Most of the world's economic output is produced by

1. China and Russia
2. the U.S. and Japan
3. the U.S. and the European Union
4. China and Japan
5. Russia and the European Union

A multiple-choice question with one possible answer.(Required)

Over the last 200 years

1. global inequality has not changed
2. global inequality has fallen mainly because of falling between country inequality
3. global inequality has risen mainly because of rising between country inequality
4. global inequality has fallen mainly because of falling within country inequality
5. global inequality has risen mainly because of rising within country inequality

A multiple-choice question with one possible answer.(Required)

GDP per capita in France in 2001 was equivalent to $24,230. The labor force

participation rate was 44%, the employment rate was 91.5%, and hourly productivity was $39.27. The average number of hours worked yearly by an employed person was

1. 1532
2. 1283
3. 2019
4. 1402
5. 1876

A multiple-choice question with one possible answer.(Required)

For an economy with a Cobb-Douglas production function in which labor receives

70% of national income and capital receives 30%, a 10% increase in total hours worked, holding all else constant

1. increases output by 10%
2. increases the marginal product of labor by 3%
3. increases total factor productivity by 5%
4. increases the share of national income paid to labor 10%

A multiple-choice question with one possible answer.(Required)

If an economy is growing at 5% per annum. How long will it take, approximately, for its GDP to double?

1. 9 years
2. 20 years
3. 14 years
4. 52 years
5. 37 years

A multiple-choice question with one possible answer.(Required)

The historically slow development of the Chinese economy may be attributable to

1. its large markets
2. rent-seeking
3. the size of the labor force
4. geographical constraints
5. lack of usable natural resources

A multiple-choice question with one possible answer.(Required)

Ethno-linguistic diversity in Africa is largely the result of

1. heavy reliance on imported technology
2. government policies to promote bilingual education
3. immigration from China and India
4. study-abroad programs which educate African students in European schools
5. arbitrary boundaries created by European colonialism

A multiple-choice question with one possible answer.(Required)

The rate at which a country saves its income has no effect on

1. its short run GDP
2. its investment behavior
3. its long run growth rate
4. its interest rates
5. its long run standard of living

A multiple-choice question with one possible answer.(Required)

Which of the following is an historically accurate description of real per capita growth rates?

1. Between 1820 and 1913, Bangladesh grew as rapidly as Japan
2. Between 1913 and 2002, Japan grew faster than either the US or the UK
3. For the 1820-1913 period, the UK economy experienced negative growth
4. In 1820 the US had a higher income per head than China, Japan and the UK
5. By 2010 China had overtaken Japan in terms of Income per head

A multiple-choice question with one possible answer.(Required)

In his Essay on the Principle of Population, T.R. Malthus predicted

1. that populations would migrate to countries with the most productive land
2. that by the year 2000, world population would be 6 billion people
3. most of the demographic trends currently taking place in Europe
4. that output per capita would decline until the population was left in poverty
5. that better technology would provide the population with more leisure time

A multiple-choice question with one possible answer.(Required)

In most countries, the Malthusian predictions have not been realized because

1. population is declining
2. technology is improving
3. aggregate demand is declining
4. the marginal product of labor is increasing
5. of governmental regulations unforeseen in Malthus' tim

A multiple-choice question with one possible answer.(Required)

Suppose that production at a firm occurs according to the following schedule.

Labor: 0 1 2 3 4 5 6

Output: 0 85 160 225 280 325 360

If output sells for $6 per unit, then for 5 units of labor the firm should be willing to pay a wage rate (per unit of labor) of up to

1. $1950
2. $180
3. $45
4. $270

A multiple-choice question with one possible answer.(Required)

Among developed economies, the natural rate of unemployment

1. tends to follow a steady upward trend
2. tends to follow a steady downward trend
3. varies more the actual unemployment
4. is a fixed number
5. varies, but less the actual unemployment

A multiple-choice question with one possible answer.(Required)

In most developed economies, unemployment insurance benefits

1. are nonexistent
2. replace an increasing percentage of lost earnings as the duration of unemployment becomes prolonged
3. paid for by insurance companies
4. become less generous as the duration of unemployment is prolonged
5. initially replace 100% of lost wages

A multiple-choice question with one possible answer.(Required)

If the rate at which workers flow from employment into unemployment each period is

6% and the flow out of unemployment occurs at a rate of 69%, then the natural rate of unemployment is

1. 4.14%
2. 6.9%
3. 6%
4. 8%
5. 11.5%

A multiple-choice question with one possible answer.(Required)

Suppose Canada can produce either 120 units of goods, 80 units of services, or any linear combination thereof. Mexico can produce 90 units of goods, 50 units of services, or any linear combination thereof. International trade under these conditions

1. can benefit both countries if Canada exports services and imports goods
2. can only benefit Mexico
3. can benefit both countries if Canada exports goods and imports services
4. cannot benefit either country
5. can only benefit Canada

A multiple-choice question with one possible answer.(Required)

Which of the following is not an example of intra-industry trade?

1. England exports beef to Ireland, and imports Irish potatoes
2. Norwegians deposit funds in Swiss banks while the Swiss buy insurance from Norway
3. Canadians touring the US side of Niagara Falls stay in US motels while Americans touring the Canadian side stay in Canadian hotels
4. Russia exports oil and imports capital equipment
5. the Dutch export elm trees and import lumber products

A multiple-choice question with one possible answer.(Required)

.If country A is well-endowed with natural resources but a small population while B is endowed with much labor but little land and few natural resources, then trade theory predicts that

1. A and B will not trade with each other, as neither can produce enough goods to export
2. A will gain more from trade than B
3. Wages and land values will rise in both countries if they trade
4. Trade will occur, but wages will fall in country A
5. The price of labor-intensive goods will fall in country B after trade

A multiple-choice question with one possible answer.(Required)

A government subsidy to an industry having increasing returns to scale in order to capture international market share is an example of

1. strategic trade policy
2. a boycott
3. import substitution
4. the Prebisch-Singer hypothesisChoice 4
5. an embargo

A multiple-choice question with one possible answer.(Required)

In most major countries, including Japan, Canada, and the US, fluctuations in consumption are

1. procyclical and less volatile than GDP
2. unrelated to fluctuations in GDP
3. procyclical and more volatile than GDP
4. countercyclical and more volatile than GDP
5. countercyclical and less volatile than GDP

A multiple-choice question with one possible answer.(Required)

According to the simple Keynesian model, if disposable income rises,

1. the marginal propensity to consume rises
2. savings falls
3. consumption increases
4. all of the above
5. the expenditure multiplier rises

A multiple-choice question with one possible answer.(Required)

An individual is endowed with $100 of income in period 1, and will receive an income of 121 in period 2. The interest rate is 10%, and there are only 2 periods.

The maximum first period consumption consistent with the intertemporal budget constraint is

1. 100
2. 210
3. 121
4. 110
5. 221

A multiple-choice question with one possible answer.(Required)

An individual is endowed with $100 of income in period 1, and will receive an income of 121 in period 2. The interest rate is 10%, and there are only 2 periods.

The maximum second period consumption is

1. 231
2. 221
3. 233.1
4. 121
5. 100

A multiple-choice question with one possible answer.(Required)

An individual is endowed with $100 of income in period 1, and will receive an income of 121 in period 2. The interest rate is 10%, and there are only 2 periods.

If first period consumption is $80, then second period consumption must be

1. 143
2. 201
3. 131
4. 141
5. 129

A multiple-choice question with one possible answer.(Required)

A publicly traded firm has 2.5 million shares of stock outstanding, with a current share price of $30. The firm's insurance agent estimates that the replacement cost of the firm's plant and equipment (and related capital assets) is $70 million. Tobin's q is

1. 1.07
2. 2.80
3. 1.20
4. 2.33

A multiple-choice question with one possible answer.(Required)

A large negative output gap

1. means the business cycle is at a peak
2. represents a shortage of goods due to excessive demand for output
3. is the result of overtime work by the labor force
4. implies excessive unemployment
5. creates inflation

A multiple-choice question with one possible answer.(Required)

Consider the following hypothetical annual growth rates of real GDP:

Long run trend 1996 1997 1998 1999 2000 2001 2002 2003

2.5% 3.0% 2.5% 2.0% -1% 0.5% 2.0% 2.5% 3.0%

1998 appears to have been a year of

1. 1.economic expansion
2. 2.recession
3. 3.depression
4. 4.stagflation
5. 5.growth recession

A multiple-choice question with one possible answer.(Required)

Compared to Keynesians, Real Business Cycle theorists

1. are more likely to claim that individuals are unresponsive to price changes
2. give a larger role to stabilization policy
3. have greater optimism regarding markets
4. are relatively unconcerned with productivity shocks

A multiple-choice question with one possible answer.(Required)

The number of times a unit of currency changes hands for transactions in a given period is called

1. the transactions demand for money
2. velocity
3. the money multiplier
4. GDP
5. M1

A multiple-choice question with one possible answer.(Required)

United States GDP in constant dollars refers to

1. the output produced within the U.S., valued in base year prices
2. output produced by American citizens, valued using purchasing power parity
3. the amount of income each U.S. citizen would get if GDP were divided equally across the population
4. nominal GDP after adjusting for the depreciation of capital

A multiple-choice question with one possible answer.(Required)

If a chef buys eggs for 50 and vegetables for 100 and uses them to cook and sell 550 worth of cooked food to consumers, the contribution to GDP is

1. 700.
2. 550
3. 50
4. 400
5. 100

A multiple-choice question with one possible answer.(Required)

If a U.S.-owned manufacturing firm closes its American plant and moves its

production facilities and American employees to Canada,

1. U.S. GDP falls and U.S. GNI rises
2. Canadian GDP rises and Canadian GNI is unchanged
3. Real U.S. GDP rises but nominal U.S. GDP falls
4. U.S. GNP falls, and Canadian GNI rises
5. None of the above

A multiple-choice question with one possible answer.(Required)

It is observed that poorer nations grow faster than richer ones if they share

the same steady state, this is known as

1. the poverty trap
2. conditional convergence
3. the iron law of convergence
4. spillover

A multiple-choice question with one possible answer.(Required)

Which of the following is probably the least relevant to a country's growth rate?

1. short-term interest rates
2. legal restrictions on capital mobility and investment
3. new technological inventions
4. the education of the workforce

A multiple-choice question with one possible answer.(Required)

Suppose the economy has TFP = 1, there are 400 hours worked, and 9 unit of capital and the Cobb-Douglas production function is Output=TFP L^0.5 K^0.5 (note: 400^0.5= 20, 9^0.5= 3)

Output is currently

1. 600
2. 36,000
3. 60
4. 12,000
5. 6,000

A multiple-choice question with one possible answer.(Required)

From 1965 to 1990, US economic output, adjusted for inflation, quadrupled while the population doubled. This means that output per person

1. rose by a factor of 8
2. increased 200%
3. doubled
4. remained constant
5. fell by 50%

A multiple-choice question with one possible answer.(Required)

When an economy is well developed,

1. capital becomes more productive due to the "catch-up effect."
2. it is nearly impossible for it to become relatively poorer.
3. none of these answers
4. it no longer needs any human capital.

A multiple-choice question with one possible answer.(Required)

The widespread historical use of gold or silver in transactions is an example of

1. commodity money
2. barter
3. fiat money
4. credit

A multiple-choice question with one possible answer.(Required)

If labor productivity increases, which of the following could happen?

1. 1.the hours of employment per worker falls
2. 2.employment falls
3. 3.any of the above
4. 4.GDP rises

A multiple-choice question with one possible answer.(Required)

Business cycles affect the next month's growth because

1. the competition to survive a recession provides incentives for firms to reorganize for greater efficiency
2. human capital depreciates during recessions
3. none of the above
4. installation costs for new plant and equipment are lower during recessions than during periods of expansion

A multiple-choice question with one possible answer.(Required)

The shape of the short run aggregate supply curve is generally believed to be

1. vertical
2. an increasing function of the price level
3. . a decreasing function of the price level
4. an increasing function of the interest rate

A multiple-choice question with one possible answer.(Required)

Which of the following could cause a recession?

1. An increase in saving
2. An increase in investment
3. An increase in consumption
4. An increase in government purchases

A multiple-choice question with one possible answer.(Required)

The LM curve slopes upward because

1. as the money supply rises, the inflation rate increases
2. as interest rates rise, the demand for money rises
3. as income rises, the demand for money begins to exceed its supply
4. as the demand for money rises, the supply of money is increased

A multiple-choice question with one possible answer.(Required)

If the consumption function is C = 750 + .5Y and there are no income taxes, then the expenditure multiplier is

1. 0.25
2. 4.0
3. 0.75
4. 2.0

A multiple-choice question with one possible answer.(Required)

In the Hotelling Rule, which of the following will not cause the price of an exhaustable natural resource to rise

1. An unanticipated fall in interest rates
2. An unanticipated rise in demand
3. An unanticipated fall in supply
4. An unanticipated rise in interest rates

A multiple-choice question with one possible answer.(Required)

Suppose the economy is initially in long-run equilibrium. Then suppose there is a increase in military spending due to rising international tensions. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?

1. Prices fall; output falls.
2. Prices rise; output falls.
3. Prices rise; output rises.
4. Prices fall; output rises.

A multiple-choice question with one possible answer.(Required)

What, if any, is the difference between a household buying a computer and a business buying the same computer?

1. the computer depreciates faster in a household
2. the computer has greater durability in a business than in a household
3. the former is consumption, and the latter is investment
4. the business pays a higher price

A multiple-choice question with one possible answer.(Required)

Under the conditions of endogenous growth,

1. firms are likely to over-invest in physical capital.
2. subsidies for capital investment can boost long run growth
3. there is no role for government intervention in taxing or subsidizing investment

A multiple-choice question with one possible answer.(Required)

The best long run growth strategy for developing economies is probably

1. to increase the capital stock
2. to shift resources into research and development of new technologies
3. the same as for mature industrial economies
4. to increase the rate of population growth

A multiple-choice question with one possible answer.(Required)

A fall in a country's terms of trade means that

1. imports have become relatively more expensive
2. export-import contracts are of longer duration
3. the exchange rate is rising
4. the benefits from trade are increasing

constant MPK prevents spillover effects between physical and human capital

it is still possible for it to grow quickly because of the investment in R&D.

infrastructure such as roads or computer networks

learning by doing

output produced by American-based firms, valued at current market exchangerates

believe technology plays a relatively minor role in short run fluctuations

increases the marginal product of capital by 7%