Chapter 25 review
Student: ___________________________________________________________________________
1. Which of the following is a measure of economic growth that is most useful for comparing living standards? 
A) Growth in nominal GDP
B) Decreases in the rate of unemployment
C) Increases in real GDP per capita
D) Increases in real GDP
 2. A nation's real GDP was $250 billion in 2009 and $265 billion in 2010. Its population was 120 million in 2009 and 125 million in 2010. What is its real GDP growth rate in 2010? 
A) 15.0%
B) 6.0%
C) 5.7%
D) 1.1%
 
3. A nation's real GDP was $250 billion in 2009 and $265 billion in 2010. Its population was 120 million in 2009 and 125 million in 2010. What is its real GDP per capita in 2010? 
A) $2,120 per person
B) $212 per person
C) $21,200 per person
D) $205 per person
 4. The "rule of 70" is a formula for determining the approximate number of: 
A) Years that it would take for a value (like real GDP) to expand 70 times
B) Years that it would take for a value (like real GDP) to double
C) Times a value (like real GDP) is a multiple of 70
D) Times one could double a certain value (like real GDP) over 70 years
 
5. A nation's average annual real GDP growth rate is 2.5%. Based on the "rule of 70", the approximate number of years that it would take for this nation's real GDP to double is: 
A) 175 years
B) 40 years
C) 28 years
D) 17.5 years
 6. Consider two scenarios for a nation's economic growth. Scenario A has real GDP growing at an average annual rate of 3.5%; scenario B has an average annual growth of 4.5%. The nation's real GDP would double in about: 
A) 20 years under scenario A, versus 30 years under scenario B
B) 20 years under scenario A, versus 16 years under scenario B
C) 12 years under scenario A, versus 16 years under scenario B
D) 16 years under scenario A, versus 30 years under scenario B
 
7. Patents and copyrights foster the flow of: 
A) Saving and investment
B) Spending and income
C) Resources and products
D) Inventions and ideas
 
8. Which of the following is a demand factor in economic growth? 
A) More human and natural resources
B) Technological progress and innovation
C) An increase in the economy's stock of capital goods
D) An increase in total spending in the economy
 9. Economic growth can best be portrayed as a: 
A) Leftward shift of the production possibilities curve
B) Movement from a point inside to a point outside of the production possibilities curve
C) Movement from a point near the vertical axis to a point near the horizontal axis on the production possibilities curve
D) Rightward shift of the production possibilities curve

 10. Assume a nation's current production possibilities are represented by the curve AB in the above diagram. Economic growth would best be indicated by a: 
A) Shift in the curve from AB to CD
B) Shift in the curve from AB to EF
C) Movement from point 1 to point 2
D) Movement from point 3 to point 4
 
11. Refer to the above diagram. Which of the following is the most likely cause for a shift in the production possibilities curve from AB to CD? 
A) The use of the economy's resources in a more efficient way
B) An increase in the spending of business and consumers
C) An increase in government purchase of the economy's output
D) An increase in the quantity and quality of labor resources

12. Refer to the above graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by which of the following factors? 
A) A decrease in the price level
B) Allocative efficiency
C) Technological progress
D) Full employment of resources
 
13. Refer to the above graph. If the production possibilities curve for an economy is at CD but the economy is operating at point X, the reasons are most likely to be because of: 
A) Technological progress and industrial change
B) Increases in the quantity and the quality of resources
C) Improvement in labor productivity and the number of work-hours
D) Unemployment and inefficient allocation of resources
 14. Society can increase its output and income by increasing basically one or both of two factors: 
A) Its spending and investment
B) Its private and public sectors of the economy
C) Its resources and the productivity of the resources
D) Its markets and prices
 
15. The factor accounting for the largest increase in the productivity of labor in the United States has been: 
A) The education and training of workers
B) Improved resource allocation
C) The quantity of capital
D) Technological advance
 16. Which is the single most important source of U.S. economic growth? 
A) Stability of the socio-cultural-political environment
B) Improvement in the legal and human environment
C) Increases in the quantity of labor
D) Increases in labor productivity
 
17. What economic concept would be most closely associated with a situation where an aluminum plant expands its operations and uses extensive computerization in the production line to reduce per-unit costs of production? 
A) Infrastructure
B) Human capital
C) Network effects
D) Economies of scale
 18. The shift of labor out of agriculture to industry in the United States has tended to: 
A) Reduce the rate of productivity growth
B) Increase unemployment in the agriculture sector
C) Reduce unemployment in the industrial sector
D) Increase labor productivity

Chapter 25 review Key
 
1. C
 
2. B
 
3. A
 
4. B
 
5. C
 
6. B
 
7. D
 
8. D
 
9. D
 
10. A
 
11. D
 
12. C
 
13. D
 
14. C
 
15. D
 
16. D
 
17. D
 
18. D