1. What is the "Rule of 70"?
2. Are all nations converging to the same level of real GDP per person? Briefly discuss your answer.
3. What is the difference between the money wage rate and the real wage rate?
4. How does an increase in population affect potential real GDP? In your answer, be sure to mention the role played by the labor market.
Answer the following multiple choice questions.
5. Real GDP per person in China is growing at about 7 percent per year. At this rate China's real GDP per person will double in approximately ____ years.
a. 14
b. 10
c. 7
d. More information is needed about the current amount of real GDP per person in China in order to answer the question.
6. Real GDP per person is highest in which of the following regions?
a. central Europe
b. Africa
c. Japan
d. Central and South America
7. The real wage rate measures the
a. quantity of goods and services that an hour of work will buy.
b. average weekly earnings in dollars of a worker.
c. dollar value of an hour of work.
d. dollar value of what a worker could earn in another job.
8. Full employment corresponds to
a. equilibrium in the labor market, with real GDP being equal to potential real GDP.
b. labor demand being greater than labor supply and real GDP being equal to potential real GDP.
c. being at the point where the productivity of labor equals zero.
d. equilibrium in the labor market, and real GDP exceeding potential real GDP.
9. If both the supply of labor and the demand for labor increase, then
a. potential real GDP decreases.
b. potential real GDP increases.
c. full employment decreases.
d. the real wage rate increases.