A)

least; average

B)

most; highest

C)

least; highest

D)

most; lowest

2.

Which of the following is NOT a source of productivity growth?

A)

improvements in technology

B)

decreasing the capital-to-labor ratio

C)

increasing the quality of the labor force

D)

All of these are sources of productivity growth.

3.

In his essay on population, Malthus argued that any improvement in the standard of living would lead to:

A)

a decrease in the population that would lead to utopia.

B)

an increase in the population matched by an increase in the food supply.

C)

a decrease in the population matched by a decrease in the food supply.

D)

an increase in the population that would outstrip the growth in food supply.

4.

Which of the following resources is an example of infrastructure?

A)

coal mine

B)

newly drained swamp

C)

elementary school

D)

computer manufacturing plant

5.

Increases in ___________ often lead to economic growth.

A)

public goods

B)

government regulations

C)

capital

D)

money supply

6.

The Rule of 70 states that the number of years required for a value to double in size is:

A)

the growth rate divided by 70.

B)

70 divided by the growth rate.

C)

70.

D)

70 times the growth rate.

7.

If the Bureau of Economic Analysis reports that the annualized U.S. growth rate was 2.5% for the second quarter, then the actual growth rate from the first quarter to the second quarter was:

A)

10%.

B)

0.625%.

C)

2.5%.

D)

7.5%.

8.

An example of intangible infrastructure is:

A)

transportation networks.

B)

patent laws.

C)

power transmission lines.

D)

public education facilities.

9.

Developed nations tend to have:

A)

large amounts of both labor and capital.

B)

limited amounts of both labor and capital.

C)

limited labor supplies but lots of capital.

D)

low capital-to-labor ratios.

10.

Land and natural resources include:

A)

water and minerals that come from the earth.

B)

manufactured products that are used to produce other goods and services.

C)

the mental and physical talents of people.

D)

human capital.

11.

Which of the following occurrences is the key explanation for the high economic growth in the United States in the past century?

A)

technology improvements

B)

investment in human capital

C)

an increase in population

D)

increasing the capital-to-labor ratio

12.

Decreasing the accessibility to college in order to funnel workers into the workforce faster will:

A)

have no impact on the economy.

B)

increase real wages.

C)

decrease productivity of the economy.

D)

increase productivity of the economy.

13.

If technology is held constant, an increase in capital concurrent with a decrease in labor input causes output to:

A)

fall.

B)

rise, fall, or stay the same.

C)

stay the same.

D)

rise.

14.

The absence of well-defined and enforceable property rights often:

A)

inhibits investment because it is difficult to use capital as collateral.

B)

improves society because it avoids the selfish actions of private property owners.

C)

brings about efficiency.

D)

causes people to work together for the good of all.

15.

Joseph's Schumpeter's idea that waves of innovations lead to business cycles is called:

A)

innovative destruction.

B)

the upward spiral.

C)

creative destruction.

D)

the theory of technological business cycle.

16.

Which of the following increases productivity?

A)

large labor force

B)

increased skill in the labor force

C)

young labor force

D)

poorly educated labor force

17.

To have long-term economic growth, the production function suggests:

A)

increasing government oversight of business decisions.

B)

redistributing income from the wealthy to the poor.

C)

increasing the availability of technology, capital, and labor.

D)

keeping interest rates high to encourage saving.

18.

Because it consists of _____ items, a nation's infrastructure is difficult to measure.

A)

tangible and intangible

B)

only tangible

C)

A nation's infrastructure is not difficult to measure.

D)

only intangible

19.

In the United States, real GDP is measured by:

A)

the Congressional Budget Office.

B)

the National Bureau of Economic Research.

C)

the Bureau of Economic Analysis.

D)

the Federal Reserve.

20.

If an economy's GDP will double in 25 years, then its growth rate must be about:

A)

25%.

B)

2.5%.

C)

28%.

D)

2.8%.

21.

When the government enforces contracts between two parties, it is acting in its role to promote economic growth by:

A)

promoting free and competitive markets.

B)

ensuring a stable and secure financial system.

C)

ensuring a stable legal system.

D)

providing physical and human capital.

22.

Which of the following factors is NOT generally viewed by economists as critical to economic growth?

A)

stable monetary system

B)

economic freedom

C)

strong and fair legal system

D)

access to large amounts of natural resources

23.

A production function:

A)

shows the output that is most highly valued by consumers.

B)

shows the output that is produced using different combinations of inputs combined with existing technology.

C)

shows the most desired production method for a given level of output.

D)

shows the output that is produced using different combinations of technology combined with existing inputs.

24.

Creative destruction occurs when:

A)

the periodic emergence of innovation boosts the economy.

B)

firms plan for their products to become obsolete so that consumers will be forced to buy replacements.

C)

companies attempt to destroy the demand for their competitors' product.

D)

new technology is born out of the same theories that led to the old technology.

25.

Which of the following occurrences is NOT a source of productivity growth?

A)

improvements in technology

B)

increasing the quality of the labor force

C)

increasing the capital-to-labor ratio

D)

increasing the level of consumption spending

26.

The recent global financial instability:

A)

caused severe credit crunches.

B)

slowed down economic growth.

C)

harmed standards of living.

D)

All of the answers are correct.

27.

Which of the following statements about the role of social media in promoting economic growth is FALSE?

A)

The advent of social media raised costs for firms, which now must invest in Web pages and information gathering technology to stay competitive.

B)

Many people who used to get information about products from their local newspaper now access this information via social media.

C)

Social media allow firms to do more with fewer resources.

D)

Social media allow buyers and sellers to interact more seamlessly.

28.

When the government funds Head Start, it is acting in its role to promote economic growth by:

A)

ensuring a stable and secure financial system.

B)

ensuring a stable legal system.

C)

promoting free and competitive markets.

D)

enhancing physical and human capital.

29.

Investment in human capital is important because:

A)

it increases labor productivity.

B)

it improves morale.

C)

it lowers the total wage bill.

D)

humans need capital.

30.

The catch-up effect tends to:

A)

slow down over time.

B)

remain the same over time unless new technologies are developed.

C)

speed up over time.

D)

remain the same over time.

31.

The primary reason the U.S. standard of living is relatively _____ is that U.S. workers produce _____ than workers throughout most of the rest of the world.

A)

low; less

B)

low; more

C)

high; less

D)

high; more

32.

Because of the work of _____ during the late 18th and early 19th centuries, economics became known as the dismal science.

A)

John Maynard Keynes

B)

Alfred Marshall

C)

Thomas Malthus

D)

Karl Marx

33.

Whispering Valley Furniture employs five workers working eight hours each to produce 80 rocking chairs. Rocky Gap Furniture employs 10 workers working eight hours each to produce 100 rocking chairs. Which company's workers are more productive?

A)

The two companies' workers are equally productive.

B)

Whispering Valley Furniture's workers are more productive.

C)

Rocky Gap Furniture's workers are more productive.

D)

It is not possible to determine which workers are more productive.

34.

The natural gas deposits found in the United States over the past decade are an example of an increase in:

A)

entrepreneurial ability, technology, and ideas.

B)

land and natural resources.

C)

labor.

D)

physical capital.

35.

Excessive inflation or deflation:

A)

can be beneficial in the long run.

B)

has a negative effect on the economy only if traders are aware of it.

C)

interferes with the price mechanism that brings a market to equilibrium.

D)

has a neutral effect on the market.

36.

For which growth rate would the Rule of 70 be most accurate?

A)

15%

B)

30%

C)

1%

D)

20%

37.

The classical form of the production function states that:

A)

Output = f(N, K)

B)

Output = f(N / K)

C)

Output = f(L / K)

D)

Output = f(L, K)

38.

Which of the following institutions is NOT an example of our nation's infrastructure?

A)

Hoover Dam

B)

buildings of General Electric

C)

subway system

D)

interstate highway system

39.

Labor productivity is NOT a major determinant of:

A)

the money supply.

B)

living standards.

C)

per capita GDP.

D)

economic growth.

40.

The Index of Economic Freedom:

A)

measures the distribution of income.

B)

measures the degree of tolerance with respect to drugs.

C)

is completely objective.

D)

measures the quality of a country's intangible infrastructure.