Module M08 Quiz: Introduction to Economic Growth
25 questions ยท Introductory ยท Mix of multiple choice, calculation, and short answer
How to use
Attempt each question before clicking Show Answer. For calculation questions, write out your working before checking.
Question 1
Lesson L01 ยท Growth
What is the approximate doubling time for an economy growing at 1.5% per year using the Rule of 70?
Type: Multiple Choice
- A) 35 years
- B) 47 years
- C) 70 years
- D) 23 years
Show Answer
Answer: B) 47 years
70 รท 1.5 โ 47 years
Question 2
Lesson L01 ยท Giving A Better Indication Of Average Living Standards.
Which of the following best explains why economists focus on real GDP per capita rather than total real GDP when comparing living standards?
Type: Multiple Choice
- A) Total GDP is harder to measure
- B) Real GDP per capita accounts for population growth
- C) Total GDP includes inflation
- D) Real GDP per capita excludes government spending
Show Answer
Answer: B) Real GDP per capita accounts for population growth
Real GDP per capita (GDP divided by population) measures output per person
Question 3
Lesson L01 ยท 000 ร 2 = $120
Calculate the approximate GDP after 35 years if current GDP per capita is $60
Type: Short Answer
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Answer: $120,000
Using the Rule of 70: 70 รท 2 = 35 years to double. $60
Question 4
Lesson L01 ยท Growth
Name one reason why long-run growth tends to slow as a country becomes richer.
Type: Short Answer
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Answer: As a country accumulates more physical capital
each additional unit of capital adds less to output.
Question 5
Lesson L01 ยท Growth
Which of the following is the dominant driver of sustained long-run growth?
Type: Multiple Choice
- A) Capital accumulation
- B) Labour force growth
- C) Total Factor Productivity (TFP)
- D) Government spending
Show Answer
Answer: C) Total Factor Productivity (TFP)
Technology (TFP) is the dominant driver of sustained growth in the long run.
Question 6
Lesson L02 ยท Tfp Captures Everything That Raises Output Without Simply Adding More Inputs โ Technological Innovation
In growth accounting
Type: Short Answer
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Answer: Government infrastructure spending
b
Question 7
*Lesson L02 ยท *
If capital grows at 5%
Type: Short Answer
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Answer:
Question 8
Lesson L02 ยท Growth
Why would slowing TFP growth reduce long-run GDP growth even if capital investment remains high?
Type: Short Answer
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Answer: Capital investment alone faces diminishing returns โ each new unit of capital adds progressively less output. Without TFP growth
just adding more machinery cannot sustain GDP growth.
Question 9
Lesson L02 ยท Growth
Which of the following is NOT a component of TFP growth?
Type: Multiple Choice
- A) Technological innovation
- B) Better management practices
- C) Increased labour hours
- D) Improved education
Show Answer
Answer: C) Increased labour hours
TFP growth excludes simple increases in inputs (like labour hours) and focuses on efficiency improvements.
Question 10
Lesson L02 ยท Intro
Calculate the contribution of capital to GDP growth if ฮK/K = 4% and ฮฑ = 0.3.
Type: Calculation
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Answer: ฮฑ ร (ฮK/K) = 0.3 ร 4% = 1.2%.
growth
Question 11
Lesson L03 ยท The Production Function Summarises How An Economy Converts Inputs (K And L) Into Output (Y)
What does the aggregate production function Y = AF(K
Type: Short Answer
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Answer: International trade
a
Question 12
Lesson L03 ยท Growth
Why does the principle of diminishing returns to capital suggest that poor countries should grow faster than rich countries?
Type: Short Answer
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Answer: Poor countries have little capital
so the marginal product of capital is high โ each new machine or piece of infrastructure adds a lot to output.
Question 13
Lesson L03 ยท 100^0.3 โ 3.981; 10^0.7 โ 7.943; 3.981 ร 7.943 โ 316.
If Y = K^0.3 ร L^0.7 and K = 100
Type: Short Answer
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Answer:
~316
Question 14
Lesson L03 ยท L) โ Doubling A Doubles Output From The Same Inputs.
What happens to output if technology A doubles while K and L remain constant?
Type: Multiple Choice
- A) Output doubles
- B) Output halves
- C) Output stays the same
- D) Output increases by 10%
Show Answer
Answer: A) Output doubles
Y = AF(K
Question 15
Lesson L03 ยท Software Development (Technology) Improves The Efficiency Of Combining K And L
Which of the following investments would most directly affect TFP (A) in Y = AF(K
Type: Short Answer
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Answer: Increasing working hours
c
Question 16
Lesson L04 ยท Growth
What was a key driver of Australia's GDP growth during the mining boom (2003โ2013)?
Type: Multiple Choice
- A) Productivity improvements
- B) Commodity export prices and capital investment
- C) Government spending
- D) Population growth
Show Answer
Answer: B) Commodity export prices and capital investment
The mining boom was primarily driven by a surge in commodity export prices and massive capital investment in mining projects.
Question 17
Lesson L04 ยท Growth
Using the Rule of 70
Type: Short Answer
Show Answer
Answer: ~64 years
70 รท 1.1 โ 64 years.
Question 18
Lesson L04 ยท And Automation Is More Difficult Than In Standardized Manufacturing.
Why is productivity growth harder to achieve in the services sector compared to manufacturing?
Type: Short Answer
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Answer: Services are often labour-intensive
output quality varies
Question 19
Lesson L04 ยท Education
Which of the following sectors has grown significantly in Australia as manufacturing declined?
Type: Multiple Choice
- A) Agriculture
- B) Mining
- C) Services
- D) Construction
Show Answer
Answer: C) Services
The services sector โ including health
Question 20
Lesson L04 ยท Growth
What does a current account deficit imply about national saving and investment?
Type: Multiple Choice
- A) S > I
- B) S = I
- C) S < I
- D) S and I are unrelated
Show Answer
Answer: C) S < I
A current account deficit (NX < 0) implies domestic investment exceeds national saving (S < I).
Question 21
Lesson L05 ยท Shifting The Production Function Upward.
Which of the following is a supply-side policy to promote long-run growth?
Type: Multiple Choice
- A) Increasing government spending
- B) Reducing income taxes
- C) Investing in education
- D) Cutting interest rates
Show Answer
Answer: C) Investing in education
Education investment raises human capital (H)
Question 22
Lesson L05 ยท Growth
Why does the Solow model predict that saving rate increases only have a level effect on output?
Type: Short Answer
Show Answer
Answer: Higher saving raises steady-state capital and output
but growth stops once the new steady state is reached. Sustained growth requires TFP.
Question 23
*Lesson L05 ยท *
If a childcare subsidy enables 200
Type: Short Answer
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Answer:
Question 24
Lesson L05 ยท Which Improves Technology And Efficiency (A).
Which of the following policies would most directly raise TFP (A)?
Type: Multiple Choice
- A) Building more roads
- B) Subsidising R&D
- C) Increasing the minimum wage
- D) Expanding the public sector
Show Answer
Answer: B) Subsidising R&D
R&D subsidies incentivise innovation
Question 25
Lesson L05 ยท Growth
What is the "Golden Rule" saving rate?
Type: Multiple Choice
- A) The rate that maximises steady-state consumption
- B) The rate that minimises taxes
- C) The rate that balances the budget
- D) The rate that eliminates inflation
Show Answer
Answer: A) The rate that maximises steady-state consumption
The Golden Rule saving rate maximises steady-state consumption per worker.