Name: __________________________ Date: _____________
Use the following to answer questions 1-2:
Use the following list to answer the following questions:
1. Improvements in technology
2. Increases in the supply (stock) of capital goods
3. Purchases of rising output.
4. Obtaining the optimal combination of goods, each at least-cost production
5. Increases in the quantity and quality of natural resources
6. Increases in the quantity and quality of human resources
1. Refer to the above list. As distinct from the demand and efficiency factors of economic
growth, the supply factors of economic growth are:
A) 2, 5, and 6 only.
B) 2, 4, 5, and 6 only.
C) 1, 2, 5, and 6 only.
D) 1, 3, 4 only.
2. Refer to the above list. As distinct from the supply factors and efficiency factor of
economic growth, the demand factor of economic growth is:
A) 1 only.
B) 4 only.
C) 1 and 3 only.
D) 3 only.
3. Which of the following is not a supply factor in economic growth?
A) the stock of capital
B) technological advance
C) the size and quality of the labor force
D) aggregate expenditures
4. The achievement of full employment through time will:
A) diminish labor productivity.
B) reduce the level of investment as a percentage of GDP.
C) increase the realized rate of economic growth.
D) have no impact on the rate of economic growth.
Use the following to answer questions 5-6:
0 D 0 Q2
Consumer goods Real GDP
5. Curve AB is a:
A) production possibilities curve and curve X is a long-run aggregate supply curve.
B) consumer demand curve and curve X is a long-run aggregate supply curve.
C) long-run aggregate supply curve and Y is potential real GDP curve.
D) long-run aggregate supply curve and X is a production possibilities curve.
6. Refer to the above graphs. Growth of production capacity is shown by:
A) the shift from AB to CD only.
B) the shift from X to Y only.
C) both the shift from AB to CD and the shift from X to Y.
D) both the shift from AB to CD and the shift from Y to X.
7. Labor productivity is defined as:
A) total output/worker-hours.
B) nominal GDP minus real GDP.
C) the ratio of real capital to worker-hours.
D) the annual increase in nominal GDP per worker.
8. Suppose total output (real GDP) is $4000 and labor productivity is 8. We can conclude
A) real GDP per capita must be $500.
B) the price-level index must be greater than 100.
C) nominal GDP must be $500.
D) the number of worker-hours must be 500.
Use the following to answer questions 9-10:
9. Refer to the above diagram. The shifts in long-run and short-run aggregate supply
curves from AS1 and AS'1 to AS2 and AS'2 would most likely result from:
A) an increase in the price level.
B) a reduction in aggregate demand.
C) an improvement in technology.
D) deterioration of the infrastructure.
10. Refer to the above diagram. Suppose that in a specific year the long-run and short-run
aggregate supply curves shift from AS1 and AS'1 to AS2 and AS'2. If the aggregate
demand curve also shifts rightward from AD1 to AD2, the rates of economic growth
and inflation for the year will be:
A) 4 percent each.
B) 6 percent and 5 percent, respectively.
C) 8 percent and 3 percent, respectively.
D) 5 percent and 8 percent, respectively.
11. In the aggregate demand-aggregate supply model, economic growth is represented by a:
A) leftward shift of the long-run aggregate supply curve.
B) leftward shift of the aggregate demand curve.
C) rightward shift of the long-run aggregate supply curve.
D) rightward shift of the short-run aggregate supply curve resulting from a decline in
the price level.
12. The largest contributor to increases in the productivity of American labor is:
A) the reallocation of labor from agriculture to manufacturing.
B) improvements in labor quality.
C) increases in the quantity of capital.
D) technological advance.
13. The view that the trend rate of U.S. productivity growth accelerated between 1995 and
2002 is closely associated with the:
A) idea of the New Economy.
B) distinction between short-run and long-run aggregate supply.
C) idea of the invisible hand.
D) theory of comparative advantage.
14. All of the following are sources of increasing returns and economies of scale except:
A) network effects.
B) spreading of development costs.
C) more specialized inputs.
D) coordination problems in large organizations.
15. The fundamental invention underpinning the New Economy is the:
B) fuel cell.
D) personal computer.
16. The claim that innovations in information technology, together with global capitalism,
are leading to a long-term increase in U.S. productivity growth is known as the:
A) rational expectations theory.
B) theory of creative destruction.
C) new-Keynesian perspective.
D) New Economy view.
17. Proponents of economic growth say that pollution:
A) is an inevitable by-product of growth.
B) occurs, not because of growth, but because common properties are treated as free
C) declines as a country moves from agriculture to industry.
D) is detrimental to economic growth.
18. Critics of economic growth:
A) contend that growth and industrialization reduce pollution.
B) argue that economic growth does not resolve socioeconomic problems such as
C) point out that growth results in greater economic security for workers.
D) say that its benefits accrue nearly exclusively to white males.