Study Guides (248,122)
Canada (121,330)
Economics (344)
Prof (10)

chapter 22-1.doc

33 Pages
60 Views
Unlock Document

Department
Economics
Course
Economics 1022A/B
Professor
Prof
Semester
Winter

Description
Economics: Canada in the Global Environment, 7e (Parkin) Chapter 22 Economic Growth 22.1 The Basics of Economic Growth 1) Economic growth is A) a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period. B) a sustained expansion of consumption expenditure over a given period. C) always accompanied by a rising price level. D) equal to real GDP per capita multiplied by 70. E) a sustained expansion of production possibilities measured as the increase in real GDP over a given period. Answer: E Diff: 2 Topic: The Basics of Economic Growth Skill: Recognition AACSB: Reflective Thinking 2) In 2008, Armenia had real GDP of $4.21 billion and a population of 2.98 million. In 2009, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate in 2009? A) 0.38 percent B) 3.8 percent C) 8.3 percent D) 9.0 percent E) 11.1 percent Answer: D Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 3) In 2008, Armenia had real GDP of $4.21 billion and a population of 2.98 million. In 2009, real GDP was $4.59 billion and population was 2.97 million. Between 2008 and 2009, Armenia's standard of living ________. A) increased B) decreased C) did not change D) might have increased, decreased, or remained unchanged E) doubled. Answer: A Topic: The Basics of Economic Growth Skill: Conceptual AACSB: Analytical Skills 1 © 2010 Pearson Education Canada 4) In 2008, Armenia had real GDP of $4.21 billion and a population of 2.98 million. In 2009, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2009 was A) $1,545. B) $380. C) $1,413. D) $132. E) $1.41. Answer: A Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 5) During 2009, the country of Economia had real GDP of $115 billion and the population was 0.9 billion. In 2008, real GDP was $105 billion and the population was 0.85 billion. In 2009, real GDP per person was A) $124. B) $135. C) $117. D) $12,778. E) $128. Answer: E Diff: 2 Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 6) During 2009, the country of Economia had real GDP of $115 billion and the population was 0.9 billion. In 2008, real GDP was $105 billion and the population was 0.85 billion. In 2008, real GDP per person was A) $128. B) $124. C) $135. D) $117. E) $1,235. Answer: B Diff: 2 Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 2 © 2010 Pearson Education Canada 7) Suppose a country's population grows by 2 percent a year and, at the same time, its real GDP grows by 5 percent a year. Real GDP per person is increasing by ________ a year. A) 2 percent B) 5 percent C) 10 percent D) 16 percent E) 3 percent Answer: E Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 8) The Rule of 70 is used to A) estimate how much of an economy's growth rate is attributable to increases in capital per hour of labour. B) calculate the standard of living. C) calculate the economy's growth rate. D) estimate how long it will take the level of any variable to double. E) estimate how much of an economy's growth rate is attributable to technological advance. Answer: D Topic: The Basics of Economic Growth Skill: Recognition AACSB: Reflective Thinking 9) Using the Rule of 70, if the country of Flowerdom's current growth rate of real GDP per person is 7 percent a year, how long will it take the country's real GDP per person to double? A) 1 year B) 2 years C) 10 years D) 49 years E) 7 years Answer: C Diff: 2 Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 3 © 2010 Pearson Education Canada 10) Using the Rule of 70, if the country of Flowerdom's current growth rate of real GDP per person is 10 percent a year, how long will it take the country's real GDP per person to double? A) 0.7 years B) 1 year C) 10 years D) 49 years E) 7 years Answer: E Diff: 2 Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 11) Slowdonia's current growth rate of real GDP per person is 2 percent a year. How long will it take to double real GDP per person? A) half a year B) approximately 10 years C) 28.6 years D) 35 years E) 2 years Answer: D Diff: 3 Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 12) Slowdonia's current growth rate of real GDP per person is 1 percent a year. How long will it take to double real GDP per person? A) 10 years B) 35 years C) 70 years D) 100 years E) Real GDP per person will never double Answer: C Diff: 3 Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 4 © 2010 Pearson Education Canada 13) If real GDP per person is growing at 4 percent per year, it will double in A) 17.5 years. B) 25 years. C) 4 years. D) 8 years. E) 56 years. Answer: A Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 14) Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million? A) 14 B) 7 C) 4 D) 30 E) 3.5 years Answer: A Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 15) Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap? A) in 2 years B) in 15 years C) never D) in 10 years E) in 7 years Answer: B Topic: The Basics of Economic Growth Skill: Analytical AACSB: Analytical Skills 16) Growthland's real GDP per capita was $112 billion in 2009 and $117 billion in 2010. What is the growth rate of Growthland's real GDP per capita? A) 4.3% B) 4.5% C) 5% D) 12% E) 17% Answer: B Topic: The Basics of Economic Growth Source: Study Guide 5 © 2010 Pearson Education Canada 22.2 Economic Growth Trends 1) In which of the following decades did Canada experience the slowest economic growth? A) 1960s B) 1970s C) 1980s D) 1940s E) 1990s Answer: C Diff: 2 Topic: Economic Growth Trends 2) Canada's economic growth rate was highest in which of the following decades? A) the 1930s B) the 1960s C) the 1970s D) the 1980s E) the 1990s Answer: B Diff: 2 Topic: Economic Growth Trends Source: Study Guide 3) Which of the following statements about Canada's long-term growth trends is false? A) Economic growth rates have been steady, except for the business cycle. B) Economic growth rates show periods of slow and high growth. C) Economic growth rates were faster in the 1990s than in the 1980s. D) Economic growth rates have generally been faster in Japan than in Canada. E) African countries have fallen further behind Canada in recent years. Answer: A Topic: Economic Growth Trends Source: Study Guide 4) Between 1926 and 2007 real GDP per person in Canada grew at an average rate of A) 2.8 percent a year. B) 1.7 percent a year. C) 2.1 percent a year. D) 3.6 percent a year. E) 4.3 percent a year. Answer: C Diff: 3 Topic: Economic Growth Trends 6 © 2010 Pearson Education Canada 5) Compared to growth in other countries, between 1960 and 2007 Canada A) fell behind most other countries. B) dramatically caught up to and passed other countries. C) worsened dramatically versus the United States, but did better versus other countries. D) did as well or better than most countries except certain Asian countries. E) did none of the above. Answer: D Topic: Economic Growth Trends Source: Study Guide 6) Between 1990 and 2008, the gap between real GDP per person in Canada and real GDP per person in Japan ________. A) remained the same B) widened C) was equal to the gap between real GDP per person in the United States and real GDP per person in Japan D) narrowed E) none of the above Answer: B Topic: Economic Growth Trends Source: MyEconLab 7) Between 1926 and 2007, the average growth rate of real GDP per person in Canada was ________ percent a year. During this period, ________ grew at a faster rate than ________. A) 2.1; GDP; the population B) 2.1; real GDP; the population C) 1.1; inflation; real GDP D) 3.1; the population; real GDP E) 3.1; inflation; real GDP Answer: B Topic: Economic Growth Trends Source: MyEconLab 8) Convergence between real GDP per person in Canada and Japan was relatively ________ during the 1960s; convergence has recently been ________. A) slow; increasing B) rapid; decreasing C) rapid; increasing at an even faster rate D) slow; decreasing E) rapidly; continuing at the 1960s pace Answer: B Topic: Economic Growth Trends Source: MyEconLab 7 © 2010 Pearson Education Canada 9) The gap between real GDP per person in Canada and Hong Kong has ________ since 1960. During this period, the growth rate of real GDP per person in Canada has been ________ than in Hong Kong. A) reversed; faster B) increased; faster C) remained constant; equal D) reversed; slower E) decreased; faster Answer: D Topic: Economic Growth Trends Source: MyEconLab 10) Between 1960 and 2008, growth rates in real GDP per person in Hong Kong, Korea, Singapore, Taiwan, and China ________ the growth rate of real GDP per person in Canada. China's real GDP per person today is approximately equal to real GDP per person in Hong Kong in ________. A) exceeded; 1998 B) were less than; 1988 C) were less than; 1978 D) exceeded; 1968 E) were approximately equal to; 1968 Answer: D Topic: Economic Growth Trends Source: MyEconLab 22.3 How Potential GDP Grows 1) An increase in labour hours will lead to A) an upward shift of the aggregate production function. B) a movement along the aggregate production function. C) both a movement along and an upward shift of the aggregate production function. D) neither a movement along nor a shift of the aggregate production function. E) a downward shift of the aggregate production function. Answer: B Topic: How Potential GDP Grows Skill: Conceptual AACSB: Reflective Thinking 8 © 2010 Pearson Education Canada 2) The aggregate production function is graphed as A) a downward-sloping curve. B) an upward-sloping straight line. C) an upward-sloping line that becomes flatter as the quantity of labour increases. D) an upward-sloping line that becomes steeper as the quantity of labour increases. E) a production possibilities frontier. Answer: C Topic: How Potential GDP Grows Skill: Recognition AACSB: Reflective Thinking 3) The decreasing slope of the aggregate production function reflects A) diminishing returns. B) rising unemployment. C) decreasing costs. D) increasing aggregate demand. E) a decrease in potential GDP. Answer: A Topic: How Potential GDP Grows Skill: Conceptual AACSB: Reflective Thinking 4) According to the law of diminishing returns, along the aggregate production function an additional unit of A) capital produces more output than an additional unit of labour. B) labour decreases output. C) labour produces more output than the previous unit. D) labour produces less output than the previous unit. E) labour increases the real wage rate. Answer: D Topic: How Potential GDP Grows Skill: Recognition AACSB: Reflective Thinking 9 © 2010 Pearson Education Canada Use the figure below to answer the following question. Figure 22.3.1 5) Refer to Figure 22.3.1. The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will A) move to point such as Y. B) remain at point W. C) move to point such as X. D) move to point such as Z. E) either remain at point W or move to point X. Answer: C Topic: How Potential GDP Grows Skill: Conceptual AACSB: Analytical Skills 6) If the money wage rate is $15.00 an hour and the price level is 120, the real wage rate is A) $8.50 an hour. B) $10.75 an hour. C) $12.50 an hour. D) $15.00 an hour. E) $18 an hour. Answer: C Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 10 © 2010 Pearson Education Canada 7) If the money wage rate is $10.00 an hour and the price level is 60, the real wage rate is A) $16.67 an hour. B) $18.75 an hour. C) $10.00 an hour. D) $12.50 an hour. E) $6.00 an hour. Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 8) If the real wage rate is $10.00 an hour and the price level is 60, the money wage rate is A) $16.75 an hour. B) $18.50 an hour. C) $10.00 an hour. D) $6.00 an hour. E) $16.67 an hour. Answer: D Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 9) When the quantity of labour demanded exceeds the quantity of labour supplied, the real wage rate A) rises to eliminate the labour market shortage. B) falls to eliminate the labour market surplus. C) rises to eliminate the labour market surplus. D) falls to eliminate the labour market shortage. E) does not change but the money wage rate rises to eliminate the labour market shortage. Answer: A Topic: How Potential GDP Grows Skill: Conceptual AACSB: Reflective Thinking 10) In the labour market, an increase in labour productivity ________ the real wage rate and ________ the level of employment. A) raises; increases B) raises; decreases C) lowers; increases D) lowers; decreases E) raises; does not change Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 11 © 2010 Pearson Education Canada Use the figure below to answer the following questions. Figure 22.3.2 11) Refer to Figure 22.3.2. The equilibrium real wage rate is A) $10 an hour. B) $15 an hour. C) $20 an hour. D) any wage rate above $15 an hour. E) any wage rate below $15 an hour. Answer: B Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 12) Refer to Figure 22.3.2. The equilibrium quantity of labour is A) 100 billion hours. B) 150 billion hours. C) 200 billion hours. D) 50 billion hours. E) 250 billion hours. Answer: B Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 12 © 2010 Pearson Education Canada 13) Refer to Figure 22.3.2. If the real wage is $20 an hour, a labour A) shortage will occur and the real wage will rise. B) shortage will occur and the real wage will fall. C) surplus will occur and the real wage will rise. D) surplus will occur and the real wage will fall. E) surplus will occur and the demand for labour will increase. Answer: D Topic: How Potential GDP Grows 14) When the population increases with no change in labour productivity, employment ________ and potential GDP ________. A) decreases; decreases B) increases; increases C) decreases; increases D) increases; decreases E) increases; does not change Answer: B Topic: How Potential GDP Grows Skill: Analytical AACSB: Reflective Thinking 13 © 2010 Pearson Education Canada Use the table below to answer the following questions. Table 22.3.1 Real wage rate Quantity of labourQuantity of labour (2002 dollars per demanded supplied hour) (billions of hours (billions of hours per year) per year) 15 70 10 20 60 20 25 50 30 30 40 40 35 30 50 Real GDP Quantity of labour (trillions of 2002 (billions of hours dollars per year) per year) 3 20 9 30 14 40 18 50 21 60 15) Refer to Table 22.3.1. The tables show the labour market and the aggregate production function schedule for the country of Pickett. Potential GDP is ________. A) $40 trillion B) $6 trillion C) $14 trillion D) $25 trillion E) $9 trillion Answer: C Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 16) Refer to Table 22.3.1. The tables show the labour market and the production function schedule for the country of Pickett. An increase in population changes the quantity of labour supplied by 20 billion hours at each real wage rate. Potential GDP ________. A) does not change. B) decreases to $3 trillion. C) increases to $50 trillion. D) increases to $18 trillion. E) increases to $20 trillion. Answer: D Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 14 © 2010 Pearson Education Canada 17) Labour productivity is A) real GDP per hour of labour times the hours of work. B) real GDP per hour of labour times the population. C) the quantity of real GDP produced by an hour of labour. D) the rate of change in real GDP per hour of labour. E) none of the above. Answer: C Topic: How Potential GDP Grows Skill: Recognition AACSB: Reflective Thinking 18) If real GDP is $800 million and aggregate labour hours are 20 million, labour productivity is ________. A) $40 an hour B) $16,000 million C) $40 million D) $160 an hour E) $16 an hour Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 19) If real GDP is $12,150 billion and aggregate labour hours are 270 billion, labour productivity equals A) $6.50 an hour. B) $45 an hour. C) $48 an hour. D) $650 an hour. E) $32.81 an hour. Answer: B Diff: 3 Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 15 © 2010 Pearson Education Canada 20) When labour productivity increases, the demand for labour curve ________ and the supply of labour curve ________. A) shifts rightward; shifts rightward B) shifts rightward; does not shift C) shifts leftward; shifts rightward D) shifts leftward; does not shift E) shifts rightward; shifts leftward Answer: B Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 21) An increase in labour productivity ________ the real wage rate and an increase in population ________ the real wage rate. A) raises; lowers B) raises; raises C) lowers; lowers D) lowers; raises E) raises; does not change Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 22) An increase in population results in A) an upward shift in the production function. B) a movement along the production function. C) a leftward shift of the labour supply curve. D) a rightward shift of the labour demand curve. E) both B and D are correct. Answer: B Diff: 3 Topic: How Potential GDP Grows Skill: Conceptual AACSB: Analytical Skills 23) If the population increases, then potential GDP ________, employment ________, and ________ potential GDP per hour of labour. A) increases; increases; decreases B) increases; decreases; decreases C) decreases; increases; increases D) decreases; decreases; decreases E) increases; increases; increases Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 16 © 2010 Pearson Education Canada 24) If new capital increases labour productivity, the supply of labour ________ and the demand for labour ________. A) stays the same; increases B) increases; increases C) increases; decreases D) decreases; stays the same E) increases; stays the same Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Reflective Thinking Use the figure below to answer the following question. Figure 22.3.3 25) Refer to Figure 22.3.3. As a result of the rightward shift in the demand curve for labour from LD 0o LD , 1he equilibrium level of employment ________, potential GDP ________, and potential GDP per hour of labour ________. A) increases; increases; increases B) increases; decreases; increases C) decreases; increases; decreases D) decreases; decreases; decreases E) increases; increases; decreases Answer: A Topic: How Potential GDP Grows Skill: Analytical AACSB: Analytical Skills 17 © 2010 Pearson Education Canada 26) Ceteris paribus, an increase in labour productivity results in a A) higher real wage rate and higher potential GDP per hour of labour. B) lower real wage rate and higher potential GDP per hour of labour. C) higher real wage rate and lower potential GDP per hour of labour. D) lower real wage rate and lower potential GDP per hour of labour. E) constant real wage rate in the long run. Answer: A Topic: How Potential GDP Grows Source: Study Guide 27) Ceteris paribus, an increase in population results in a A) higher level of labour employed and higher potential GDP per hour of labour. B) lower level of labour employed and higher potential GDP per hour of labour. C) higher level of labour employed and lower potential GDP per hour of labour. D) lower level of labour employed and lower potential GDP per hour of labour. E) constant level of labour employed and constant potential GDP per hour of labour. Answer: C Topic: How Potential GDP Grows Source: Study Guide 22.4 Why Labour Productivity Grows 1) Labour productivity grows as A) consumption expenditure increases. B) depreciation increases. C) physical capital grows. D) human capital grows. E) both C and D are correct. Answer: E Topic: Why Labour Productivity Grows Skill: Conceptual AACSB: Reflective Thinking 2) If capital per hour of labour increases, labour productivity A) decreases for a given level of technology. B) increases because the level of technology increases. C) increases for a given level of technology. D) decreases because the level of technology decreases
More Less

Related notes for Economics 1022A/B

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit