ECON 201
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Increasing returns in production imply the following, except
A. increasing labor-requirements per unit of output.
decreasing per-unit production costs.
economies of scale.
an increase in the productivity of inputs.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Increases in the value of the product to each user, including existing users, as the total number of users rises are called
A. network effects.
simultaneous consumption.
learning by doing.
the spreading of development costs.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
A piece of software that benefits many users at the same time would be an example of
network effects.
learning by doing.
multiple production.
D. simultaneous consumption.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Which of the following is a main source of increasing returns in recent years?
A. more learning by doing
the concentration of development costs
the use of less specialized inputs as firms grow
more resources devoted to agricultural production
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
One major economic benefit of global competition is
lower unemployment.
increased protection of domestic firms.
C. pressure to innovate.
D. more leisure opportunities.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Which of the following countries ranked highest in the World Economic Forum's Global Competitiveness Ranking in 2015–2016?
A. Japan
B. Switzerland
Germany
the United States
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
The dramatic slowdown in productivity growth experienced after the Great Recession
A. is believed by most economists to be a permanent shift in the economy.
B. is still debated among many economists as to whether it represents a permanent shift in the economy.
suggests that prospects for lasting increases in productivity growth are rather poor.
suggests that productivity growth can occur without raising the nation's standard of living.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Which of the following is not an explanation put forward to explain the recent productivity slowdown?
Consumers and firms are paying down highlevels of debt instead of investing in productive projects.
Overinvestment during the boom that preceded the Great Recession created overcapacity.
Technological progress itself may have stalled, until invention and innovation levels bounce back.
D. A massive influx of immigrant labor has caused the labor force to expand much faster than real GDP.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Which of the following arguments is not made by critics of growth policies?
Growth has resulted in resource degradation and pollution.
Sociological problems like poverty have not been solved by growth.
C. Growth may have given us the good life, but we cannot better it anymore.
D. Rapid growth is not sustainable in the long term due to resource limitations.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
One of the main arguments against further growth for industrialized nations focuses on the problem of
A. technological knowledge.
B. environmental quality.
feedback mechanisms.
infrastructure.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
An antigrowth view would be that there may be a significant trade-off between productivity and
education.
employment.
economies of scale.
D. the quality of life.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
One of the basic economic defenses of economic growth rests on the conclusion that
growth makes workers less obsolete and more secure in employment.
growth reduces the cost to society of "common property" resources.
C. growth makes the gap between unlimited wants and scarce resources less acute.
D. a growth-oriented society confers a "work and look to the future" attitude on the members of society.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
"Show me a pastoral society with an untouched environment, an abundance of leisure, and nonsecular values, and I will show you an underdeveloped, poverty-ridden country." This statement is most likely to be made by a(n)
advocate of learning by doing.
advocate of network effects.
C. proponent of economic growth.
D. critic of economic growth.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
If the working-age population in an economy shrinks, real GDP can still grow if
A. work hours per week decreases, to spread work among more workers.
B. labor productivity increases rapidly enough.
consumption by households increases rapidly.
spending by firms and the government increases.
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
To keep the population in an economy stable, the total fertility rate (average number of births per woman in her lifetime) must be about A. 4.2.
B. 1.5.
C. 5.1.
D. 2.1.
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
The "inverse dependency ratio" is defined as the ratio of
A. the average number of dependents per head of household.
B. the working-age population to the number of dependents.
the number of dependents to the number of the total population.
the number of parents and grandparents to the number of children.
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
From 2010 to 2050, the "inverse dependency ratio" in the U.S. is expected to
A. rise from 1.2 to 1.8.
B. fall from 1.5 to 1.2.
remain stable at 2.1.
rise from 1.5 to 2.8.
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
The problematic trend in the "inverse dependency ratio" in the U.S. is likely to show up first in
the manufacturing sector.
agriculture.
C. Social Security.
D. national defense.
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
True / False Questions
There are two common measures of economic growth: (1) increases in real GDP over some period of time and (2) increases in real GDP per capita over some time period.
TRUE
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-01 List two ways that economic growth is measured.
Test Bank: II Topic: Economic Growth
If a country has a larger real GDP than another country, then it should also have a higher real GDP per capita than the other country.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-01 List two ways that economic growth is measured.
Test Bank: II Topic: Economic Growth
The so-called Rule of 70 is a formula for finding the approximate number of times that a value will double in a period of 70 years.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-01 List two ways that economic growth is measured.
Test Bank: II Topic: Economic Growth
If real GDP grows at an average annual rate of 2.0 percent instead of 3.5 percent, then it would take about 35 years—instead of 20 years—for real GDP to double.
TRUE
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-01 List two ways that economic growth is measured.
Test Bank: II Topic: Economic Growth
Leader countries that experience modern economic growth early on will always grow faster than follower countries.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
In the period 1960 to 2010, the U.S. experienced a more rapid annual growth in real GDP per capita than countries like Ireland, Singapore, and South Korea.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Modern Economic Growth
One important growth-promoting institutional structure is the protection of domestic jobs against outsourcing.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-02 Define modern economic growth and explain the institutional structures needed for an economy to experience it.
Test Bank: II Topic: Institutional Structures That Promote Growth
An increase in the quantity and quality of natural resources is an example of a demand factor of economic growth.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-03 Identify the general supply, demand, and efficiency forces that give rise to economic growth.
Test Bank: II Topic: Determinants of Growth
The supply factors of economic growth are those factors that shift a country's production possibilities curve.
TRUE
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-03 Identify the general supply, demand, and efficiency forces that give rise to economic growth.
Test Bank: II Topic: Determinants of Growth
The ability to expand production is sufficient for a nation to achieve maximum possible growth.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-03 Identify the general supply, demand, and efficiency forces that give rise to economic growth.
Test Bank: II Topic: Determinants of Growth
A shift outward in the production possibilities curve is the direct result of improvements in the efficiency factor of economic growth.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-03 Identify the general supply, demand, and efficiency forces that give rise to economic growth.
Test Bank: II Topic: Production Possibilities Analysis
Total output for an economy is basically equal to total work-hours multiplied by labor productivity.
TRUE
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Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-03 Identify the general supply, demand, and efficiency forces that give rise to economic growth.
Test Bank: II Topic: Production Possibilities Analysis
If an economy has 800,000 work-hours employed, and its labor productivity is $16/hour, then its real GDP must be $50,000.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-03 Identify the general supply, demand, and efficiency forces that give rise to economic growth.
Test Bank: II Topic: Production Possibilities Analysis
Since the 1950s, the U.S. average annual rate of growth of real GDP was higher than the average annual growth of real GDP per capita.
TRUE
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-04 Describe growth accounting and the specific factors accounting for economic growth in the United States.
Test Bank: II Topic: Accounting for Growth
Increased labor productivity has been less important as a source of growth than the increased labor inputs in the U.S. economy since the 1950s.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-04 Describe growth accounting and the specific factors accounting for economic growth in the United States.
Test Bank: II Topic: Accounting for Growth
The real GDP of the United States has grown since the 1950s largely because of increases in labor productivity.
TRUE
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-04 Describe growth accounting and the specific factors accounting for economic growth in the United States.
Test Bank: II Topic: Accounting for Growth
The largest factor that raised labor productivity in the U.S. economy since the 1950s has been the increased amount of capital available.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-04 Describe growth accounting and the specific factors accounting for economic growth in the United States.
Test Bank: II Topic: Accounting for Growth
Human capital refers to the amount of capital available for the economy's human resources to work with.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-04 Describe growth accounting and the specific factors accounting for economic growth in the United States.
Test Bank: II Topic: Accounting for Growth
262.
The rate of growth of labor productivity in the U.S. declined from the period 1973–1995 to the period 1995–2010.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
The significant increase in U.S. labor-productivity growth experienced in the period 1995–2010 continued to be observed in the period 2010–2015.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
There tends to be a high positive correlation between the rate of productivity growth and the rate of economic growth.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
There tends to be a positive correlation between real wages of workers and the productivity of labor in the economy.
TRUE
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Global competition has tended to slow down the rate of productivity growth in the United States.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
Simultaneous consumption and network effects are sources of increasing returns and economies of scale that promote productivity growth.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-05 Explain how the average rate of U.S. productivity growth has fluctuated since 1973.
Test Bank: II Topic: Recent Fluctuations in the Average Rate of Productivity Growth
There is unanimous agreement that economic growth is both desirable and sustainable.
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
In the growth debate, defenders of economic growth believe that it is the primary path to raising living standards.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
In the growth debate, critics of economic growth say that it will deplete our finite economic resources.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
In the growth debate, critics of economic growth define "making a better living" as identical to "the good life."
FA LSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 08-06 Discuss differing perspectives as to whether growth is desirable and sustainable.
Test Bank: II Topic: Is Growth Desirable and Sustainable?
Chapter 09 Business Cycles, Unemployment, and Inflation Answer Key
Multiple Choice Questions
Recurring upswings and downswings in an economy's real GDP over time are called
A. recessions.
B. business cycles.
output yo-yos.
total product oscillations.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
In the United States, business cycles have occurred against a backdrop of a long-run trend of
declining unemployment.
stagnant productivity growth.
C. rising real GDP.
D. rising inflation.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
Most economists agree that the immediate determinant of the volume of output and employment is the
composition of consumer spending.
ratio of public goods to private goods production.
C. level of total spending.
D. size of the labor force.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
As it relates to economic growth, the term long-run trend refers to
A. the long-run increase in the relative importance of durable goods in the U.S. economy.
B. the long-term expansion or contraction of business activity that occurs over 50 or 100 years.
fluctuations in business activity that average 40 months in duration.
fluctuations in business activity that occur around Christmas, Easter, and other major holidays.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?
A. military goods
B. capital goods
textile products
agricultural commodities
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are
military goods and capital goods.
services and nondurable consumer goods.
clothing and education.
D. capital goods and durable consumer goods.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
During a severe recession, we would expect output to fall the most in
the health care industry.
the clothing industry.
agriculture.
D. the construction industry.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
The phase of the business cycle in which real GDP declines is called
the peak.
an expansion.
C. a recession.
D. the trough.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
The phase of the business cycle in which real GDP is at a minimum is called
the peak.
a recession.
C. the trough.
D. the underside.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
The production of durable goods varies more than the production of nondurable goods because
A. durable purchases of durables are not postponable.
B. durable purchases of durables are postponable.
the producers of nondurables have monopoly power.
producers of durables are highly competitive.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
A recession is defined as a period in which
cost-push inflation is present.
nominal domestic output falls.
demand-pull inflation is present.
D. real domestic output falls.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
A. expansion
recession
peak
trough
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 09-01 Describe the business cycle and its primary phases.
Test Bank: I Topic: The Business Cycle
Which of the following statements is true about causes of business cycle fluctuations?
Economists all agree that supply shocks are the cause of most business cycle fluctuations.
Economists all agree that productivity shocks are the cause of most business cycle changes.
Economists all agree that monetary changes are primarily responsible for business cycle fluctuations.
D. There are a wide range of theories as to the underlying causes of business cycle movements.
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