Question 1

Which of the following best defines economic growth as discussed in the lecture materials?

Accepted Answer

A long-run increase in the economy’s ability to produce goods and services.

Question 2

Suppose the real GDP per capita in a country increased from $$50,000 to 51$$,500 over one year. What is the growth rate of real GDP per capita for that year? Use the formula $$ 	ext{Growth Rate} = \frac{	ext{New Value} - 	ext{Old Value}}{	ext{Old Value}} 	imes 100\% .$$

Accepted Answer

$$2.5\%$$

Question 3

According to the 'Rule of 70', if a country's real GDP per capita grows at an annual rate of $$2\%$$, how many years will it take for the real GDP per capita to double?

Accepted Answer

$$35$$ years

Question 4

Which of the following is NOT considered a primary determinant of long-run economic growth?

Accepted Answer

Short-term changes in consumer spending

Question 5

If the U.S. real GDP per capita was $$66,814 in 2023 $$and $$65,478 in 2022$$, what was the growth rate in 2023? Use $$ 	ext{Growth Rate} = \frac{66,814 - 65,478}{65,478} 	imes 100\% .$$

Accepted Answer

$$2.04\%$$

Question 6

Which of the following best describes the business cycle?

Accepted Answer

Periodic fluctuations in economic activity, such as changes in real GDP and employment.

Question 7

During which phase of the business cycle does actual output typically fall below potential output?

Accepted Answer

Recession

Question 8

Which of the following is an example of technological progress as a source of economic growth?

Accepted Answer

A company invents a new, more efficient method for producing solar panels.

Question 9

If a country’s real GDP per capita grows at $$0.5\%$$ per year, how many years will it take for its output per capita to double according to the Rule of 70?

Accepted Answer

$$70 / 0.5 = 140$$ years

Question 10

Which of the following institutional factors is most likely to promote long-term economic growth?

Accepted Answer

Protected property rights

Question 11

Refer to the provided FRED graph of U.S. real GDP per capita growth rates. Which of the following statements is most accurate?

Accepted Answer

The growth rate of real GDP per capita fluctuates significantly from year to year.

Question 12

Which of the following best describes the effect of economic growth on the production possibilities frontier (PPF)?

Accepted Answer

Economic growth causes the PPF to shift outward.

Question 13

Which of the following events is most likely to trigger a recession, as defined in the lecture materials?

Accepted Answer

A significant decline in economic activity lasting more than a few months and spread across the economy.

Question 14

Which of the following is a correct application of the Rule of 70? If a country’s real GDP per capita grows at $$3.5\%$$ per year, how many years will it take to double?

Accepted Answer

$$70 / 3.5 = 20$$ years

Question 15

Which of the following best distinguishes a 'recession' from a 'slump'?

Accepted Answer

A recession lasts from a business cycle peak to the following trough, while a slump is an extended period of low resource utilization.

Question 16

Which of the following is an example of an institution that facilitates economic growth?

Accepted Answer

A government that enforces protected property rights.

Question 17

If actual output exceeds potential output in an economy, which phase of the business cycle is most likely occurring?

Accepted Answer

Expansion

Question 18

Which of the following is a plausible reason why macroeconomists cannot provide a universal growth recipe for all countries?

Accepted Answer

Growth depends on a complex mix of factors including institutions, technology, and capital, which vary across countries.

Question 19

Which of the following is an example of human capital contributing to economic growth?

Accepted Answer

Workers receive advanced training and education.

Question 20

Which of the following best describes the relationship between labor productivity and real GDP per capita?

Accepted Answer

Higher labor productivity leads to higher real GDP per capita.

Economic Growth and the Business Cycle: Concepts, Measures, and Applications

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