Q: Which equation correctly defines real GDP per person?

$$\text{Real GDP per person} = \frac{\text{Real GDP}}{\text{Population}}$$

Question 1

Which of the following best describes economic growth in macroeconomics?

Accepted Answer

The sustained, year-on-year increase in potential GDP.

Question 2

If a country’s real GDP grows at 2% per year, approximately how many years will it take for real GDP to double according to the Rule of 70?

Accepted Answer

$$70 \div 2 = 35$$ years

Question 3

Which of the following is NOT a source of growth in potential GDP?

Accepted Answer

A one-time increase in aggregate demand

Question 4

Suppose the working-age population increases, but labour productivity remains unchanged. What is the most likely effect on real GDP per person?

Accepted Answer

It will decrease due to diminishing returns.

Question 5

Which equation correctly defines real GDP per person?

Accepted Answer

$$	ext{Real GDP per person} = \frac{	ext{Real GDP}}{	ext{Population}}$$

Question 6

What happens to the equilibrium real wage rate and aggregate labour hours if the supply of labour increases with no change in demand?

Accepted Answer

The real wage rate falls and aggregate labour hours increase.

Question 7

Which of the following is the most fundamental source of labour productivity growth?

Accepted Answer

Human capital acquired through education and training

Question 8

If labour productivity increases, what is the effect on the aggregate production function?

Accepted Answer

It shifts upward.

Question 9

A country’s real GDP per person will grow only if:

Accepted Answer

Real GDP grows at a faster rate than the population.

Question 10

Which of the following best explains why technological advances are important for economic growth?

Accepted Answer

They increase labour productivity, shifting the production function upward.

Question 11

If the real wage rate is above equilibrium in the labour market, what will occur?

Accepted Answer

A labour surplus will force the real wage rate down.

Question 12

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

Accepted Answer

An increase in labour productivity

Question 13

Suppose a country’s real GDP grows at 3.5% per year. Using the Rule of 70, how many years will it take for real GDP to double?

Accepted Answer

$$70 \div 3.5 = 20$$ years

Question 14

Which of the following is NOT a precondition for labour productivity growth?

Accepted Answer

A high unemployment rate

Question 15

If the aggregate demand for labour increases while the supply of labour remains unchanged, what happens to the equilibrium real wage rate and aggregate labour hours?

Accepted Answer

Both the real wage rate and aggregate labour hours increase.

Question 16

Which of the following scenarios best illustrates economic growth rather than a business cycle expansion?

Accepted Answer

An outward shift of the PPF.

Question 17

Labour productivity is defined as:

Accepted Answer

The quantity of real GDP produced by an hour of labour.

Question 18

Which of the following would NOT increase aggregate hours in an economy?

Accepted Answer

A decrease in average hours per worker

Question 19

If real GDP increases from $$2,000$$ billion to $$2,200$$ billion when aggregate labour hours increase from $$30$$ billion to $$35$$ billion, what is the average labour productivity at $$35$$ billion hours?

Accepted Answer

$$\frac{2,200}{35} = 62.86 ($$billion dollars per billion hours)

Question 20

Which of the following is a likely long-term effect of sustained growth in labour productivity?

Accepted Answer

An upward shift in the aggregate production function

Economic Growth: Concepts, Measurement, and Sources

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