(1) If the interest rate is 7% a year, how long would it take to double your inv
ID: 1136768 • Letter: #
Question
(1) If the interest rate is 7% a year, how long would it take to double your investment? 10 years 15 years 18 years 24 years
(2) Productivity is defined as the amount of output produced given a set of prices. a specific level of inputs. a production possibilities frontier. workers' willingness to work.
(3) What is the effect of an increase in the quantity of natural resources on productivity? Productivity rises. Productivity falls. Productivity remains unchanged, because it depends only on labor. Productivity remains unchanged, because it depends only on labor and capital accumulation.
(4) If returns to scale are constant, by how much does output rise if capital, labor, natural resources, and human capital each increase 8 percent? 2 percent 4 percent 8 percent 32 percent
(5) Given a fixed quantity of resources and technology, which of the following statements is true? There is a trade-off between the quantity of capital goods and the quantity of consumption goods that can be produced. An economy can produce more capital goods and more consumption goods if it increases the quantity of capital goods produced. Choosing a point inside the production possibilities frontier allows the economy to produce more consumption goods and more capital goods. Choosing a point outside the production possibilities frontier allows the economy to produce more consumption goods and more capital goods.
(6) What are the determinants of aggregate output? Labor, capital goods, natural resources, and human capital Prices, supply, and demand Inflation, unemployment, and growth Capital goods and consumption goods
(7) Which of the following is not likely to help an economy grow? An increase in population An increase in the level of education An increase in the price level An increase in the availability of natural resources
(8) Which of the following statements about an outward shift of the production possibilities frontier is true? The economy can no longer produce the same quantities of consumption and capital goods it did before the shift. The economy can produce more capital goods but fewer consumption goods. The economy faces a broader set of optimal production combinations. The aggregate supply curve shifts upward, meaning that at every price, producers are willing to supply less than they were before the shift.
(9) The term compounding refers to the increase in the growth rate over a period of time. the inflation adjustment to the growth rate of real GDP over a period of time. the accumulation of a growth rate over a period of time. none of the above.
(10) If Tom received a yearly raise of 7%, about how many years would it take for his salary to double? 7 years 10 years 14 years 21 years
(11) Apply the Rule of 70 to the following question. If you invest $10,000 at 5% interest, how long will it take for your money to double? 5 years 7 years 10 years 14 years
(12) Study the graph below. A movement from point A to point B would most likely result in
sacrificing the production of capital goods for the production of consumption goods. an outward shift of the production possibilities frontier (PPF) curve. a lower level of full employment. higher prices.
(13) An outward shift of the long-run aggregate supply curve will raise an economy’s standard of living. increases unemployment. is caused by a depletion of natural resources. increases the aggregate price level.
(14) If an economy’s production possibilities frontier (PPF) curve shifts outward, we can expect the __________ to shift __________. aggregate demand curve; inward aggregate demand curve; outward long-run aggregate supply curve; outward long-run aggregate supply curve; inward
(15) All of the following would be considered capital goods, except a dump truck. a new factory. on-the-job training. All of the above are capital goods.
(16) What are the sources of savings in the economy? Business savings and household savings Private savings by households, government savings, and savings by foreigners The difference between income and spending of households The difference between income and spending of households and businesses
(17) How is the level of investment related to the level of savings in the economy? The higher the level of savings, the higher the level of investment. The lower the level of savings, the higher the level of investment. The relationship depends on how firms behave. Investment depends on interest rates, not savings.
(18) What is the effect on growth of eliminating trade barriers? Domestic producers are forced out of business, and growth slows. Domestic producers are forced to compete with importers, and productivity and growth increase. The domestic economy is unaffected. Consumers tend to substitute domestic goods for imports.
(19) What is the effect of banning imports in order to encourage the development of domestic industries? Exports increase. People pay more for goods and services, because they are produced by less efficient domestic manufacturers, who are protected from foreign competition. People pay less for goods and services, because they are produced domestically. The quality of goods and services improves, because they are produced domestically rather than imported from abroad.
(20) The cycle of poverty in which emerging countries are caught involves low productivity, which leads to high prices, low consumption, and poverty. low investment, which leads to low consumption, low prices, and low GDP. low per capita GDP, which leads to low demand, low savings, low investment, and low productivity. a low level of natural resources, which leads to low demand, low savings, low investment, and low productivity.
(21) Per capita GDP is the level of productivity divided by the level of investment. spending divided by the level of investment. output divided by the population. output divided by the level of prices.
(22) Policies that can break the cycle of poverty include investing in foreign technology and providing incentives for saving. providing basic health care and increasing birth rates. increasing wages and output. increasing imports and maintaining political stability.
(23) Promoting industrialization over agriculture might fail to help an emerging economy grow because the economy may have a comparative advantage in agriculture. workers may be unwilling to work in factories. the prices of industrial inputs may be high. there may be too few workers to operate factories efficiently.
(24) Thomas Malthus, the nineteenth century British economist, predicted that changes in technology would eventually eliminate hunger. food production could never keep up with population growth. reductions in birth rates would increase standards of living throughout the world. under certain circumstances, large populations can be engines of growth.
(25) Which of the following is not a source of funds for investment in emerging economies? The World Bank A trade surplus The International Monetary Fund Household savings
Explanation / Answer
Solution -
1) 10 years
2) Specific level of inputs
3) productivity rises
6) labor,capital goods,natural resources and human capital
7) an increase in the price level
9) the accumulation of growth rate over a period of time.
10) 10 years
11) 14 years
12) an outward shift of the PPf curve
13) will raise an economy standard of living
14) long run aggregate supply curve; Outward
15) On the job training
18) domestic producers are forced to compete with importers and productivity and growth increase.
19) People pay more for goods and services because they are produced by less efficient domestic manufacturers qho are protected from foreign competition.
21) output divided by the population
22) increasing wages and output
25) a trade surplus.
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