Question 1 (1 point) Consider long-run economic growth in the context of the Neoclassical Growth model with physical capital and labour. If physical capital increases by 5%, and there is no change in technology, population or the labour force, then: O a) Real GDP will decrease and real GDP per capita will increase. ( b) Real GDP will increase, and real GDP per capita will increase. O c) Real GDP will increase and real GDP per capital will decrease. O d) Real GDP will decrease and real GDP per capita will decrease. O e) Real GDP will increase and real GDP per capita will remain constant. Question 2 (1 point) In the Neoclassical growth model, the law of diminishing marginal returns implies that capital accumulation leads to ever A) larger levels of unemployment but small increases in the standard of living. B) smaller increases in GDP and average living standards. O C) larger increases in GDP but smaller decreases in living standards. O D) larger decreases in GDP and large decreases in living standards. O E) larger levels of unemployment but larger increases in the standard of living. Question 3 (1 point) The table below shows aggregate values for a hypothetical economy. Suppose this economy has real GDP equal to potential output. Potential GDP $14 000 Government purchases $2200 Investment $300 Consumption $11 500 Net tax revenues $2000 TABLE 25-3 Refer to Table 25-3. What is the level of private saving for this economy? O A) $50 O B) $2000 O C) $100 OD) $500 OE) $3000Question 4 (1 point) If government policies are to be successful in enhancing a country's long-run growth rate, they likely work through generating O A) an increase in current consumption and a reduction in saving. O B) greater investment in physical and human capital. O C) fiscal policies that shift the AD curve to the right. O D) higher levels of current consumption. O E) a leftward shift in the AS curve. Question 5 (1 point) The "new" theories of economic growth emphasize that the pace of technological change is to economic signals, and that it is to the economic system. O A) responsive; endogenous O B) responsive; exogenous O C) unresponsive; exogenous O D) unresponsive; endogenous O E) unresponsive; unrelated Question 6 (1 point) Consider the model of long-run savings, investment and interest rates. What would be the long-run effect of a decrease in desired consumption? a) A decrease in the interest rate and an increase in the equilibrium quantity of investment. O b) An increase in the interest rate and a decrease in the equilibrium quantity of investment. O c) An increase in the interest rate and the equilibrium quantity of investment. O d) A decrease in the interest rate and the equilibrium quantity of investment. Question 7 (1 point) In Neoclassical growth theory, an increase in the labour force total output and total output per person. O A) increases; increases O B) leaves constant; reduces O C) leaves constant; leaves constant O D) increases; reducesQuestion 8 (1 point) Compared to Neoclassical growth theory, newer "endogenous growth" theories are more regarding the prospect of continuous increases in the standard of living, due in part to its emphasis on the O A) optimistic; accelerating depletion of natural resources O B) pessimistic; increasing birth rates as a result of higher real income per capita OC) pessimistic; accelerating depletion of natural resources O D) pessimistic; endogeneity of technological change O E) optimistic; endogeneity of technological change Question 9 (1 point) Why is real GDP not a good measure of average material living standards? O A) Because it is biased by the changes in the inflation rate. B) Because it is sensitive to the base year chosen in its calculation. O C) Because it does not take into account the size of the population. O D) Because the price level may be changing, which affects what people can afford to buy. O E) Because it excludes the role of imported goods. Question 10 (1 point) Consider the long-run theory of investment, saving, and growth. For a given level of national income, a decrease in private consumption or government purchases will cause the equilibrium interest rate to O A) decrease and the flow of national saving to increase. O B) increase and the flow of investment to increase. O C) increase and the flow of national saving to decrease. O D) decrease and the flow of national saving to decrease. O E) increase and the flow of investment to decrease. Question 11 (1 point) Which of the following is a common measure of a country's level of productivity? O A) the capital-output ratio O B) output per capita O C) output per unit of labour input O D) per capita GDP OF) the average efficiencyO E) the average efficiency of capital Question 12 (1 point) In Neoclassical growth theory, if the capital stock is growing, but the population and labour force are growing faster, then this will lead to in total output and in total output per person. O A) no change ; reductions O B) increases; increases O C) increases; no change O D) no change; leaves constant O E) increases; reductions