ECO 201 Chapter 23 Economic Growth Rate Exam Questions and Answers Graded A+
Aggregate production function - Answers The relationship that tells us how real GDP changes as the
quantity of labor changes when all other influences on production remain the same.
Classical growth theory - Answers The view that the growth of real GDP per person is temporary and
that when it rises above the subsistence level, a population explosion eventually brings it back the the
subsistence level.
Economic growth - Answers The expansion of production possibilities.
Growth rate - Answers The annual percentage change of a variable - the change in the level expressed as
a percentage of the initial level.
Labor productivity - Answers The quantity of real GDP produced by an hour of labor.
Neoclassical growth theory - Answers The proposition that real GDP per person grows because
technological change induces saving and investment that make capital per hour of labor grow.
New growth theory - Answers Real GDP per person grows because of the choices people make in the
pursuit of profit and that growth will persist indefinitely.
Real GDP per person - Answers Real GDP divided by the population.
Real wage rate - Answers The money wage rate divided by the price level.
Rule of 70 - Answers A formula that states that the number of years it takes for the level of any variable
to double is approximately 70 divided by the annual percentage growth rate of the variable.
Aggregate production function - Answers The relationship that tells us how real GDP changes as the
quantity of labor changes when all other influences on production remain the same.
Classical growth theory - Answers The view that the growth of real GDP per person is temporary and
that when it rises above the subsistence level, a population explosion eventually brings it back the the
subsistence level.
Economic growth - Answers The expansion of production possibilities.
Growth rate - Answers The annual percentage change of a variable - the change in the level expressed as
a percentage of the initial level.
Labor productivity - Answers The quantity of real GDP produced by an hour of labor.
Neoclassical growth theory - Answers The proposition that real GDP per person grows because
technological change induces saving and investment that make capital per hour of labor grow.
New growth theory - Answers Real GDP per person grows because of the choices people make in the
pursuit of profit and that growth will persist indefinitely.
Real GDP per person - Answers Real GDP divided by the population.
Real wage rate - Answers The money wage rate divided by the price level.
Rule of 70 - Answers A formula that states that the number of years it takes for the level of any variable
to double is approximately 70 divided by the annual percentage growth rate of the variable.
