Fundamentals of Economics

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1. In 2009, the imaginary nation of Florastan had a population of 8,044 and real GDP of 36,198,000. In 2010 it had a population of 7,800 and real GDP of 35,880,000. What was the growth rate of real GDP per person in Florastan between 2009 and 2010?
a.
-2.2 percent
b.
-0.7 percent
c.
2.2 percent
d.
4.5 percent

2. Which of the following statements is true?
a.
Productivity is calculated as hours worked divided by output produced.
b.
Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers.
c.
Both A and B are correct.
d.
None of the above are correct.

3. Productivity is the
a.
key determinant of living standards, and growth in productivity is the key determinant of growth in living standards.
b.
key determinant of living standards, but growth in productivity is not the key determinant of growth in living standards.
c.
not the key determinant of living standards, but growth in productivity is the key determinant of growth in living standards.
d.
not the key determinant of living standards, and growth in productivity is not the key determinant of growth in living standards.

4. A barber shop produces 96 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop’s productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?
a.
2
b.
3
c.
4
d.
6

5. Which of the following is considered human capital?
a.
the comfortable chair in your dorm room where you read economics texts
b.
the amount you get paid each week to work at the library
c.
the things you have learned this semester
d.
any capital goods that require a human to be present to operate

6. Greater scarcity of a natural resource is indicated
a.
by an increase in the price of the resource, whether the price increase is less than or greater than the rate of inflation.
b.
only by an increase in the price of the resource that is less than the rate of

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