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# Assignment 12

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 1. The slowdown of economic growth in the United States after 1965 may be the result of all the following except a) a shift from manufacturing to service industries. b) the quantity of resources available in the United States. c) a drop in the quality of the U.S. labor force. d) higher energy prices. e) fewer technological innovations. 2. Using the rule of 72, what is the average annual growth rate of GDP needed for a country to double its size in just four years? a) 2 percent b) 4 percent c) 18 percent d) 72 percent e) 288 percent 3. If Korea's average annual growth rate is 9.4 percent and the United States' average annual growth rate is 2.7 percent, the time required for Korea's real GDP to double will be a) 12.1 years less than it takes the United States. b) 19 years less than it takes the United States. c) 6.7 years less than it takes the United States. d) 3.5 years less than it takes the United States. e) 15 years less than it takes the United States. 4. The lack of capital formation in less-developed countries can be blamed on a) high interest rates. b) excessive foreign aid. c) government prohibitions on private ownership. d) high consumption spending. e) high tax rates on private investment. 5. Growth in total factor productivity equals a) the percentage change in per capita real GDP. b) the ratio of total inputs to total outputs. c) the percentage change in output minus the percentage change in resources. d) the sum of resource growth and economic growth. e) the ratio of total outputs to total inputs. 6. Per capita real GDP is of limited use as a measure of economic growth for all the following reasons except a) it says nothing about the quality of the environment. b) it is not adjusted for changes in leisure time. c) it does not reflect the total output of goods and services of an economy. d) it says nothing about the distribution of income. e) it does not reflect the degree of personal freedom in a society. 7. What is a nation's real GDP after seven years if the average annual growth rate is 5 percent and initial real output is \$10 billion? a) \$13.44 billion b) \$14.07 billion c) \$14.57 billion d) \$11.27 billion e) \$9.74 billion 8. Which of the following statements about technology is not correct? a) Low levels of education can impede technological progress. b) Investment in research and development can improve the likelihood of technological advances. c) It can be improved by new management techniques. d) Industrial countries follow the lead of developing countries in implementing new technology. e) It is a key determinant of economic growth. 9. If a country's population growth exceeds the annual growth in real GDP, a) real GDP will fall. b) per capita real GDP will rise. c) nominal output will fall. d) economic growth will be greater than zero. e) per capita real GDP will fall. 10. When the growth in total factor productivity is zero, the growth in real GDP a) is positive if the stock of capital and labor is depleting. b) is positive if resource growth is greater than zero. c) is always positive. d) is always equal to zero. e) is always negative. 11. Technological progress does not depend on a) the intellectual capabilities of the population. b) the investment in research and development. c) the quality of the education system. d) the availability of natural resources. e) scientific discoveries. 12. Long-term economic growth requires a permanent a) decline in the average price level. b) leftward shift of the vertical Phillips curve. c) rightward shift of the vertical aggregate supply curve. d) rightward shift of the aggregate demand curve. e) rise in the natural rate of unemployment. 13. Per capita real GDP a) is a measure of the GDP per country. b) is a measure of the value of output produced and available to an average person. c) is equivalent to the real GDP level. d) is a measure of an economy's income distribution. e) is higher in developing countries. 14. All the following would raise total factor productivity except a) a decline in resource prices. b) increased expenditures on research and development. c) higher production efficiency. d) an increase in the quality of labor. e) reduced capital accumulation. 15. What is real GDP after five years if Singapore's average annual growth rate is 9.8 percent and the economy initially produces at real GDP of S\$80,500 million? a) S\$98,726 million b) S\$102,375 million c) S\$119,945 million d) S\$124,648 million e) S\$128,471 million 16. Economic growth refers to a) an increase in per capita nominal GDP. b) an expansionary period of the business cycle. c) an increase in real GDP. d) an increase in nominal GDP. e) an increase in the standard of living. 17. Most developing countries a) are unable to convert their natural resources into productive inputs. b) have no natural resources. c) allocate their resources to the production of capital goods. d) experience slow growth in their labor force. e) make inefficient use of their technological advancement. 18. Assume you invest \$550 in a certificate of deposit that has an annual interest rate of 4.5 percent. According to the rule of 72, what will your investment be worth after sixteen years? a) \$797.5 b) \$550 c) \$1,100 d) \$39,600 e) It cannot be determined based on the information given. 19. The ability of a country to invest in capital goods is tied to a) the quality of its labor force. b) the size of its labor force. c) its ability to save. d) its abundance of natural resources. e) the level of technology it has achieved. 20. If the average annual population growth is 1.4 percent higher in low-income countries than in industrial nations, a) the growth in the labor supply is lower in industrial nations. b) productivity is higher in low-income countries. c) the investment in education is higher in low-income countries. d) the total size of the labor force is higher in industrial nations. e) economic growth is higher in low-income countries.

### Essay Questions

1. Using the rule of 72, calculate the approximate doubling times for (a) a \$2,000 savings account that pays 9 percent interest per year and (b) real GDP growing at 3 percent per year. What must the rate of interest be if you initial investment of \$25,000 is worth \$50,000 after twelve years?

2. How would an aging population affect economic growth?

Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 22). Assignment 12. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/introduction-to-economics/Assignment12.htm. This work is licensed under a Creative Commons License