Q: Suppose Country X had a real GDP of $$500 billion in 2022 and 530 $$billion in 2023. What was Country X's real GDP growth rate in 2023?

$$\frac{530 - 500}{500} \times 100 = 6\%$$

Question 1

Suppose Country X had a real GDP of $$500 billion in 2022 and 530 $$billion in 2023. What was Country X's real GDP growth rate in 2023?

Accepted Answer

$$\frac{530 - 500}{500} 	imes 100 = 6\%$$

Question 2

If a country’s real GDP grows at 4% per year, approximately how many years will it take for its real GDP to double according to the Rule of 70?

Accepted Answer

$$\frac{70}{4} = 17.5$$ years

Question 3

Which of the following best describes the difference between real GDP and real GDP per person?

Accepted Answer

Real GDP measures total production; real GDP per person measures average standard of living.

Question 4

If a country’s real GDP grows by 5% and its population grows by 2% in the same year, what is the approximate growth rate of real GDP per person?

Accepted Answer

$$5\% - 2\% = 3\%$$

Question 5

Which of the following is NOT a precondition for labor productivity growth according to the study materials?

Accepted Answer

A large government bureaucracy

Question 6

A country increases its working-age population, but its aggregate production function does not shift. What is the most likely effect?

Accepted Answer

Potential GDP increases, but potential GDP per hour of labor decreases.

Question 7

Which of the following best explains why each additional hour of labor is less productive than the last, according to the aggregate production function?

Accepted Answer

Diminishing returns to labor

Question 8

If labor productivity increases in a country, what happens to the aggregate production function and the demand for labor?

Accepted Answer

The aggregate production function shifts upward and demand for labor increases.

Question 9

Which of the following is the most significant contributor to long-run labor productivity growth?

Accepted Answer

Technological advances

Question 10

According to classical (Malthusian) growth theory, what happens when real GDP per person rises above the subsistence level?

Accepted Answer

Population increases, causing real GDP per person to fall back to subsistence.

Question 11

Which theory argues that knowledge is a public good and not subject to diminishing returns, allowing for permanent economic growth?

Accepted Answer

New growth theory

Question 12

If a country is producing inside its production possibilities frontier (PPF) one year and on the PPF the next year, but the PPF itself does not change, what does this indicate?

Accepted Answer

The country has moved from inefficient to efficient production, but has not experienced economic growth.

Question 13

Which of the following would cause the aggregate labor supply curve to shift to the right?

Accepted Answer

An increase in the working-age population

Question 14

Which of the following is a direct effect of an increase in physical capital in an economy?

Accepted Answer

Labor productivity increases

Question 15

According to neoclassical growth theory, what is the primary driver of long-run economic growth?

Accepted Answer

Random technological improvements

Question 16

Which of the following scenarios best illustrates the concept of diminishing returns to physical capital?

Accepted Answer

A factory adds more machines, but each new machine increases output by less than the previous one.

Question 17

If a country’s real wage rate is above the equilibrium wage rate, what will happen in the labor market?

Accepted Answer

There will be a surplus of labor and the wage rate will fall.

Question 18

Which of the following is an example of human capital growth?

Accepted Answer

Workers receive additional training and education.

Question 19

Which of the following statements about knowledge capital is TRUE according to new growth theory?

Accepted Answer

Knowledge capital is not subject to diminishing returns.

Economic Growth: Principles, Measurement, and Theories

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