Macroeconomics Quiz # 8

X – M is the equation for ______.

Fixed investment

Inventory investment

Net imports

Net exports

______ are annual allowances set aside to replace worn-out capital.

Depreciation payments

Appreciation payments

Factor payments

Inventory payments

If GNP is $15,000 and depreciation is $3,000, NNP is ______.

$5,000

$8,000

$12,000

$18,000

Which of the following often makes comparing GDP over time misleading?

Deflation

Inflation

Government subsidies

Government loans

The real output of goods and services per person is called the real ______ per capita.

GDP

GNP

NNP

NDP

What is the only measurement that can be used to compare GDP over time?

Bonds

Commodities

Money

Stocks

Which of the following is an accurate statement about nonmarket transactions?

They usually include leisure activities.

They avoid the exchange of money.

They are included in the GDP.

They often involve illegal activities.

GDP fails to take into account which of the following?

Market transactions

Government spending

Quality of goods

Foreign sales

Externalities are the effects caused by ______.

Environmental incidents

Nonmarket transactions

The exchange of illegal goods

The production of goods

Economists typically measure economic growth by looking at ______.

Standard of living

Real GDP per capita

Natural rate of output

The rule of 70

According to the rule of 70, an economy with an annual growth rate of 4 percent will double its output after ______ years.

280

175

28

17.5

Which statement about productivity is true?

Productivity is usually measured in terms of labor.

Productivity measures a nation’s annual output.

A nation’s productivity rises as its population grows.

A nation’s standard of living falls when its productivity rises.

Labor productivity is best defined as ______.

The average annual output of a nation

The efficient use of resources

Output per unit of worker

The aggregate value of worker output

Which statement about natural resources is true?

Access to abundant natural resources tends to enhance national output.

Natural resources are the single most telling predictor of a nation’s output.

A country that lacks natural resources will not grow economically.

Labor is a form of natural resource.

Innovation is best defined as the ______.

Lowering of firm costs through productivity gains

Adoption of a process or product

Ability to increase output with fewer workers

Use of technology in production

An economy can offset diminishing marginal returns by ______.

Raising the standard of living

Promoting saving

Increasing the number of people working on a given task

Implementing technological innovations

Which statement regarding democracy and economic growth is true?

Democracy is a natural and inevitable result of economic growth.

Majority voting and some other democratic features can hinder growth.

The highest levels of growth are found in democratic societies.

Authoritarian societies do not pursue policies to increase economic growth.

Which statement about saving is true?

Higher levels of saving generally lead to greater investment and economic growth.

The standard of living in a nation will rise if every dollar earned is saved.

Economies are more likely to grow if individuals consume the majority of their income.

The link between saving and economic growth is tenuous at best.

One of the main objectives of the International Monetary Fund and World bank is to ______.

Ensure international economic equality so that no one country becomes too wealthy

Boost savings rates around the world to spur growth

Help channel money to developing countries for investment in infrastructure

Protect private property rights and enforce the rule of law

Economists refer to a government’s ability to enforce contracts and protect property rights the ______.

Law of diminishing marginal returns

Rule of law

Malthusian Prediction

Standard of ceteris paribus

Which statement about world population growth is true?

Rapid population growth hindered U.S. economic growth during the mid-nineteenth century.

If population increases more slowly than output, per capita output will fall.

The United Nations expects the world population to level off around 2100.

Most future population growth is expected to occur in developing countries.

The Reverend Thomas Malthus based his predictions about per capita economic growth and wages on several assumptions, including the idea that ______.

The economy was service based

Humans would choose to control the birthrate

Technology can overcome marginal diminishing returns

There is a fixed supply of land

What is one reason why Malthus’s theory was ultimately incorrect for most of the world?

Improved technology is able to mitigate some of the impact of the law of diminishing returns.

The law of diminishing returns does not apply when labor is involved.

Unenforceable property rights mean that land is constantly changing hands and is not worked to its fullest potential.

Most countries have more natural resources than they can ever hope to use.

What did China do between 1980 and 2015 to try to increase economic growth per capita?

It encouraged citizens to have large families so there would be more workers.

It acquired additional land for farming from its neighbors.

It regulated how many children a family could have.

It limited educational access for women.

Entities that hold shares of stock in a corporation are called ______.

Stockholders

Stock indexes

Stockbrokers

Stock issuers

A stock that pays fixed, regular dividend payments that do not vary with the profits of the corporation is known as ______.

Common stock

Preferred stock

Public stock

Market stock

Stocks and bonds are often referred to as ______.

Real estate

Commodities

Money markets

Securities

Financial institutions that accept funds from households and make them available to firms are known as ______.

Preferred stocks

Shareholders

Financial intermediaries

Common stocks

If Company Q were to go bankrupt, the owners of Company Q’s ______ would be most exposed to risk.

Bonds

Common stock

Preferred stock

Loanable funds

The relationship between saving and investment for an entire economy is represented by the equation ______.

S = I

S < I

S > I

S + I = 0