Macro Chapter 7

What is the definition of compound interest?

• Interest calculated only on the initial amount of money deposited

• Interest that is paid out monthly regardless of the principal

• Interest calculated on both the initial principal and the accumulated interest from previous periods

• Interest that is only applied at the end of a loan period

Which of the following best describes average labor productivity?

• The amount of output produced per worker

• The total number of workers in an economy

• The total value of goods produced in a country

• The average number of hours worked per week

Which of the following is a determinant of average labor productivity?

• The number of government regulations

• The amount of money in circulation

• The number of banks in a country

• The level of human capital among workers

What is human capital?

• The total value of machinery and equipment in a country

• The skills, knowledge, and experience possessed by individuals

• The number of people employed in the manufacturing sector

• The amount of money invested in stocks and bonds

Physical capital refers to:

• The skills and education of the workforce

• The amount of money held by banks

• The total population of a country

• The machinery, buildings, and equipment used in production

Which statement best describes diminishing returns to capital?

• Each additional unit of capital increases output by a smaller amount

• Each additional unit of capital increases output by a larger amount

• Output remains constant as more capital is added

• Output decreases as more capital is added

Entrepreneurs are important to economic growth because they:

• Only manage existing businesses

• Create new products and drive innovation

• Focus solely on government policy

• Primarily work in the public sector

GDP per capita is calculated by:

• Dividing total GDP by the number of businesses

• Multiplying total GDP by the number of workers

• Subtracting imports from exports

• Dividing total GDP by the population

Which of the following is an example of human capital investment?

• Purchasing new factory equipment

• Attending a university to gain new skills

• Building a new office building

• Increasing the money supply

If a country increases its physical capital but keeps other factors constant, what is likely to happen according to the law of diminishing returns?

• Output will increase at a decreasing rate

• Output will increase at an increasing rate

• Output will remain unchanged

• Output will decrease