A) | In the short run, all markets are in equilibrium |
| | B) | The level of income is the primary determinant of the level of saving |
| | C) | Nominal wages and prices are completely flexible |
| | D) | Even in the long run, there can be unemployment |
|
5 | |
In the classical model, the long-run aggregate supply curve: |
|
| | A) | Is vertical and shows that long-run output is not determined by the inflation rate. |
| | B) | Is horizontal and shows that long-run output is sensitive to changes in the inflation rate. |
| | C) | Shows how aggregate output changes when the inflation rate changes. |
| | D) | Slopes up and to the right. |
|
6 | |
The statistic most frequently used by economists to measure economic growth is the change in: |
|
| | A) | Real per capita GNP |
| | B) | Individual life expectancy |
| | C) | Real GDP |
| | D) | None of the above |
|
7 | |
Which one of the following statements is false? |
|
| | A) | As investment in human capital improves the quality and productivity of labour, labour produces less output per worker. |
| | B) | Human capital is defined as skills and knowledge embodied in workers. |
| | C) | Formal education and on-the-job training are two methods of increasing the stock of human capital. |
| | D) | Per capita output over the last 100 years has increased, in part, because of investment in human capital. |
|
8 | |
Which one of the following would not necessarily increase a country's productivity? |
|
| | A) | An increase in the country's stock of capital goods |
| | B) | An improvement in managerial techniques |
| | C) | An increase in the country's population |
| | D) | Increases in the country's investment in human capital |
|
9 | |
A steady state growth path is when: |
|
| | A) | The growth rate is always the same |
| | B) | Output, capital and labour grow at the same rate |
| | C) | Output per worker grows faster than capital per worker |
| | D) | Output per worker grows more slowly than capital per worker |
|
10 | |
Which one of the following is not likely to be a benefit of economic growth? |
|
| | A) | An improving environmental quality that results from increased industrialization |
| | B) | An increase in per capita income |
| | C) | Rising life expectancies |
| | D) | The ability to reduce poverty |
|
11 | |
According to the convergence hypothesis, all countries are destined eventually to reach more or less the same level of income. |
|
| | A) | TRUE |
| | B) | FALSE |
|
12 | |
The convergence hypothesis implies that countries with lower levels of income will grow fast as they catch up with the wealthier countries. |
|
| | A) | TRUE |
| | B) | FALSE |
|
13 | |
Endogenous growth theory assumes increasing returns to scale. |
|
| | A) | TRUE |
| | B) | FALSE |
|
14 | |
An increase in the economic growth rate of 0.25% is assumed to be unimportant. |
|
| | A) | TRUE |
| | B) | FALSE |
|
15 | |
An increase in investment will lead to higher long-term economic growth. |
|
| | A) | TRUE |
| | B) | FALSE |
|
16 | |
Full employment occurs within an economy when all markets are in _________. |
|
| | A) | Equilibrium |
| | B) | Surplus |
| | C) | Shortage |
| | D) | Disequilibrium |
|
17 | |
An increase in aggregate supply will lead to ________ inflation and ________ GDP. |
|
| | A) | Higher, higher |
| | B) | Lower, lower |
| | C) | Lower, higher |
| | D) | Higher, lower |
|
18 | |
Technical progress under neo classical growth models is assumed to be ________. |
|
| | A) | Slow |
| | B) | Fast |
| | C) | Planned |
| | D) | Random |
|
19 | |
An increase in long-run aggregate supply will be associated with an increase in _________. |
|
| | A) | Taxes |
| | B) | Average Costs |
| | C) | Production Possibility Frontier |
| | D) | Scarcity |
|
20 | |
Economic growth tackles the problem of ___________. |
|
| | A) | Scarcity |
| | B) | Shortages |
| | C) | Surpluses |
| | D) | Spending |