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ECON 104, GOFFE, PSU EXAM QUESTIONS AND ANSWERS 2024
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ECON 104, GOFFE, PSU EXAM QUESTIONS AND ANSWERS 2024
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ECON 104, GOFFE, PSU EXAM 2024ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
In order to be a rich country, you need a lot of technology and capital per worker.
To grow, these need to increase, how does this happen? - ANSWERS-Institutions.
Good Institutions provide: 1.) Vibrant Markets (2.) High Tech and K/L (3.) High
Y/L (Labor productivity) and (4.) High GDP per Person
QUESTION 2
How are lay offs essential for growth? - ANSWERS-1.) More output by fewer
workers leads to higher real wages
2.) New industries employ those who've been laid off
3.) Labor saving technology is a the key to economic prosperity
QUESTION 3
Point of Diminishing Returns - ANSWERS-A point at which the level of profits or
benefits gained is less than the amount of money or energy invested
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PAGE 1
, ECON 104, GOFFE, PSU EXAM 2024
QUESTION 4
What causes the per-worker production function curve to shift up? - ANSWERS-
1.) More education
2.) More efficient machines
3.) Ideas that improveefficiency
QUESTION 5
What government action would be most harmful to economic growth? -
ANSWERS-Fixing Prices because flexible prices help economies work
more efficiently by producing incentives. So, fixed prices don't create
incentives.
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, ECON 104, GOFFE, PSU EXAM 2024
QUESTION 6
Which type of unemployment varies the most from year to year? - ANSWERS-
Cyclical. All depends on the business cycle.
QUESTION 7
Natural Rate of Unemployment - ANSWERS-Natty rate of unemployment is the
rate of unemployment when 1.) cyclical unemployment is 0% (2.) The
unemployment rate is from roughly 5-5.5 % and (3.) The economy is at "Full
employment"
QUESTION 8
What happens to potential GDP from year to year? How about during recessions?
- ANSWERS-Potential GDP GROWS from year to year, and in recessions it is
MORE THAN real GDP.
QUESTION 9
Define Okun's Law - ANSWERS-Connection between Real GDP (Y) and the
unemployment rate (u).
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