Question

1) A good measure of the standard of living is A) real GDP per capita B) the real interest rate C) total nominal GDP D) total real GDP. E) nominal GDP per capita 2) If you invest $10,000 in a bond that earns 8% interest per year, how many years will it take to double your money? A) 1 year and 3 months B) 2 years and 6 months C) 5 years and 6 months D) 8 years E) 8 years and 9 months 3) The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as A) unit efficiency B) real GDP. C) human capital D) labour productivity E) technology. 4) Which of the following increases labour productivity? A) inventions of new machinery, equipment, or software B) an increase in the aggregate hours of work C) an increase in regulations D) decreases in the availability of computers and factory buildings E) a decline in the health of the population 5) What two factors are the keys to determining labour productivity? A) the average level of education of the workforce and the price level B) the growth rate of real GDP and the interest rate C) investment and average number of hours worked D) the business cycle and the growth rate of real GDP E) technology and the quantity of capital per hour worked

Answer 1

1) Option A. Real GDP per capita articulates what each individual in the economy gets if the real GDP is distributed uniformly. It is therefore a good measure for standards of living

2) The doubling time is calculated as ln(20000/10000)/ln(1.08) = 9 years. Closest value is Option E

3) Option D. It is found by dividing total output with total labor hours and is a reflection of average product of labor

4) Option A. Workers increase their productivity when they are equipped with more capital

5) Option E