Multiple Choice Questions:
1. According to the Rule of 70, if a nation grows at a rate of 5 percent per year, it will take roughly _____________ for national income to double.
a. 10 years.
b. 7 years.
c. 70 years.
d. 14 years.
e. None of the above.
2. A country will roughly double its GDP in 10 years if its annual growth rate is?
a. 5 percent.
b. 7 percent.
c. 10 percent.
d. 12 percent.
e. 20 percent.
3. According to the Rule of 70?
a. If a country is growing at 7 percent per year, its output will double in approximately 10 years.
b. If a country is growing at 3.5 percent per year, its output will double in approximately 20 years.
c. If a country is growing at 1 percent per year, its output will double in approximately 70 years.
d. All of the above are true.
e. None of the above is true.
4. According to the Rule of 70, if a country’s growth rate doubled, the amount of time before its output doubled would be?
a. Quartered.
b. Halved.
c. Doubled.
d. Quadrupled.
5. In the long run, the most important determinant of a nation’s standard of living is?
a. Its rate of productivity growth.
b. Its ability to export cheap labor.
c. Its ability to control the nation’s money supply.
d. Its endowment of natural resources.
6. Per capita real output would tend to rise, other things being equal?
a. If the labor force participation rate in the country rose.
b. If the population rose.
c. If the population fell and the labor force participation rate in the country fell.
d. In all of the above cases.
e. In none of the above cases.
7. If both the capital stock and the technology in a country increased, other things being equal, the country’s potential output would?
a. Rise.
b. Fall.
c. Remain unchanged.
d. Change in an indeterminate direction.
8. If a country reduced its spending on education and used the resources to build capital goods, economic growth in that country?
a. Would tend to rise.
b. Would tend to fall.
c. Would tend to remain the same.
d. Could rise, fall, or remain the same.
9. Technological advances can be?
a. Labor saving.
b. Capital saving.
c. Land (natural resource) saving.
d. Any of the above.
10. If Goodland’s population grows faster than Badland’s population, but Badland’s labor force participation rate is growing faster than Goodland’s, other things being equal?
a. Real GDP will be growing faster in Badland.
b. Real GDP per capita will be growing faster in Badland.
c. Real GDP will be growing faster in Goodland.
d. Real GDP per capita will be growing faster in Goodland.
e. Both b and d will be true.