1. Nathan owns a coffee shop. He wants to increase the weekly number of coffee drinks he sells, and he wants to spend more on physical capital to do so. ________ would represent an increase in physical capital at his coffee shop.

Group of answer choices

An increase in the number of employees

An improvement in the quality of coffee drinks he serves

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Using an efficient method to brew coffee.

Getting more coffee cups, coffee filters and spoons.

2. Why growth rate of real GDP is not an ideal measure of economic growth?

Group of answer choices

If the population growth rate is very high, the average income per person does not grow much even though the country has a high real GDP growth rate.

Real GDP growth rate does not take into account of inflation rate.

We don't need to consider inflation rate when we measure economic growth.

Real GDP growth rate and economic growth rate are always inversely related.

3. Suppose you are the government economist of country A. For each of the following policies of promoting economic growth, categorize each into one of the factors of economic growth.

Group of answer choices

1. Government relaxes the regulations and it is now easier for firms to borrow money. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
2. People are encouraged to exercise to keep healthy. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
3. Government does not require students to pay back student loans. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
4. Government builds infrastructure. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
5. Firm receive tax incentive for reducing industrial wastes. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
6. Firm receive tax incentive for developing new production methods. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
7. The government sends out a team of scientists to find natural gas. [ Choose ] Physical capital Institutions Natural resources Technology Human capital
8. The government allows more workers to come to the country. [ Choose ] Physical capital Institutions Natural resources Technology Human capital

For country A, the annual economic growth rate is 1%. Population growth rate is 0.5% per year. Inflation rate is 15% per year. Use the given information to answer questions 4-9.

4. What is the annual growth rate of real GDP per capita.

Answer: The annual growth rate of real GDP per capita = __________%

5. Using the rule of 70, calculate how long it takes for the real GDP per capita to double. Answer: The real GDP per capita will double in __________ years.

6. Calculate the annual growth rate of real GDP. Answer: The annual growth rate of real GDP = ___________%

7. Calculate the annual growth rate of nominal GDP. Answer: The annual growth rate of nominal GDP = ___________%

8. Country A wants to control inflation rate. This is related to which factor of economic growth?

A. natural resources

B. physical capital

C. human capital

D. technology

E. institutions

9. Country A is politically unstable. Explain why political instability reduces economic growth.

A. If the country is politically unstable, human capital increases.

B. If the country is politically unstable, firms are less willing to invest.

C. If the country is politically unstable, firms will buy more physical capital.

D. If the country is politically unstable, money and prices are stable.