Question 1

GDP is a summary statistic, which attempts to capture ____________ in the economy, which in turn is _______________ with other measures of well-being in the economy.

1. consumption, uncorrelated
2. standard of living, uncorrelated
3. happiness, correlated
4. production, highly correlated

Question 2

The GDP at the steady-state growth is also referred to as

1. potential GDP.
2. Short-run GDP and cyclical GDP.
3. sustainable GDP.
4. cyclical GDP.
5. short-run GDP.
6. Potential GDP and sustainable GDP.

Question 3

When it comes to the long-term growth rate of the aggregate economy, a percentage point or two difference __________.

1. really doesn't make much of a difference in the standard of living of the people
2. may or may not affect standard of living of the people. Hard to say.
3. makes a huge difference in the standard of living of the people

Question 4

To move along the production function, __________ must be increased.

1. Consumption rate
2. Export level
3. Savings rate
4. Import level

Question 5

The "old economy" production function suffers from the curse of __________.

Diminishing returns to scale

1. Diminishing value of production
2. Diminishing capital
3. Diminishing savings

Question 6

To twist up the production function, __________ must be improved.

1. Technology
2. Savings rate
3. Output
4. Exports

Question 7

Labor productivity determines the value of a unit of labor. Increases in labor productivity drive increases in GDP per capita. What drives increases in labor productivity?

1. Increases in capital and "technology" that allow a (skilled) workforce to produce more
2. Decreases in the reliance on technology and machinery, resulting in more people being put to work
3. Increases in number of labor-intensive jobs
4. Decreasing the hours in the work week so more people are put to work

Question 8

Rule of __________ and __________ rights have been identified as crucial "environment" variables necessary to support a robust and sustainable production function.

1. Thirds; human
2. law; property
3. 70; property
4. law; human

Question 9

The financial system has been characterized as the "brains" of the economy. What roles does that brain play in the macroeconomy?

1. Moving capital from those who have excess to those who have good ideas
2. Risk sharing
3. Allocating capital to its most productive uses
4. Information regarding expected future cash flows and risk
5. Liquidity provision

Group of answer choices

1. 3 and 4 only
2. 1 and 2 only
3. 1, 3, and 5 only
4. All the options provided

Question 10

_____________ is/are what households have left from national income and transfer payments after they consume and pay taxes.

1. Private savings
2. Capital investment
3. Imports
4. Exports

Question 11

Total national savings is what the economy has left over from __________ after household consumption spending and government spending on goods and services.

1. Investments
2. GDP
3. Government Debt
4. Taxes

Question 12

____________ is what the government has left from taxes after spending on goods and services and transfer payments to households. For most governments, most of the time, this tends to be ________________.

1. Public investment; positive
2. Public savings; negative
3. Subsidies; positive
4. Private savings; positive

Question 13

In developed economies, growth depends more on technological change than on increases in capital per hour worked. Which of the following does NOT drive technological change?

1. Uncontrollable, unexplainable random "shocks" to the production function
2. Development of human capital
3. A competitive environment
4. Entrepreneurial risk taking

Question 14

New growth theory focuses on the virtuous cycle between __________ and __________.

1. Savings and consumption
2. Technology and capital
3. Savings and investments
4. Capital and investment

Question 15

Wheelan says, " [A] market economy inspires hard work and progress not just because it rewards winners, but because it crushes losers." This is a characterization of Schumpeter's __________.

1. Creative destruction
2. Old growth theory
3. Destructive creation
4. New growth theory

Question 16

According to Wheelan, "The important point is that productivity growth, like so much else in economics, is ____________."

1. what drives population growth
2. not a zero-sum game
3. available to everyone globally
4. secondary to economic growth

Question 17

Modern growth theory does not assume that improved "________" appears exogenously as a "shock" - like a "gift from the gods."

1. Savings
2. Output
3. Investment
4. Technology

Question 18

Modern growth theory sees no role for the government, essentially leaving everything to "the market."

1. False
2. Maybe
3. Don't know
4. True

Question 19

Government can play a crucial role in fostering long-term economic growth. Which of the below is NOT an example of this?

1. Protect the status quo for narrow, politically powerful interests
2. Facilitate investment in physical and social infrastructure
3. Foster a healthy, skilled workforce
4. Safeguard property rights and enforce rule of law