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LOS j: Identify and interpret the components of economic growth trends and demonstrate the application of economic growth trend analysis to the formulation of capital market expectations. ffice ffice" />
Q1. Which of the following is NOT a substantial component of the change in the long-term growth rate in an economy?
A) Changes in employment levels.
B) Changes in consumer spending.
C) Changes in spending on new capital inputs.
Correct answer is B)
Although consumer spending is the largest component of GDP, it is fairly stable over time. To forecast a country’s long-term economic growth trend, the trend growth rate can be decomposed into two main components: changes in employment levels and changes in productivity. The former component can be further broken down into population growth and the rate of labor force
participation. The productivity component can be broken down into spending on new capital inputs and total factor productivity growth.
Q2. Which of the following is NOT a governmental structural policy that would promote the long-term growth in an economy?
A) A promotion of competition.
B) A redistributive tax system.
C) Minimal government interference in the economy.
Correct answer is B)
When wealth is redistributed through the government’s tax policy, economic inefficiency is created. Tax policies should promote economic growth as much as possible.
Q3. If population growth is expected to grow by 3%, labor force participation is expected to grow by 0.25%, spending on new capital inputs is projected to grow at 2.75% and total factor productivity will grow by 0.75%. What is the long-term projected growth rate?
A) 6.75%.
B) 5.75%.
C) 6.00%.
Correct answer is A)
The sum of the components is 3% + 0.25% + 2.75% + 0.75% = 6.75%, so the economy is projected to grow by this amount.
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发表于 2009-3-5 13:07
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