Question 1

Explain how an economy can grow without an increases in the labor force and the stock of capital.

Accepted Answer

Increases in productivity (through impro

Question 2

Which of the following is not an assumption in the Solow Model?

Accepted Answer

A)  no foreign sector 
B)  constant population 
C)  no government 
D)  no depreciation 
A)  no foreign sector 
B)  constant population 
C)  no government 
D)  no depreciation

Question 3

Net investment is defined as

Accepted Answer

A)  the total amount of investment made in the economy. 
B)  the depreciation of the capital stock in the economy less gross investment. 
C)  the gross investment made in the economy less depreciation. 
D)  the gross investment made in the economy plus depreciation. 
A)  the total amount of investment made in the economy. 
B)  the depreciation of the capital stock in the economy less gross investment. 
C)  the gross investment made in the economy less depreciation. 
D)  the gross investment made in the economy plus depreciation.

Question 4

Education can contribute to economic growth through:

Accepted Answer

A)  a better integration of technology and workers' skills. 
B)  the faster adaptation of existing technologies. 
C)  the faster discovery of new technologies. 
D)  all of the above. 
A)  a better integration of technology and workers' skills. 
B)  the faster adaptation of existing technologies. 
C)  the faster discovery of new technologies. 
D)  all of the above.

Question 5

For economic growth to increase living standards:

Accepted Answer

A)  society must discover ways of using available resources more efficiently. 
B)  the rate of growth of real GDP must exceed the rate of population increase. 
C)  society must acquire more resources. 
D)  the choices available to consumers must increase. 
A)  society must discover ways of using available resources more efficiently. 
B)  the rate of growth of real GDP must exceed the rate of population increase. 
C)  society must acquire more resources. 
D)  the choices available to consumers must increase.

Question 6

Recall Application 6, "Culture, Evolution, and Economic Growth," to answer the following questions:
-According to the application, the differences in the survival rates of the rich and the poor in England caused a change in culture in the form of:

Accepted Answer

A)  increased hard work. 
B)  reduced violent behaviors. 
C)  increased thrift and prudence. 
D)  All of the above are correct. 
A)  increased hard work. 
B)  reduced violent behaviors. 
C)  increased thrift and prudence. 
D)  All of the above are correct.

Question 7

One method employed by the World Bank to assist developing countries is:

Accepted Answer

A)  infusion of new machinery. 
B)  increased foreign aid. 
C)  the promotion of universal education. 
D)  All of the above are correct. 
A)  infusion of new machinery. 
B)  increased foreign aid. 
C)  the promotion of universal education. 
D)  All of the above are correct.

Question 8

Based on growth accounting, which of the following would not cause a reduction in output?

Accepted Answer

A)  a reduction in employment 
B)  a reduction in interest rates 
C)  a reduction in the number of hours worked 
D)  a reduction in the capital stock 
A)  a reduction in employment 
B)  a reduction in interest rates 
C)  a reduction in the number of hours worked 
D)  a reduction in the capital stock

Question 9

Which of the following is not an investment in human capital?

Accepted Answer

A)  Local governments begin providing free hepatitis vaccinations to any resident who wants one. 
B)  The Ferris Advertising Agency replaces its secretary's typewriters with personal computers. 
C)  The Precision Tool Company teaches all its workers how to repair the machines in the factory. 
D)  Older workers return to school to update their skills. 
A)  Local governments begin providing free hepatitis vaccinations to any resident who wants one. 
B)  The Ferris Advertising Agency replaces its secretary's typewriters with personal computers. 
C)  The Precision Tool Company teaches all its workers how to repair the machines in the factory. 
D)  Older workers return to school to update their skills.

Question 10

As of 2008, the United States had the highest GDP per capita in the world.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following will not lead to greater economic growth?

Accepted Answer

A)  more resources 
B)  government taxation of the private sector in order to engage in consumption spending 
C)  government investment in infrastructure 
D)  technological improvements 
A)  more resources 
B)  government taxation of the private sector in order to engage in consumption spending 
C)  government investment in infrastructure 
D)  technological improvements

Question 12

Suppose that, over the past century, real GDP per capita in the country of Fictionia has grown at a rate of 1.75 percent per year. How many years will it take for real GDP per capita to double if it continues to grow at this rate? Suppose that that real GDP per capita is currently $15,000 in Fictionia. What will be the real GDP per capita in Fictionia 200 years from now if it continues to grow at 1.75 percent per year?

Accepted Answer

According to the rule of 70, real GDP pe

Question 13

Suppose that growth in output that can be attributed to growth in labor and capital is 3%. If output grows at a rate of 3%, it must be the case that:

Accepted Answer

A)  growth in labor force exceeds growth in capital. 
B)  the economy is experiencing technological progress. 
C)  growth in capital exceeds growth in labor. 
D)  labor is not becoming more productive. 
A)  growth in labor force exceeds growth in capital. 
B)  the economy is experiencing technological progress. 
C)  growth in capital exceeds growth in labor. 
D)  labor is not becoming more productive.

Question 14

Recall Application 4, "Growth Accounting and Information Technology," to answer the following questions:
-According to the application, Robert Gordon's study found that technological growth was found:

Accepted Answer

A)  to be confined in the durable goods manufacturing industry only. 
B)  in every industry. 
C)  in construction, mining and agricultural sectors only. 
D)  to be confined to computers only. 
A)  to be confined in the durable goods manufacturing industry only. 
B)  in every industry. 
C)  in construction, mining and agricultural sectors only. 
D)  to be confined to computers only.

Question 15

When diminishing returns has set in, adding more labor will decrease real GDP per capita.

Accepted Answer

A) True 
 B)False

Question 16

An increase in GDP per capita always results in an increase in real GDP per capita.

Accepted Answer

A) True 
 B)False

Question 17

Because the dK line is drawn as a straight line, then the Solow Model assumes that:

Accepted Answer

A)  the depreciation rate in the economy is constant. 
B)  the total depreciation in the economy is constant. 
C)  the higher the level of capital, the lower the amount of total depreciation. 
D)  the total depreciation in the economy is zero. 
A)  the depreciation rate in the economy is constant. 
B)  the total depreciation in the economy is constant. 
C)  the higher the level of capital, the lower the amount of total depreciation. 
D)  the total depreciation in the economy is zero.

Question 18

In the Solow Model, will a country always enjoy economic growth through capital deepening?

Accepted Answer

No. Once the economy reaches a long run

Question 19

The best measure of economic growth is:

Accepted Answer

A)  an increase in real GDP per capita. 
B)  an increase in real GDP. 
C)  an increase in capital stock per capita. 
D)  an increase in nominal GDP per capita. 
A)  an increase in real GDP per capita. 
B)  an increase in real GDP. 
C)  an increase in capital stock per capita. 
D)  an increase in nominal GDP per capita.

Question 20

Induced innovations can only be achieved through government taxation of certain activities.

Accepted Answer

A) True 
 B)False

Explain how an economy can grow without an increases in the labor force and the stock of capital.

Which of the following is not an assumption in the Solow Model?

Net investment is defined as

Education can contribute to economic growth through:

For economic growth to increase living standards:

Recall Application 6, "Culture, Evolution, and Economic Growth," to answer the following questions: -According to the application, the differences in the survival rates of the rich and the poor in England caused a change in culture in the form of:

One method employed by the World Bank to assist developing countries is:

Based on growth accounting, which of the following would not cause a reduction in output?

Which of the following is not an investment in human capital?

As of 2008, the United States had the highest GDP per capita in the world.

Which of the following will not lead to greater economic growth?

Suppose that growth in output that can be attributed to growth in labor and capital is 3%. If output grows at a rate of 3%, it must be the case that:

Recall Application 4, "Growth Accounting and Information Technology," to answer the following questions: -According to the application, Robert Gordon's study found that technological growth was found:

When diminishing returns has set in, adding more labor will decrease real GDP per capita.

An increase in GDP per capita always results in an increase in real GDP per capita.

Because the dK line is drawn as a straight line, then the Solow Model assumes that:

In the Solow Model, will a country always enjoy economic growth through capital deepening?

The best measure of economic growth is:

Induced innovations can only be achieved through government taxation of certain activities.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 8: Why Do Economies Grow

Explain how an economy can grow without an increases in the labor force and the stock of capital.

Which of the following is not an assumption in the Solow Model?

Net investment is defined as

Education can contribute to economic growth through:

For economic growth to increase living standards:

Recall Application 6, "Culture, Evolution, and Economic Growth," to answer the following questions: -According to the application, the differences in the survival rates of the rich and the poor in England caused a change in culture in the form of:

One method employed by the World Bank to assist developing countries is:

Based on growth accounting, which of the following would not cause a reduction in output?

Which of the following is not an investment in human capital?

As of 2008, the United States had the highest GDP per capita in the world.

Which of the following will not lead to greater economic growth?

Suppose that growth in output that can be attributed to growth in labor and capital is 3%. If output grows at a rate of 3%, it must be the case that:

Recall Application 4, "Growth Accounting and Information Technology," to answer the following questions: -According to the application, Robert Gordon's study found that technological growth was found:

When diminishing returns has set in, adding more labor will decrease real GDP per capita.

An increase in GDP per capita always results in an increase in real GDP per capita.

Because the dK line is drawn as a straight line, then the Solow Model assumes that:

In the Solow Model, will a country always enjoy economic growth through capital deepening?

The best measure of economic growth is:

Induced innovations can only be achieved through government taxation of certain activities.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters