Economists Use Real GDP Per Capita To Coasure Economic Growth

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1. Economists use real GDP per capita to measure economic growth:
A) because it ignores the effect of price changes.
B) because poor nations have a large population and the population of richer nations is declining. C) because it is the inflation-adjusted value of a country 's production of goods and services corrected for the change in a country 's population.
D) even though nominal GNP per capita is a far superior measure of economic growth.
Use the following to answer questions 2-5:
Scenario: Growth Rates
Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year. Real GDP per capita of China is $4,000, and its annual growth rate is 7%.
2. (Scenario: Growth Rates) Look at the scenario Growth Rates.
(Scenario: Growth Rates) Look at the scenario Growth Rates. How many years will it take for China 's real GDP per capita to be larger than real GDP per capita in the United
States?
A) 70 to 75 years
B) 40 to 45 years
C) 15 to 20 years
D) 5 to 10 years
Page 2
5. (Scenario: Growth Rates) Look at the scenario Growth Rates. According to the rule of
70, how large will China 's real GDP per capita be in 20 years?
A) $5,600
B) $8,000
C) $16,000
D) $28,000
6. Which of the following will NOT increase the productivity of labor?
A) technological improvements
B) an increase in the capital stock
C) improvements in education
D) an increase in the size of the labor force
7. If technology advances:
A) more output can be obtained from the same inputs.
B) more inputs are needed to produce the same output.
C) less output can be obtained from the same inputs.
D) less output can be produced even with more inputs.
8. Which of the following does NOT qualify as physical capital?
A) shovel
B) factory
C) backhoe
D) mineral deposits
9. Technological progress is advanced through:
A) research and development.
B) government regulation.
C) consumption.
D) infrastructure.
10. When the government invests in building roads, ports, and a reliable power grid, it is investing in a nation
D) resource scarcity no longer limits economic growth.
15. As a limit to economic growth, environmental problems are more difficult to solve than resource problems because:
A) environmental problems don 't automatically provide incentives for changed behavior. B) resource problems don 't automatically provide incentives for changed behavior.
C) the opportunity cost of solving environmental problems in terms of GDP sacrificed is larger.
D) most scientists haven 't determined the relationship between greenhouse gas emissions and climate change.
16. Between 1973 and the early 1990s consumers responded to:
A) low oil prices by buying large cars, trucks, and SUVs that were not fuel-efficient.
B) low oil prices by using other types of energy.
C) high oil prices by buying small, fuel-efficient cars.
D) high oil prices by agreeing to cap-and-trade policies to limit the use of oil.
17. Economists mostly agree that the problem of climate change necessitates government action in the form of market-based incentives such as:
A) tax rebates to those causing negative externalities.
B) a reduction in the amount of gasoline that each person is allowed to

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