• Introduction of new goods

A nation’s standard of living is measured by its

• nominal GDP per person.

Over the past century in the United States, real GDP per person has grown by about

• 2 percent per year.

Over the past century in the United States, average income as measured by real GDP per person has grown at an average annual rate that implies should double about every

• 35 years.

In the United States, as measured by real GDP, average income is about how many times as high as average income a century ago?

• 8

In recent decades, average income in some East Asian countries, such as Hong Kong, Singapore, and Taiwan, has risen about

• 7 percent per year.

In some East Asian countries, average income, as measured by real GDP per person, has grown at an average annual rate that implies output should double about every

• 10 years.

In the length of one generation, which of the following countries has gone from being among the poorest countries in the world to being among the richest?

• South Korea

Average income has been stagnant for many years in

• Ethiopia.

Which of the following is NOT true?

• Productivity is not closely linked to government policies

Which of the following is measured by real GDP?

• total real output

Which of the following is correct?

• Both levels and growth rates of real GDP per person are diverse across countries.

In 1997, the typical citizen of China had about as much real income as the typical American in

• 1870.

Of the following countries, which had the highest growth rate over the last 100 years?

• Brazil

Countries that grew the fastest over the last 100 years had growth rates of about

• 3.0 percent.

Compounding refers to

• the accumulation of a growth rate over a period of time.

According to the “rule of 70,” about how many more years does it take the output of a country to double if its output grows at 2 percent per year instead of 3 percent per year?

• 12 years

According to the rule of 70, if some variable grows at a rate of x percent per year, then that variable doubles in approximately

• 70/x years.

Productivity

• explains most of the differences across countries in the standard of living

Which of the following is a correct way to measure productivity?

• divide output by the number of hours worked

Which of the following is not correct?

• Countries that have had higher output growth per person have typically not experienced higher productivity growth.

Which of the following is a determinant of productivity?

• All of the above are correct.

Natural resources

• All of the above are correct.

Which of the following is an example of a nonrenewable resource?

• Oil

In a market economy, scarcity of resources is reflected in

• market prices.

In a market economy, the real, or inflation adjusted, price of a resource measures its

• relative scarcity.

The market prices of most natural resources (adjusted for inflation) have been

• stable or falling

The relationship between the quantity of output created and the quantity of inputs needed to create it is called

• the production function.

Capital accumulation

• requires that society sacrifice consumption goods in the present

Across countries, investment and growth rates are

• positively related

The traditional view of the production process is that capital is subject to

• diminishing returns