Real GDP per person in the country of Flax is £10,000. Each year real GDP per person grows 5 percent. At the end of 2 years, real GDP per person is _________________.

£11,000
£11,025
£10,500
£10,000

Real GDP per person in the country of Flip is £10,000, and the growth rate is 10 per cent a year. Real GDP per person in the country of Flap is £20,000 and the growth rate is 5 per cent a year. When will real GDP per person be greater in Flip than in Flap?

never
in 14 years
in 2 years
in 15 years

Economic growth can begin when people _______, but in order to continue, there must be an incentive system which encourages people to pursue activities _______.

increase working hours; that use more capital
are educated; in which they have a comparative advantage
specialize and trade; such as investment in human capital
have comparative advantage; having absolute advantage

The one-third rule predicts that if capital per hour of work increases by 18 per cent and real GDP per hour of work increases by 10 percent, then the increase in capital per hour of work increases real GDP per hour of work by _______ and technological change increases real GDP per hour of work by _______.

10 per cent; 0 per cent
18 per cent; 0 per cent
6 per cent;4 per cent
4 per cent; 6 per cent

The table shows capital per hour of work and productivity for the beach economy of Whitepool. In the year 2001, how many seashells does the increase in capital per hour of work contribute and how many seashells of growth does technological change contribute to the growth in real GDP per hour of work?

24 seashells; 0 seashells
3 seashells; 3 seashells
12 seashells; 12 seashells
54 seashells; -30 seashells

The table shows capital per hour work and productivity for the beach economy of Whitepool. In the year 2002, what is the contribution of the increase in capital per hour of work and the contribution of technological change to the growth in real GDP per hour of work?

5 per cent; 5 percent
10 per cent; 0 per cent
0 per cent; 10 percent
3 1/3 per cent; 6 2/3 per cent

In 2000, capital per person was £250 and real GDP per person was £50. In 2001, real GDP per person was £55. If there was no change in technology between 2000 and 2001, then capital per person in 2001 was _______.

£275
£280
£252
£325

An economy is in a long-run equilibrium. The real interest rate is 6 per cent a year. New technology increases the productivity of capital and the real interest rate increases to 10 per cent a year. The supply of capital increases. Neoclassical growth theory predicts that economic growth will continue __________________.

indefinitely
until the real interest rate and subsistence wage rate are equal
as long as the real interest rate is 10 per cent a year
until the real interest rate falls to 6 per cent a year

The real interest rate in an economy is 8 per cent a year. The supply of capital (which includes the capital of knowledge) shifts progressively rightward. New growth theory predicts that economic growth will continue _______ because the rate of return on capital will _______.

to decrease; fall
for a short period; fall
for a short period; stay at 8 per cent a year
indefinitely; stay at 8 per cent a year

A country would achieve faster growth by ______________________.

taxing consumption and not income
increasing union membership
increasing the cost of education
discouraging free trade