1. What are the four supply factors of economic growth? What is the demand factor? What is the efficiency factor? Illustrate these factors in terms of the production possibilities curve.

2. Between 1990 and 2005 the U.S. price level rose by about 50 percent while real output increased by about 56 percent. Use the aggregate demand–aggregate supply model to illustrate these outcomes graphically.

3. To what extent have increases in U.S. real GDP resulted from more labor inputs? From higher labor productivity? Rearrange the following contributors to the growth of productivity in order of their quantitative importance: economies of scale, quantity of capital, improved resource allocation, education and training, technological advance.

4. Relate each of the following to the New Economy:

1. The rate of productivity growth
2. Information technology
3. Increasing returns
4. Network effects
5. Global competition