10.31 Economics & Science

Which of the following formulae is the correct formula to calculate GDP per capita?

• nominal GDP/labor force

• nominal GDP/population

• real GDP/labor force

• real GDP/population

• nominal GDP/workers

Answer explanation

GDP per capita is calculated by dividing the total economic output (real GDP) by the population. Thus, the correct formula is real GDP/population, which reflects the average economic output per person.

Which of the following values BEST reflects growth in GDP?

• employment rate

• standard of living

• overall prices

• population growth

• value of production

Answer explanation

The value of production directly measures the total output of goods and services in an economy, making it the best indicator of GDP growth. Other options reflect different aspects of economic health but do not directly measure GDP.

Relative to 1900, by what factor did US real GDP per capita rise in 2019?

• 1600%

• 2000%

• 900%

• 3200%

• 400%

Answer explanation

In 2019, US real GDP per capita was approximately 9 times higher than in 1900, indicating a rise of 900%. This corresponds to a 900% increase relative to the base year, making it the correct choice.

Which of the following goods is physical capital?

• factories

• knowledge

• labor

• cars

• stocks

Answer explanation

Physical capital refers to tangible assets used in production. Factories are structures that house production processes, making them a clear example of physical capital. In contrast, knowledge, labor, cars, and stocks are not classified as such.

What actor provides land and labor in economic exchange?

• firms

• households

• natural resources

• financial intermediaries

• the government

Answer explanation

Households provide land and labor in economic exchange, as they own these resources and supply them to firms in return for wages and income. This makes households the correct answer.

What MAIN factor drives long-run productivity growth?

• legal environment

• improved technology

• democratization

• discovery of natural resources

• growth in physical capital

Answer explanation

Improved technology is the main driver of long-run productivity growth as it enhances efficiency, innovation, and the ability to produce more with the same resources, leading to sustained economic growth.

Which of the following institutions is a firm?

• Doctors Without Borders

• the Spanish government

• the World Bank

• McDonald’s

• the Federal Reserve

Answer explanation

McDonald’s is a firm, as it is a for-profit business that sells food and operates restaurants. The other options are non-profit organizations or government entities, not firms.

Which of the following statements is NOT true of natural resources?

• Countries like Saudi Arabia depend heavily on their natural resources.

• The countries with highest GDP per capita depend on natural resources.

• Natural resources are not necessary for an economy to thrive.

• Iron and oil are plentiful resources that allow for economic growth.

• Natural resources can be easily imported.

Answer explanation

The statement 'The countries with highest GDP per capita depend on natural resources' is NOT true, as many high GDP per capita countries, like those in technology and finance, do not rely heavily on natural resources.

Why is too much investment economically undesirable?

• Investments eventually yield diminishing returns.

• Investment decreases future production.

• Investment can be inefficient and costly.

• Investment decreases total welfare.

• Investment focuses on short-run growth.

Answer explanation

Investments eventually yield diminishing returns, meaning that as more resources are allocated to investment, the additional output generated decreases. This can lead to inefficiencies and reduced overall economic growth.

What flow(s) does the market for goods and services experience?

• inputs and outputs

• profits and rents

• spending and revenue

• wages and taxes

• transfers and loans

Answer explanation

The market for goods and services experiences flows of spending and revenue. Consumers spend money to purchase goods and services, generating revenue for businesses, which is essential for economic activity.