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1 | |
GDP per head may be an imperfect measure of economic welfare because it excludes _________ |
| | A) | the value of leisure |
| | B) | externalities |
| | C) | untraded goods |
| | D) | changes in the distribution of income |
| | E) | all of the above |
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2 | |
Potential output can be increased by _____________ or by ______________ |
| | A) | increasing the use of labour, increasing the use of land |
| | B) | increasing the use of capital, increasing the use of labour |
| | C) | increasing the use of land, increasing the use of capital |
| | D) | increasing the use of all inputs, technical advances |
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3 | |
If a production input is in fixed supply, growth is impossible in the long run |
| | A) | TRUE |
| | B) | FALSE |
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4 | |
The neoclassical theory of growth identifies the steady state rate of growth as the _________ just sufficient to keep ____________ constant while labour grows |
| | A) | saving, investment |
| | B) | capital per person, productivity |
| | C) | labour growth, output |
| | D) | investment, capital per person |
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5 | |
In the neoclassical theory of growth, a higher saving rate leads to __________ |
| | A) | a higher growth rate |
| | B) | a fluctuating growth rate |
| | C) | a lower growth rate |
| | D) | no change in the growth rate* |
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6 | |
The convergence hypothesis states that poor countries grow more slowly than average, but rich countries grow more quickly than average |
| | A) | TRUE |
| | B) | FALSE |
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7 | |
Economic growth may depend upon ___________ and ________ |
| | A) | Population size, x-efficiency |
| | B) | Population age distribution, education |
| | C) | Population growth, technical progress |
| | D) | Population growth, education |
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8 | |
The zero-growth proposal argues that it is best to aim for zero-growth in measured GNP to avoid environmental costs |
| | A) | TRUE |
| | B) | FALSE |
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9 | |
The growth rates of economies tend to converge because __________ is easier when capital per worker is low and because of ______________ |
| | A) | capital-widening, technical innovation |
| | B) | capital-widening, catch-up in technology |
| | C) | capital-deepening, technical innovation |
| | D) | capital-deepening, catch-up in technology |
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10 | |
The business cycle describes fluctuations in output around the ___________ |
| | A) | trend path of output |
| | B) | boom |
| | C) | recession |
| | D) | short-run fluctuations in output |
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11 | |
All of the following are parts of the business cycle except __________ |
| | A) | boom |
| | B) | slump |
| | C) | recovery |
| | D) | acceleration |
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12 | |
The political business cycle arises because politicians interfere with the economy for political advantage |
| | A) | TRUE |
| | B) | FALSE |
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13 | |
The theory that explains business cycles by the dynamic interaction of consumption and investment demand is the __________ |
| | A) | sun spot theory |
| | B) | multiplier-accelerator model |
| | C) | Solow theory |
| | D) | New classical theory |
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14 | |
The multiplier-accelerator model assumes _________ depends on ___________ |
| | A) | consumption, expected future profits |
| | B) | investment, interest rates |
| | C) | investment, expected future profits |
| | D) | stockbuilding, interest rates |
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15 | |
Real business cycle theory suggests that _________ not important in explaining short-term fluctuations around actual output |
| | A) | aggregate supply is |
| | B) | aggregate demand is |
| | C) | potential output is |
| | D) | real variables are |
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16 | |
The impossibility of negative gross investment provides a _________ to fluctuations in _______ |
| | A) | ceiling, stockbuilding |
| | B) | ceiling, capital prices |
| | C) | floor, output |
| | D) | floor, the capital-output ratio |
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17 | |
Output can exceed demand during the recovery phase as firms restore stocks to their target levels |
| | A) | TRUE |
| | B) | FALSE |
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18 | |
Real business cycles are cycles in ____________ |
| | A) | potential output |
| | B) | actual output |
| | C) | real output |
| | D) | international trade |
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19 | |
Real business cycle theories suggest that ____________ to correct departures from the desired growth path |
| | A) | there is a role for fiscal policy |
| | B) | there is a role for monetary policy |
| | C) | there is a role for supply-side policies |
| | D) | there is no case for stabilizing output over the business cycle |
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20 | |
The business cycle is not transmitted from one country to another through __________ |
| | A) | private sector imports and exports |
| | B) | economic policy |
| | C) | the duration of compulsory education |
| | D) | labour supply changes |
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21 | |
Real business cycle theorists argue that ____________ can explain short and long term fluctuations in output |
| | A) | imperfect labour markets |
| | B) | rational expectations |
| | C) | intertemporal decisions of households, firms and government |
| | D) | sun spot cycles |
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22 | |
Keynesian unemployment causes a fall in the real wage |
| | A) | TRUE |
| | B) | FALSE |
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2003 A McGraw-Hill Online Learning Centre