# Chapter 13 Why Do Economies Grow?

1)

According to the text, ________ is perhaps the most critical aspect of a

country’s economic performance.

A)

growth in GDP

B)

the inflation rate

C)

the unemployment rate

D)

the living standard

2)

An increase in a country’s capital stock relative to its work force is known as

A)

capital deepening.

B)

capital growth.

C)

capital improvement.

D)

capital augmentation.

3)

Technological progress occurs when the economy gets more output

A)

without any more capital or labor.

B)

by using more capital per worker.

C)

by using more capital but not more workers.

D)

by using more labor but not more capital.

4)

GDP per capita means GDP

A)

in real terms.

B)

adjusted for inflation.

C)

per person.

D)

divided by the capital stock.

5)

Suppose real GDP was 120 in year 1 and 156 in year 2. The growth rate of real

GDP is

A)

5.6%.

B)

18%.

C)

30%.

D)

36%.

6)

Suppose real GDP was 100 in year 1 and 105 in year 2. The growth rate of real

GDP is

A)

0.5%.

B)

1.5%.

C)

2.5%.

D)

5%.

7)

If the growth rate for GDP was 9% and GDP in year 1 was 100, then GDP in year 2

would be

A)

90.

B)

109.

C)

190.

D)

199.

8)

If the growth rate for GDP was 5% and GDP in year 1 was 140, then GDP in year 2

would be

A)

133.3.

B)

135.

C)

145.

D)

147.

9)

Suppose that real GDP starts at 100 and grows at a rate of 10% per year for two

years. In the third year real GDP would be

A)

110.

B)

110.1.

C)

120.

D)

121.

10)

Suppose that real GDP starts at 200 and grows at a rate of 9% per year for two

years. In the third year real GDP would be

A)

183.49.

B)

236.

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