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Productivity and Growth

I would really appreciate any help that I can get with the following questions.

1. Which of the following statements regarding Gross Domestic Product is not true?
a. It is a stock variable.
b. It is measured for a particular time period, usually one year.
c. It is perhaps the most effective means of viewing the same
economy over time
d. It is a measure of the economy's performance

2. Long-term growth in production can be partially explained by
a. trade surpluses that lead to accumulations of precious metals
b. a gradual but consistent increase in the price level
c. general optimism about the future and the pioneering spirit of
America
d. improvements in technology

3. Which of the following explains why the aggregate demand curve slopes downward?
a. If the price level increases, we feel poorer and therefore buy
less.
b. If the price level increases, we feel richer and therefore buy
more.
c. If domestic prices increase, we substitute domestic goods for
imported ones.
d. If the price of a particular good increases, we substitute
away from that good.

4. Adam Smith's "invisible hand" explains
a. why people act in their own best interests
b. why the government intervenes to overcome failures in private
markets.
c. how people, acting out of self-interest, unintentionally
promote the general good
d. how comparative advantage and specialization promote
international trade

5. According to Keynes, in order to get the economy out of a recession, the government should
a. plan for a budget deficit
b. encourage firms to export to other nations, thereby jump-
starting the economy
c. follow an expansionary monetary policy
d. follow a contractionary monetary policy

6. The difference between human capital and physical capital is that
a. human capital is used by humans whereas physical capital is
not
b. only human capital increases labor productivity
c. human capital is not physical; an example of human capital is
education
d. physical capital requires investment, whereas human capital
does not

7. An improvement in the quality of capital would
a. rotate the per-worker production function upward
b. make the per-worker production function flatter
c. shift the per-worker production function downward
d. rotate the per-worker production function downward

8. The rules of the game refer to
a. any factor that facilitates production and exchange
b. a gradual but consistent change in the price level until a
fair price is attained
c. the set of election laws that ensure that all votes are
counted in every election
d. the requirements place on firms earning a profit

9. Which of the following best describes the impact of technological change on labor?
a. It causes unemployment in the short run and lower incomes in
the long run
b. It causes unemployment in the short run and higher incomes in
the long run.
c. It causes unemployment in the long run and higher incomes in
the short run.
d. It causes unemployment in the long run and lower incomes in
the short run.

10. An increase in the amount of capital per worker is called
a. capital deepening
b. marginal capital
c. per-worker production function
d. human capital

Solution Preview

1. Which of the following statements regarding Gross Domestic Product is not true?
a. It is a stock variable.

Stock variables are measurements at a specific point in time. Variables such as GDP are called flow variables because they tell us the value over a specific timeframe.

2. Long-term growth in production can be partially explained by

d. improvements in technology

3. Which of the following explains why the aggregate demand curve slopes downward?

c. If domestic prices increase, we substitute domestic goods for
imported ...

Solution Summary

Multiple choice questions concerning growth, aggregate demand, and human capital

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