Q21. Recall the Application about incentives to immunize children in developing countries to answer the following question.

This Application emphasizes the importance of

A.

literacy rates.

B.

wealth distribution.

C.

economic incentives.

D.

None of the above.

Q22. Suppose that technological advancement makes labor more productive. What is likely to happen to wages and to potentialoutput?

A.

wages decrease and potential output decreases

B.

wages increase and potential output increases

C.

wages increase and potential output decreases

D.

wages decrease and potential output increases

Q24. A trade surplus occurs when

A.

acountry's firms open more stores abroad than foreign firms open in the country.

B.

foreign firms open more stores in a country than the country opens in foreign countries.

C.

a country purchases more from abroad than other countries purchase from it.

D.

a country sells more abroad than it purchases from abroad.

Q25. The value of goods produced in a previous year but sold in the current year is added to the GDP for the current year.

True

False

Q26. Recall the Application about the role of megacities in economic growth to answer the following question.

According to theApplication, who recognized that specialization of labor can generate higherproductivity?

A.

Adam Smith

B.

John Maynard Keynes

C.

David Ricardo

D.

Karl Marx

Q32. Costofliving adjustments are

A.

averages of neighboringyears' base prices used in constructing the CPI.

B.

automatic wage changes based on the CPI which are included in some union contracts.

C.

changes in the basket of goods used in calculating the CPI.

D.

quality measurements included in the calculation of the CPI.

Q33. Increased immigration is likely to lead to the labor demand curve shifting to the right.

True

False

Q34. The returns to education are

A.

highest in developing nations.

B.

lowest in developing nations.

C.

highest in developed nations.

D.

never reflected in the wages of workers.

Q.35. In the determination of production of goods or services with respect toGDP, transfer payments are included.

True

False

Q37. Recall the Application about growth in China and India to answer the followingquestion(s). From 1978 to2004, China grew at a rate of 9.3 percent per year and India grew at a rate of 5.4 percent per year.

According to thisApplication, China's growth rate was faster thanIndia's during this 26 year period because

A.

China's growth was based more on human capital andIndia's growth was based more on physical capital.

B.

China's growth was based more on human capital andIndia's growth was based more on technological progress.

C.

China invested more in physical capital than India invested.

D.

China received more contributions from human capital than India received.

Q38. Recall the Application about using value added to measure the size of Walmart to answer the following question.

According to thisApplication, by using avalue-added approach to measureWalmart's sales in 2017 and its impact on theeconomy, we are

A.

including GDP as a measure of welfare.

B.

excluding the net foreign sector.

C.

avoidingdouble-counting.

D.

using achain-weighted index.

Q39. One of the necessary conditions for the classical model to be true is that

A.

wages were flexible and prices are fixed.

B.

wages and prices are fully flexible.

C.

wages and prices will not change.

D.

wages and prices are partly flexible.

Q40. Which one of the following statements is true of the Consumer PriceIndex?

A.

It does not take account of the price of imported goods and services.

B.

It does not take into account the price of used goods.

C.

It understates the true rate of inflation.

D.

It measures changes in prices in a fixed basket of goods.