If national real GDP grows at twice the rate of population growth,

If national real GDP grows at twice the rate of population growth,
 a. c and e.
  b. eventually there will be too much GDP.
  c. per real capita GDP will double each year.
  d. per real capita GDP will be reduced by half each year.
  e. per real capita GDP growth will double each year.

QUESTION 2

In the self-correcting AD-AS model, the economy's short-run equilibrium position is indicated by the intersection of which two curves?
 a. Short-run aggregate supply and long-run aggregate supply.
 b. Short-run aggregate supply and aggregate demand.
 c. Long-run aggregate supply and aggregate demand.
 d. Long-run aggregate demand and short-run personal consumption expenditures curve.
  e. Short-run aggregate demand and long-run personal consumption expenditures curve.

QUESTION 3

A bank creates money when it:
 a. gets new checkable deposits which the depositor formerly held as cash.
  b. has a loan paid off, which creates excess reserves for the bank.
  c. makes a loan from its excess reserves.
  d. holds back excess reserves because of an increase in the required reserve ratio.
  e. gets more excess reserves because of a decrease in the required reserve ratio.

QUESTION 4

Which of the following statements draws a false conclusion?
 a. Life expectancy in an average African country is lower than in an average European country; therefore Europeans can expect to outlive Africans.
  b. Nations that currently produce no capital goods, and whose inhabitants are hungry, risk famine with internally funded capital investments.
  c. Some African nations have substantially more food and capital investment than others; therefore, their standard of living is higher.
  d. Population reduction policies, if effective, can improve the nation's wealth by increasing real per capita GDP.
  e. The vicious circle of poverty argument states that poverty precludes capital investment and that no capital investment perpetuates poverty.

QUESTION 5

In long-run full-employment equilibrium, which of the following is true?
 a. The CPI equals AD equals the peak of the production function curve.
 b. The horizontal LRAS curve equals the intersection of the demand and supply curves inthe labor market.
 c. The CPI equals the aggregate production function at the equilibrium wage rates.
 d. The CPI equals AD equals SRAS equals LRAS.

QUESTION 6

Suppose a bank has checkable deposits of 100,000 and the required reserve ratio is 20 percent. If the bank currently has 100,000 in reserves, it could expand the money supply by as much as:
 a. 100,000.
  b. 400,000.
  c. 0.
  d. 20,000.
  e. 80,000.

QUESTION 7

If a nation remains poor over time, it could be that:
 a. c and e.
  b. d and e.
  c. the population growth rate is at least as much as the national GDP growth rate.
  d. the per capita real GDP growth rate is larger than the population growth rate.
  e. the national real GDP growth rate is lower than the population growth rate.

QUESTION 8

Long-run full-employment equilibrium assumes:
 a. a downward-sloping production function.
  b. a downward-sloping long-run supply curve (LRAS).
 c. the CPI index price level equals the equilibrium wage rate.
 d. the CPI equals aggregate demand (AD) equals short-run aggregate supply (SRAS) equals long-run aggregate supply (LRAS).