Suppose That Population Grows by 2 Percent Annually

question 44

Multiple Choice

Suppose that population grows by 2 percent annually.For the standard of living to rise,which of the following must occur?

• A) Nominal GDP must grow by more than 2 percent.
• B) Real GDP must grow by more than 2 percent.
• C) Real GDP per capita must grow by more than 2 percent.
• D) Consumption spending must grow by more than 2 percent.
• E) Private investment spending must grow by more than 2 percent.

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Definitions:

Per-hour Wage

Compensation paid to an employee based on the number of hours worked.

Payroll Tax

Dues extracted from employers or laborers, usually as a percentage of the salary expenditures.

Payroll Tax

Taxes imposed on employers and/or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate.