Practice Test 11

A country increases its investment rate for 20 years, which raises the capital stock per worker, and it also expands apprenticeship programs that improve worker skills. Over the same period, real GDP per capita rises persistently even when unemployment is near the natural rate. Based on the information shown, which combination best describes the primary and secondary sources of long-run growth?

Primary driver: physical capital accumulation; secondary reinforcing factor: human capital investment.

A country’s real GDP per capita (in 2017 dollars) is shown below. Based on the information shown, which interpretation best supports the claim that the country experienced long-run economic growth rather than a business-cycle fluctuation?

Real GDP per capita (2017 dollars): 1990: $32,000; 2000: $36,000; 2010: $41,000; 2020: $47,000