ECON1220_CD Introductory Macroeconomics Tutorial 3, Week 5

1) The best measure of the standard of living is

A) nominal GDP.
B) real GDP.
C) nominal GDP per capita.
D) real GDP per capita.

2) If labor productivity growth slows down in a country, this will

A) accelerate the increase in real GDP per capita.
B) accelerate the increase in nominal GDP.
C) slow down the increase in real GDP per capita.
D) slow down the increase in nominal GDP.

3) Labor productivity will increase if the ________ increases and ________.

A) quantity of capital per hour worked; technology improves
B) quantity of labor per unit of capital; technology improves
C) quantity of capital per hour worked; immigration increases while capital is fixed
D) quantity of labor per unit of capital; immigration increases while capital is fixed

4) If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, how long
will it take GDP to reach $26 trillion?
A) about 15 years
B) about 17 years
C) about 25 years
D) about 30 years

5) In a closed economy, which of the following equations reflects investment? (Y =

GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)
A) Y - C - G
B) Y - C - T
C) Y - T + TR
D) C + G -T

6) Which of the following is most liquid?

A) a house
B) An iPhone
C) a stock of HSBC
D) a dollar bill
ECON1220_CD Introductory Macroeconomics Tutorial 3, Week 5

7) Borrowers are ________ of loanable funds, and lenders are ________ of loanable
funds.
A) demanders; suppliers
B) suppliers; demanders
C) suppliers; suppliers
D) demanders; demanders

8) Which of the following would you expect to increase the equilibrium interest rate?
A) an increase in the percentage of income after net taxes that households save
B) an increase in the budget deficit
C) a decrease in the profitability of investment projects firms are considering
D) a change from an income tax to a consumption tax

Figure 10-1

9) Refer to Figure 10-1. Which of the following is consistent with the graph
depicted above?
A) An expected recession decreases the profitability of new investment.
B) Technological change increases the profitability of new investment.
C) The government runs a budget surplus.
D) Households become spendthrifts and begin to save less.
ECON1220_CD Introductory Macroeconomics Tutorial 3, Week 5

Figure 10-2

10) Refer to Figure 10-2. Which of the following is consistent with the graph
depicted above?
A) Taxes are changed so that real interest income is taxed rather than nominal
interest income.
B) An expected recession decreases the profitability of new investment.
C) The government runs a budget deficit.
D) Technological change increases the profitability of new investment.