In Exhibit X2 assume there are 100 laborers in the economy If an increase in investment allows movement along curve Q from point a to point b then

  In Exhibit X-2, assume there are 100 laborers in the economy. If an increase in
                            investment allows movement along curve Q from point a to point b, then investment-
                            induced economic growth is

a.–5 percent

b.not affected

c.2 percent

d.5 percent

e.10 percent

22.              In Exhibit X-2, a shift outward from curve Q to curve Q^T can be caused by

a.new technology increasing the labor’s productivity

b.the elimination of labor causing only capital to be used

c.the introduction of land to labor and capital

d.the lack of innovation in the economy

e.a reduction in the capital stock

23.              In Exhibit X-2, at a capital-labor ratio of $200, new technology raises

a.output per laborer from 50 to 55

b.output per laborer from 50 to 60

c.output per laborer from 200 to 220

d.capital-labor ratio from 50 to 60

e.capital-labor ratio from 200 to 220

24.              Adam Smith believed that without saving

a.the economy will grow faster because the increased spending on consumption will
persuade producers to invest in the future of the economy

b.people would spend that part of their income that would have been saved on
frivolous goods that have no beneficial effect on the economy

c.people would need less income, would work less, and the wealth of nations would
diminish

d.there would be no investment and no economic growth

e.technology would become more important and the increased technology that would
result would create more economic growth than the economy would otherwise
experience

25.              Historical note: The relatively high (over 5 percent) average annual rates of economic
                            growth in the U.S. during the 1960s appear to be associated with a ratio of saving to
                            GDP that

a.was consistently negative

b.was between –2.5 and +2.5 percent

c.was between 4.5 and 8.5 percent

d.over  20 percent

e.approximated the rate of growth of technology

Answer:  D              26.              Historical note: The relatively low average annual rates of economic growth in the U.S.
                            between 1973 and 1993 appear to be associated with a ratio of saving to GDP that

a.was consistently negative

b.was below 5 percent

c.was above 5 percent

d.was less than 20 percent

e.approximated the rate of growth of technology

27.              According to the Council of Economic Advisers and the Department of Labor, the most
                            significant factor contributing to the increase in GDP growth from 1947 to 1973 was

a.labor inputs

b.capital inputs

c.technological change

d.reclamation of polluted land

e.immigration

28.              Which of the following statements is true for the United States economy?

a.All the statements are true.

b.GDP increases over time.

c.GDP doubles every generation.

d.Population growth contributes to increases in GDP.

e.GDP fluctuates from year to year.

29.              Among the answers given below, which one does not explain why an economy grows?

a.growth of population and the labor force

b.capital accumulation and capital deepening

c.technological change

d.high death rates and high birth rates

e.increases in human capital

30.              Capital deepening occurs when

a.consumption and immigration increase

b.investment increases and the number of workers decreases

c.employment increases

d.saving increases and investment decreases

e.the number of workers increases and investment decreases