Economics Module 11

Question 1

Each of the following can increase the amount of spending in the economy. Which of them does not represent an outward shift in the PPF?

Answer 1

A decrease in unemployment

Question 2

Which of the following would not increase real GDP per capita?

Answer 2

Population growth

Question 3

Suppose that the demand for physical capital in the U.S. increased (recall that we introduced this demand in Chapter 17). What impact would this have on interest rates and on the amount of saving in the economy?

Answer 3

Interest rates would increase and savings would increase.

Question 4

In the previous question, what would be the impact on productivity?

Answer 4

Productivity would increase.

Question 5

Which of the following policies would not help us to have faster technological growth?

Answer 5

All of the above would help to generate faster technological growth

Question 6

Facebook had sales of $17.93 billion in 2015 and $27.64 billion in 2016. Calculate the growth in Facebook sales.

Answer 6

54.16%

Question 7

Interest rates jumped from 6 percent to 9 percent. Select the best answer.

Answer 7

B and C are correct.

Question 8

In a certain country in 1980, 40 percent of the population smoked, and in 1990 only 30 percent smoked. What is the percentage point change in smoking over that time period?

Answer 8

-10

Question 9

In a certain country in 1980, 40 percent of the population smoked, and in 1990 only 30 percent smoked. What is the percentage change in smoking over that time period?

Answer 9

-25%

Question 10

The meaning of economic growth to an economist is best described in which of the following options?

Answer 10

A shift outward in the production possibilities frontier

Question 11

Which of the following options will be most likely to help real GDP per capita grow in the long run?

Answer 11

Research and development of new technology

Question 12

A 401k is a retirement plan that provides tax benefits intended to encourage people to save for retirement. Suppose that the U.S. removed the tax benefit associated with 401k plans. Which determinant of productivity growth would be impacted by this policy?

Answer 12

Physical capital

Question 13

Suppose that a developing country successfully implements reforms to decrease corruption in the court system. Which determinant of economic growth will this impact most directly?

Answer 13

Physical capital

Question 14

If the economy is on the production possibilities frontier, which of the following might allow the economy to increase its capacity?

Answer 14

Decrease exports

Question 15

Changes in which of the following is most responsible for the slower economic growth in the period from 1973 to now as compared to 1960 to 1973?

Answer 15

Technology

Question 16

Which determinant of productivity can help to explain the slowdown in growth since 2008, but not the slowdown from 1973 to 1995?

Answer 16

Capital

Question 17

Which factor best explains changes in the productivity of U.S. workers since 1960?

Answer 17

Output per hour

Question 18

Given the following policies, which is most likely to increase economic growth in the long run? Consider only the direct effects.

Answer 18

Increase education spending

Question 19

Suppose the U.S. government increased its spending on infrastructure and paid for this increased spending with a tax on consumption. How would this policy affect economic growth?

Answer 19

Increase economic growth

Question 20

Suppose that the U.S. government began to pay for a portion of everyone’s college education, and it paid for this by increasing taxes on business investment. How would this policy affect economic growth?

Answer 20

We cannot tell

Question 21

Which of the following will contribute to an increase in real GDP in a year, assuming that the nation is at full employment? ​[Will students know why increases in consumption or government spending are not the answers? I get short-run, long-run, but the question says in a year, so that seems pretty short-run to me, in macro terms]

Answer 21

An increase in productivity.

Question 22

What effect will increased spending have on real GDP if the country is already at full employment?

Answer 22

An increase in spending will only raise real GDP slightly because it will only increase production for a very short period of time.

Question 23

Which of the following will contribute to an increase in real GDP in 10 years, assuming the economy is at full employment?

Answer 23

An increase in productivity.

Question 24

How does productivity cause changes in real GDP? ​[Again, this answers the first question. ]

Answer 24

Expanded productivity increases real output, thus increasing real GDP.

Question 25

Which of the following could increase productivity? Select all that apply.

Answer 25

a
New technology
c
Increased capital
d
Increased skills in the workforce

Question 26

Suppose the government creates an extra tax break for people who save more of their income. Will this increase growth, and how?

Answer 26

It will increase growth by increasing physical capital.

Question 27

Suppose the government increases public funding for employers to provide worker training. Will this increase growth, and how?

Answer 27

It will increase growth by increasing human capital.

Question 28

Suppose that the government decreases the sales tax. How will this impact growth?

Answer 28

All of the above:

It will decrease growth by decreasing physical capital.

It will decrease growth by decreasing human capital.

It will decrease growth by hindering technology growth.