Question

1. Suppose that in 2016 real GDP per person in Greenfield was $35,215. In 2015, real GDP per person in Greenfield was $34,560. What was the growth rate of real GDP per person in Greenfield for 2016?
A. less than 2.0 percent
B. more than 2.0 percent but less than 2.3 percent
C more than 2.3 percent but less than 2.6 percent
D. more than 2.6 percent but less than 2.9 percent
E. more than 2.9 percent

2. Which of the following statements is correct?
(x) Real GDP per person is a preferred measure of the standard of living in a country compared to nominal GDP per person since real GDP changes if production changes and nominal GDP can increase if prices rise and production remains constant.
(y) Over the past 100 years, real GDP per person in the United States has doubled about every 35 years. If it continues to double every 35 years, then in 100 years real GDP per person in the United States will be about eight times higher than it is now.
(z) The level of real GDP per person is a better gauge of economic progress than the growth rate of real GDP per person.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

3. Which of the following statements is (are) correct?
(x) Productivity is measured as the amount of goods and services produced from each hour of a worker's time and a nation's standard of living is determined by its productivity.
(y) Don’s Dairy produces 960 gallons of milk per day. Each worker at the dairy works 8 hours per day and produces 8 gallons of milk per hour. Therefore, the dairy is employing 15 workers.
(z) Suppose that over the last ten years productivity grew faster in Greatland than in Wonderland and the population of both countries was unchanged. It follows that real GDP per person grew faster in Greatland than in Wonderland.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

Answer 1

1. a [explanation: {(GDP of 2016-GDP of 2015)/GDP of 2015}*100= {(35215-34560)/34560}*100= 1.89%]

2. b [explanation: x is correct because real GDP increases if the production of the economy increases, but nominal GDP may increase a a result of inflation or price rice or may be because of rising population. it may increase without any increase in production. z is not correct because when we talk about growth of an economy we talk about the rate at which its production is growing. So higher the rate of its production or the availability of goods and services grow per person better is the economic progress.]

3. a [explanation: y is correct because, 1 worker works 8 hours per day, and produces 8 gallon of milk per day, so each worker can produce 64 gallon(= 8 gallon * 8 hours) of milk per day.so as the dairy farm produces 960 gallon per day then (960 gallon/day)/(64 gallon/day)= 15 labour is employed. x is correct because productivity is the ratio between the output volume and the volume of inputs, thus, one worker's productivity is equal to his production divided by working hours. or how many goods he/she can produce per hour. z is correct because growth in productivity of the worker, keeping the population constant, means the production of the economy and the real gdp of the country is growing.faster in Greatland]