1/Economists do not use actual values of real GDP to measure economic growth bec

Question

1/Economists do not use actual values of real GDP to measure economic growth because...

A/real GDP holds price level constant, but in reality price level changes from year to year.
B/changes in real GDP could be due to fluctuations in the level of economic activity.
C/economic growth encompasses more than just growth in output.
D/changes in real GDP do not provide any information about income distribution.

2/In the U.S., between 1990 and 2007, capital stock and the level of technology increased dramatically. During the same period, employment and real wages rose. What do these set of events suggest?

A/The demand for labor increased by more than the increase in supply of labor over this period.
B/The demand for labor increased by less than the increase in supply of labor over this period.
C/The demand for labor decreased while the supply of labor increased over this period.
D/The demand for labor and the supply of labor decreased over this period.

3/The position of the long-run aggregate supply curve is determined by the aggregate production function and the demand and supply curves for labor.

A/True
B/False

4/Which of the following is a cost of economic growth?

A/the sacrifice of current consumption
B/inflation in consumption goods
C/the sacrifice of future consumption
D/excessive depletion of a nation's natural resources

5/A change in the availability of natural resources will shift the aggregate production function.

A/True
B/False

6/What is the opportunity cost of allocating more and more resources to the production of capital goods?

A/a decrease in real income
B/the amount of consumption goods that could have been produced
C/the increase in pollution
D/the environmental goods foregone

Explanation / Answer

1) B/changes in real GDP could be due to fluctuations in the level of economic activity. 2) A/The demand for labor increased by more than the increase in supply of labor over this period. 3) B/ False 4) D/excessive depletion of a nation's natural resources 5) B/ False 6) B/the amount of consumption goods that could have been produced

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