Renewable vs

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Questions and Answers

According to the text, what happens to aggregate supply when labor costs, raw material prices, and energy prices decrease?

  • Aggregate supply fluctuates
  • Aggregate supply increases (correct)
  • Aggregate supply remains unchanged
  • Aggregate supply decreases

From an investment perspective, what is the suggested action when there is a decline in aggregate supply (leftward shift of the SRAS curve)?

  • Reduce investment in fixed income (correct)
  • Increase investment in real estate
  • Increase investment in most equity securities
  • Increase investment in commodities or commodity-based companies

What happens to the AS curve when there is higher productivity growth?

  • The AS curve fluctuates
  • The AS curve remains unchanged
  • The AS curve shifts to the left
  • The AS curve shifts to the right (correct)

What are the investment implications when there is an increase in aggregate supply (rightward shift of the SRAS curve)?

<p>Favorable for most asset classes other than commodities (A)</p> Signup and view all the answers

Which of the following is a key determinant of economic growth?

<p>Technological progress (A)</p> Signup and view all the answers

What does the labor share measure in the growth accounting equation?

<p>Employee compensation (C)</p> Signup and view all the answers

Which sector has made a significant contribution to economic growth, employment, and exports in developed countries?

<p>Information technology (C)</p> Signup and view all the answers

What does the growth accounting equation in per capita terms explain?

<p>Growth in per capita GDP (A)</p> Signup and view all the answers

Which of the following factors is NOT considered in the measurement of Total Factor Productivity (TFP)?

<p>Physical capital stock (C)</p> Signup and view all the answers

What is the labor force defined as?

<p>The portion of the working age population that is employed or available for work but not working (A)</p> Signup and view all the answers

What does human capital reflect?

<p>The accumulated knowledge and skill that workers acquire from education, training, and life experience (A)</p> Signup and view all the answers

What is the correlation between investment (as a percentage of GDP) and economic growth?

<p>High (D)</p> Signup and view all the answers

Which of the following is a characteristic of renewable resources?

<p>They have few substitutes (D)</p> Signup and view all the answers

Which countries have relatively high per capita incomes due to their resource base?

<p>Brazil and Australia (A)</p> Signup and view all the answers

What are externalities in the context of public infrastructure?

<p>Effects of production and consumption activities on others (A)</p> Signup and view all the answers

What is the relationship between carbon dioxide emissions and economic growth?

<p>Carbon dioxide emissions rise with economic growth (C)</p> Signup and view all the answers

Which of the following statements is true about economic growth?

<p>Rapid growth in per capita real GDP can transform a poor nation into a wealthy one. (B)</p> Signup and view all the answers

What is the neoclassical or Solow growth model based on?

<p>The accumulation of capital, labor, and raw materials used in production. (C)</p> Signup and view all the answers

What does potential GDP measure?

<p>The economy's productive capacity. (B)</p> Signup and view all the answers

Why is there a limit to how fast an economy can grow?

<p>The costs associated with excess growth. (B)</p> Signup and view all the answers

According to the text, what does the parameter A represent in the production function Y = AF(L,K)?

<p>Total factor productivity (TFP) (C)</p> Signup and view all the answers

What does the assumption of constant returns to scale in the production function mean?

<p>If all the inputs in the production process are increased by the same percentage, then output will rise by that percentage (D)</p> Signup and view all the answers

What does diminishing marginal productivity mean in the context of the production function?

<p>The extra output produced from a one-unit increase in an input will decline (B)</p> Signup and view all the answers

According to the text, what is the only way to sustain growth in potential GDP per capita in the long run?

<p>Growth in total factor productivity (TFP) (D)</p> Signup and view all the answers

Which factors can influence innovative activity and economic growth?

<p>All of the above (D)</p> Signup and view all the answers

What is potential GDP?

<p>An unobserved concept that is approximated using a number of alternative methods (C)</p> Signup and view all the answers

How can economists estimate potential GDP?

<p>By measuring the productivity of the labor force (C)</p> Signup and view all the answers

What is labor productivity?

<p>The quantity of goods and services that a worker can produce in one hour of work (B)</p> Signup and view all the answers

Why is understanding changes in potential GDP important for financial analysts?

<p>It helps them forecast the economy's sustainable growth path (C)</p> Signup and view all the answers

Why is using total hours worked important when calculating labor productivity?

<p>To adjust for the fact that not everyone works the same number of hours (A)</p> Signup and view all the answers

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