Unit 7 Answers
• 1. During the last two centuries, the average rate of growth
of GDP per capita in the leading industrialized countries has
averaged about _________ per year.
•
• A. 2%
• B. 12%
• C. 22%
• D. 32%
•
• Answer: A
•
• 2. _____________________ is a term which refers to the widespread
use of power-driven machinery and the economic and social
changes that resulted in the first half of the 1800s.
•
• A. GDP per capita
• B. The Industrial Revolution
• C. The living standard
• D. Investment and inventions
•
• Answer: B
• 3. To achieve a high standard of living, a nation should:
•
• A. increase the tax deduction for child dependents.
• B. promote economic growth.
• C. use less capital and more labor in the production
process.
• D. increase welfare payments to the poor.
•
• Answer: B
• 4. In the long run, the most important source of increase
in a nation's standard of living is a:
•
• A. zero rate of population growth
• B. high rate of economic growth.
• C. high rate of consumption.
• D. high rate of labor force growth.
•
• Answer: B
• 5. In macroeconomics, the connection from inputs to
outputs for the entire economy is called _______________.
•
• A. a production function
• B. an aggregate production function
• C. human capital
• D. physical capital
•
• Answer: B
•
• 6. The value of what is produced per worker, or per hour
worked, is called ____________.
•
• A. economic growth
• B. human capital
• C. productivity
• D. GDP per capita
•
• Answer: C
• 7. When society has a higher level of capital per person,
it is called ______________.
•
• A. physical capital
• B. human capital
• C. capital deepening
• D. technological gains
•
• Answer: C
• 8. A nation can achieve higher economic growth if:
•
• A. it devotes more resources to research and develop-
ment.
• B. the productivity of labor declines
• C. taxes are imposed on investment in capital.
• D. more resources are allocated to consumption goods.
•
• Answer: A
•
• 9. _________ is output per hour in the business sector.
•
• A. Net exports
• B. Productivity
• C. Investment
• D. GDP per capita
•
• Answer: B
•
• 10. Assuming a country's economy maintains an 8% rate of growth, young
adults starting at age 20 would see the average standard of living in their
country more than double by the time they had reached age __________.
•
•
• A. 30
• B. 40
• C. 50
• D. 60
•
• Answer: A
• 11. When discussing economic growth, it is often useful to focus on
____________, to avoid studying changes in the size of GDP that repre-
sent only having more people in the economy, and focus on those in-
creases in GDP which represent an actual rise in the standard of living
on a per person basis.
•
• A. economic growth
• B. GDP per capita
• C. living standards
• D. consumption and expenditures
•
• Answer: B
•
• 12. Of the world’s population of 6.7 billion people, _________
are scraping by on incomes that average less than $2 per day.
•
• A. 260 million
• B. 2.6 billion
• C. 5 billion
• D. 6.2 billion
•
• Answer: C
• 13. Which of the following is correct?
•
• A. An increase in the quantity of labor always leads to economic
growth.
• B. Increased education adds to the stock of human capital, not
unlike building factories adds to the stock of physical capital.
• C. A decrease in the productivity of labor leads to economic
growth.
• D. Third World countries are rich in human capital.
•
• Answer: B
• 14. Investment in human capital:
•
• A. is of minor importance to economic growth.
• B. can be acquired through on-the-job training.
• C. is an important source of economic growth.
• D. is characterized by both B) and C).
•
• Answer: D
•
• 15. Economists typically measure economic growth by track-
ing:
•
• A. the employment rate.
• B. the unemployment rate.
• C. averaged GDP growth
• D. real GDP per capita.
•
• Answer: D