long term economic growth MCQs – Page 2

Practise focused long term economic growth questions with marked answers for exam preparation and subject revision.

long term economic growth Mcqs
21. Potential output can be increased by ____ or by ______?
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A. increasing the use of all inputs, technical advances

B. increasing the use of labor increasing the use of land

C. increasing the use of land increasing the use of capital

D. increasing the use of capital increasing the use of labour

22. The long run equilibrium level of national income is the level at which ?
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A. All investment is used in the manufacturing sector

B. economic growth is Zero

C. All investment is used to maintain the existing capital stock at its current level

D. Economic growth is growing

23. Identify below what is NOT considered to be a cause of economic growth ?
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A. An increase in labor productivity

B. An increase in the money supply

C. An increase in technology

D. An increase in the quantity of labor and capital

24. The theory that explains business cycles by the dynamic interaction of consumption and investment demand is the ?
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A. multiplier accelerator model

B. sun spot theory

C. Solow theory

D. New classical theory

25. Real business cycles are cycles in ?
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A. real output

B. international trade

C. actual output

D. potential output
26. The golden-rule saving rate is the rate of saving that ?
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A. maximizes the level of long-run consumption

B. maximizes the level of long-run investment

C. gets the highest rate of interest

D. maximizes human capital

27. All of the following are parts of the business cycle except ?
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A. boom

B. recovery

C. slump

D. acceleration
28. Economic growth is important because ?
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A. People want a better environment

B. People want higher incomes and more consumer goods.

C. People want to be happier

D. People want less crime

29. Real business cycle theorists argue that _________ can explain short- and long-term fluctuation in output?
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A. sun spot cycles

B. imperfect labor markets

C. intertertemporal decisions of households, firms and government

D. rational expectations

30. The idea of convergence of GDP in Europe suggests that ?
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A. Poorer less developed countries will catch up with richer ones.

B. Poorer countries have higher capital/labour ratios than richer countries.

C. The gap between countries GDP per head will widen

D. All countries will eventually join the EEC