Economic growth is equal to:
a. total factor productivity plus amounts of resources.
b. growth in total factor productivity plus growth in amounts of resources.
c. total factor productivity minus marginal factor productivity.
d. real GDP plus national output.
e. GNP plus GDP.
Question 2Which of the following is the most important determinant of the elasticity of supply?
a. The number of uses for the product.
b. The number of close substitutes to the product available to consumers.
c. The amount of time producers have to adjust their behavior in response to a price change.
d. The percentage of their incomes consumers spend on the product.
Question 3When the economy is initially at full employment:
a. contractionary monetary policy can result in increased real output, but only in the short run.
b. contractionary monetary policy can result in increased real output in both the short run and long run.
c. contractionary monetary policy can result in decreased real output, but only in the short run.
d. contractionary monetary policy can result in decreased real output in both the short run and long run.
Question 4Suppose an economy grows by 2.5 percent, the labor force rises by 3 percent, and capital rises by 1 percent. If capital takes 50 percent of real GDP and labor takes the other 50 percent of real GDP, then the growth in total factor productivity must be _____.
a. 6.5
b. 4.5
c. 0.5
d. 6
e. 10
Question 5If the supply of good A is perfectly elastic, a decrease in demand will:
a. reduce the equilibrium quantity traded, but leave the price unchanged.
b. reduce the equilibrium quantity traded, and reduce the price.
c. reduce the equilibrium price, but leave the quantity traded unchanged.
d. reduce the equilibrium price traded, but increase the quantity traded.
Question 6Starting at full employment (RGDPNR),
a. expansionary monetary policy can potentially result in increased real output, but only in the short run.
b. expansionary monetary policy can potentially result in increased real output in both the short run and long run.
c. contractionary monetary policy can potentially result in increased real output, but only in the short run.
d. contractionary monetary policy can potentially result in increased real output in both the short run and long run.
Question 7Suppose that an economy grows by 4 percent, total factor productivity grows by 3 percent, and the labor force increases by 6 percent. If labor and capital are the only inputs and labor contributes 40 percent to GDP, then the stock of capital must have _____.
a. fallen by 5
b. fallen by 3.33
c. fallen by 2.33
d. risen by 3
e. risen by 1.8
Question 8If the income elasticity of demand for good A was 3.9 and the income elasticity of demand for B was 0.2:
a. Both good A and good B are normal.
b. Both good A and good B are inferior.
c. Good A is normal and good B is inferior.
d. Good A is inferior and good B is normal.
Question 9Other things equal, in an open economy, monetary policy to offset an inflationary gap will tend to
a. Lower the exchange value of the dollar and lower net exports.
b. Lower the exchange value of the dollar and raise net exports.
c. Raise the exchange value of the dollar and lower net exports.
d. Raise the exchange value of the dollar and raise net exports.
Question 10What is the growth in resources when total factor productivity grows by 3.5 percent and the economy grows by 2.7 percent?
a. 0.8
b. -2.7
c. 3.5
d. -0.8
e. 0.6
Question 11A positive income elasticity of demand for a good
a. means it is a substitute.
b. means it is a complement.
c. it is a normal good.
d. it is an inferior good.
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