ECON 1500 LATEST Exam 2 WITH
CORRECT ANSWERS 2025.
The focus of the Classical growth model is - correct answer aggregate demand
interest rates
**investment
technology
The focus of the New Growth model is - correct answer -aggregate demand
-interest rates
-investment
**technology
Which of the following factors will not shift the long-run aggregate supply curve to the
right? - correct answer **An increase in the labor force participation rate
-Better institutional arrangements
-An increase in the price level
-An improvement in technology
Which of the following policies will likely contribute to strong economic growth? - correct
answer -Low taxes on the returns to saving
-Quality research and teaching universities
-Strong Patent law which encourages innovation
**All of the above are correct
In the long run, what determines the level of output is the AS-AD model? - correct
answer -SRAS
-AD
**LAS
-Trump with a little help from Adam Shiff
All of the following are important sources of growth except - correct answer -Competitive
markets
-Enforcement of property rights
**Low labor force participation rates
-Capital accumulation
Which will increase the rate of capital accumulation? - correct answer Lower levels of
investment
Higher levels of investment
Higher levels of saving
**Both B and C are correct
Which institutional arrangement is more consistent with high GDP per capita? - correct
answer -Socialism
, -Restrictions on international trade
-Government imposed price controls
**Markets, specialization and trade
We can show economic growth in terms of the production possibility curve by: - correct
answer -movement along the production possibility curve
-shifting from a point inside the curve to a point on the production possibility curve
**shifting the production possibility curve outward
-jumping to a point outside the production possibility curve
Robert Lucas reflects the view of many economists when he argues that the most
effective way to reduce world poverty is to: - correct answer -eliminate recessions
**increase long-run growth
-provide loans to developing countries
-take money from those who are very wealthy and give to those who are very poor
Economic growth: - correct answer has a relatively large effect on living standards over
long periods of time
Market economies have been successful in leading to economic growth because they
have: - correct answer -allowed companies that pollute to avoid paying any penalty for
doing so
-ignored private property rights
**channeled individual efforts toward production and growth
-taken advantage of increased government subsidies
Markets help to promote growth by: - correct answer -Allowing for specialization
-Encouraging work
-Encouraging innovation
**All of the above are correct
Historically, the effect of economic growth generally has been to make: - correct answer
-the poor poorer and the rich richer
-the poor richer and the rich poorer
**all income levels richer
-the rich richer but not affect the poor
Per capita growth: - correct answer -occurs only when the population is growing
-occurs only when output is growing
**occurs when output increases faster than the population increases
-always improves the distribution of income
If a country's population is 10 million and its GDP is $113 billion, its per capita output is:
- correct answer $113
$1,130
$11,300
CORRECT ANSWERS 2025.
The focus of the Classical growth model is - correct answer aggregate demand
interest rates
**investment
technology
The focus of the New Growth model is - correct answer -aggregate demand
-interest rates
-investment
**technology
Which of the following factors will not shift the long-run aggregate supply curve to the
right? - correct answer **An increase in the labor force participation rate
-Better institutional arrangements
-An increase in the price level
-An improvement in technology
Which of the following policies will likely contribute to strong economic growth? - correct
answer -Low taxes on the returns to saving
-Quality research and teaching universities
-Strong Patent law which encourages innovation
**All of the above are correct
In the long run, what determines the level of output is the AS-AD model? - correct
answer -SRAS
-AD
**LAS
-Trump with a little help from Adam Shiff
All of the following are important sources of growth except - correct answer -Competitive
markets
-Enforcement of property rights
**Low labor force participation rates
-Capital accumulation
Which will increase the rate of capital accumulation? - correct answer Lower levels of
investment
Higher levels of investment
Higher levels of saving
**Both B and C are correct
Which institutional arrangement is more consistent with high GDP per capita? - correct
answer -Socialism
, -Restrictions on international trade
-Government imposed price controls
**Markets, specialization and trade
We can show economic growth in terms of the production possibility curve by: - correct
answer -movement along the production possibility curve
-shifting from a point inside the curve to a point on the production possibility curve
**shifting the production possibility curve outward
-jumping to a point outside the production possibility curve
Robert Lucas reflects the view of many economists when he argues that the most
effective way to reduce world poverty is to: - correct answer -eliminate recessions
**increase long-run growth
-provide loans to developing countries
-take money from those who are very wealthy and give to those who are very poor
Economic growth: - correct answer has a relatively large effect on living standards over
long periods of time
Market economies have been successful in leading to economic growth because they
have: - correct answer -allowed companies that pollute to avoid paying any penalty for
doing so
-ignored private property rights
**channeled individual efforts toward production and growth
-taken advantage of increased government subsidies
Markets help to promote growth by: - correct answer -Allowing for specialization
-Encouraging work
-Encouraging innovation
**All of the above are correct
Historically, the effect of economic growth generally has been to make: - correct answer
-the poor poorer and the rich richer
-the poor richer and the rich poorer
**all income levels richer
-the rich richer but not affect the poor
Per capita growth: - correct answer -occurs only when the population is growing
-occurs only when output is growing
**occurs when output increases faster than the population increases
-always improves the distribution of income
If a country's population is 10 million and its GDP is $113 billion, its per capita output is:
- correct answer $113
$1,130
$11,300
