Econ Chapter 8 Homework Flashcards

Questions and Answers

How is real GDP per capita found?

Dividing real GDP by population.

What was the average annual growth rate of U.S. real GDP per capita between 1950 and 2018?

2.0 percent.

Which of the following economic regions has experienced the least growth in real GDP per capita since 1820?

Asia

North America

Africa (correct)

Europe

Which of the following economic regions has experienced the most growth in real GDP per capita since 1820?

United States Signup and view all the answers

Which of the following is not a supply factor in economic growth?

Aggregate expenditures of households, businesses, and government Signup and view all the answers

How is labor productivity measured?

Real output per worker-hour. Signup and view all the answers

Which of the following would not be expected to increase labor productivity?

Increase in the size of the labor force Signup and view all the answers

What does a nation's infrastructure refer to?

Public capital goods such as highways and sanitation systems. Signup and view all the answers

What are increases in the value of a product to each user, as the total number of users rises, called?

Network effects. Signup and view all the answers

Which of the following is not a source of increasing returns and economies of scale?

The multiplier effect Signup and view all the answers

Which of the following statements is true?

Economic growth is the most practical route to higher standards of living. Signup and view all the answers

What do critics of economic growth argue?

Economic growth does not resolve socioeconomic problems such as an unequal distribution of income and wealth. Signup and view all the answers

What does the Consider This box on patents and innovation demonstrate?

Patent protection for U.S. companies may not be as effective when other countries do not respect or enforce U.S. patent laws. Signup and view all the answers

What measure of economic growth is most useful for comparing living standards?

Increases in real GDP per capita Signup and view all the answers

If a nation's real GDP was $250 billion in Year 1 and $265 billion in Year 2, what is its real GDP growth rate in Year 2?

6.0 percent. Signup and view all the answers

At what average annual rates have real GDP and real GDP per capita grown from 1950 to 2018?

3.1 percent and about 2 percent, respectively. Signup and view all the answers

How can economic growth best be portrayed?

A rightward shift of the production possibilities curve. Signup and view all the answers

If 40,000 worker-hours produced a total output of $600,000, what is the labor productivity?

$15/worker-hour. Signup and view all the answers

A nation's real GDP will increase by increasing all of the following, except:

Average price level Signup and view all the answers

What was the percentage increase in real GDP between Year 1 and Year 2?

5.0 percent. Signup and view all the answers

Which of the following factors has been the dominant source of economic growth in the U.S. (except in 1973-1995)?

Increases in labor productivity Signup and view all the answers

What have labor productivity growth rates been in the U.S. during the periods 1973-1995 and 1995-2010?

1.5 percent and 2.8 percent, respectively. Signup and view all the answers

What is an example of increasing returns?

A firm increases its workforce and other inputs by 5 percent and its output increases by 8 percent. Signup and view all the answers

What term describes the effect where the value of a product increases as the number of users rises?

Network effects. Signup and view all the answers

Which country ranked highest in the World Economic Forum's Global Competitiveness Ranking in 2017-2018?

Switzerland Signup and view all the answers

Study Notes

Real GDP and Economic Growth

Real GDP per capita is calculated by dividing real GDP by the population, providing a per-person economic measure.
From 1950 to 2018, U.S. real GDP per capita grew at an average annual rate of approximately 2.0 percent.
Africa has experienced the least growth in real GDP per capita since 1820.
The United States has seen the most growth in real GDP per capita since 1820.

Factors Influencing Economic Growth

Aggregate expenditures from households, businesses, and government are not considered supply factors in economic growth.
Labor productivity is defined as real output produced per worker-hour, an essential determinant of economic efficiency.
An increase in the size of the labor force does not necessarily improve labor productivity.

Infrastructure and Economic Benefits

A nation's infrastructure includes public capital goods like highways and sanitation systems, crucial for economic activity.
Network effects occur when the value of a product increases for all users as more people use it, enhancing consumer benefits.

Economic Growth Metrics and Perspectives

The multiplier effect does not contribute to increasing returns and economies of scale.
A true statement by economists posits that economic growth is a key route to improving living standards for the majority.
Critics argue that economic growth fails to address socioeconomic issues such as income inequality.

Innovation and Global Market

Patent protection effectiveness for U.S. companies can diminish if other countries do not enforce U.S. patent laws.

Measuring Economic Growth

Increases in real GDP per capita serve as a vital measure for comparing living standards across nations.
A nation's real GDP growth rate can be calculated; for example, from Year 1 to Year 2, it had a growth rate of 6.0 percent.
From 1950 to 2018, real GDP grew at an average annual rate of 3.1 percent, with real GDP per capita growing at about 2 percent.

Production and Labor Productivity

Economic growth is visually represented by a rightward shift on the production possibilities curve.
Labor productivity can be calculated; for instance, with 40,000 worker-hours producing $600,000, the productivity equals $15 per worker-hour.
Real GDP can increase through various factors except for an increase in the average price level.

Understanding Economic Growth Dynamics

From Year 1 to Year 2, real GDP increased by 5.0 percent due to changes in labor and productivity.
In the U.S., significant sources of economic growth typically stem from improvements in labor productivity, particularly outside the 1973-1995 period.
The average rates of labor productivity growth in the U.S. were 1.5 percent from 1973-1995 and 2.8 percent from 1995-2010.
Increasing returns are evident when a firm's output rises more proportionately than its inputs; for example, a 5 percent input increase resulting in an 8 percent output increase demonstrates this phenomenon.

Global Competitiveness

Switzerland ranked highest in the World Economic Forum's Global Competitiveness Ranking for the period of 2017-2018.

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Test your knowledge on the key concepts of Chapter 8 in Economics with these flashcards. Learn about real GDP, economic growth patterns, and regional comparisons from 1950 to 2018. Perfect for reinforcing your understanding of essential economic principles!