7. Suppose economies A and B have the same intial level of GDP per capita at $15

Question

7. Suppose economies A and B have the same intial level of GDP per capita at $15,000, and each economy begins with a constant growth rate of 1% per year. (Neither country has good institutions for economic growth at first Then Country A enters an era of political stablity establishes property rights, and installs incentives for and entrepreneurshp. Country A's economc growth rate consequently improves to 5% Assuming population growth rates remain unaffected, how much longer wll take Country B to double its per capita GDP level compared to 1 Quantity demanded is A the amount of a good or service that a seller is able and willing to sell given price. 8.ways equal to the equilibrium quantity in a market C the amount of a good or service that a buyer is able and willing to purchase at a given price. D. the amount of a good or service that a buyer is able wiling to seli at a given price. 2. A small economy has a current real GDP per capita level of $2,000 and a GOP growth rate of 2%. Use the Rule of 70 to estimate how long it would take for this economy to quadruple ts GDP per capita A 20 years 8 95 years Country A? B. 14 years D. 28 years . Which statement is NOT true about net exports? A. U.S imports cannot contribute to the GDP of other C 14 years D. 70 years 3. GDP per capita is GDP dvided by A the inflation rate 8 population. C. the unemployment rate. D. the price level B. A nation that imports more than it exports has negative net exports C. The smallest component of U.S GOP is net exports D. The U.S has had negative net exports for every quarter since the third quarter of 1 9. What is the best definition of a recession? A significant, widespread decline in real income and 4. A certain nation has automobile factories, rows (illegal) marijuana, and does not allow its women to work outside the home. What wil be counted in GDP? A the sale of automobiles and the marijuana B the sale of automobiles minus the environmental B period that has a persistent low employment rate c period that follows two consecutive quarters of effects of pollution emtted by the factories C. the sale of automobiles, the marijuana, and the value D. period that follows a stock market crash 10 A frm produces volleyballs and soccer balls what happens to the supply of soccer balls if the market price of voleyballs increases A The opportunity cost of producing soccer bails falls, so the supply curve of soccer bails shifts left & The opportunity cost of prodacing soccer bails tals, so the suppy curve of soccer balls shifts right C The opportunity coat of producing soocer bals rises, so the supply curve ef soccer balls shifts left D. The opportunity cost of producing soccer balls rises, so the supply curve of soccer baills shifts right. D. the sale of the automobiles S. A car engine produced by a supplier to Ford Motor Company is an example of: A a final good B an inferior good C an intermediate good. D. ac-on good. 6. Private spending on tools, pliant, and equipment that are used to produce future output h called 11. A nation's real per capita GOP & $7,788 in 2004 and 58,080 in 2005. What is the growth rate of real GDP per capita? A. 35% 8.375% C 361% 2.75%

Explanation / Answer

1. C. The amount of goods and services that a buyer is able and willing to purchase at a given price.

2. D. 70 years.

Rule of 70:

Number of years to double = 70/Annual GDP growth rate

= 70/2% = 35 years and it will take another 35 years to quadruple. So a total of 70 years.

3. B. GDP divided by population

4. Sale of automobiles. GDP gives us the value of goods and services produced within a nation's boundries. No illegal goods are counted.

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