Question 1

If investment in technology is similar to investment in capital,why does new growth theory separate the two?

Accepted Answer

The answer is twofold.First,increases in

Question 2

The rule of 72 implies that a country with a growth rate of 2 percent:

Accepted Answer

A) will never double its income. 
B) will double its income in about 7 years. 
C) will double its income in about 36 years. 
D) will double its income in about 50 years. 
A) will never double its income. 
B) will double its income in about 7 years. 
C) will double its income in about 36 years. 
D) will double its income in about 50 years.

Question 3

Which of the following is not likely to contribute to economic growth?

Accepted Answer

A) Institutions with incentives compatible with growth 
B) Technological development 
C) Entrepreneurship 
D) Government planning 
A) Institutions with incentives compatible with growth 
B) Technological development 
C) Entrepreneurship 
D) Government planning

Question 4

Jamaica has far less capital than Singapore. Based on this, the Classical growth model would predict that as each accumulates more capital Jamaica would grow:

Accepted Answer

A) more rapidly than Singapore. 
B) at the same rate as Singapore. 
C) at a slower rate than Singapore. 
D) at a rate that rises and then falls compared to Singapore. 
A) more rapidly than Singapore. 
B) at the same rate as Singapore. 
C) at a slower rate than Singapore. 
D) at a rate that rises and then falls compared to Singapore.

Question 5

If the positive externalities associated with learning by doing are sufficiently great, production will be characterized by:

Accepted Answer

A) decreasing returns to scale. 
B) increasing marginal productivity. 
C) increasing returns to scale. 
D) diminishing marginal productivity. 
A) decreasing returns to scale. 
B) increasing marginal productivity. 
C) increasing returns to scale. 
D) diminishing marginal productivity.

Question 6

If per capita output falls by 2 percent and population grows by 3 percent, output:

Accepted Answer

A) falls by 5 percent. 
B) falls by 1 percent. 
C) grows by 1 percent. 
D) grows by 5 percent. 
A) falls by 5 percent. 
B) falls by 1 percent. 
C) grows by 1 percent. 
D) grows by 5 percent.

Question 7

If a country's population is 30 million and its GDP is $8.5 billion, its per capita output is:

Accepted Answer

A) $283. 
B) $850. 
C) $2,830. 
D) $8,500. 
A) $283. 
B) $850. 
C) $2,830. 
D) $8,500.

Question 8

How have markets contributed to growth?

Accepted Answer

Markets have contributed to growth in tw

Question 9

Suppose that a business discovers an opportunity that requires funds to exploit. What effect would this have in the market for loanable funds?

Accepted Answer

A) It will increase interest rates and the quantity of funds lent will rise. 
B) It will decrease interest rates and the quantity of funds lent will rise. 
C) It will increase interest rates and the quantity of funds lent will fall. 
D) It will decrease interest rates and the quantity of funds lent will fall. 
A) It will increase interest rates and the quantity of funds lent will rise. 
B) It will decrease interest rates and the quantity of funds lent will rise. 
C) It will increase interest rates and the quantity of funds lent will fall. 
D) It will decrease interest rates and the quantity of funds lent will fall.

Question 10

The rule of 72 implies that a country with a growth rate of 6 percent will double its income in about:

Accepted Answer

A) 6 years. 
B) 8 years. 
C) 12 years. 
D) 16 years. 
A) 6 years. 
B) 8 years. 
C) 12 years. 
D) 16 years.

Question 11

People's knowledge is a type of capital, called human capital.

Accepted Answer

A) True 
 B)False

Question 12

If you know the percent change in output,what additional information would you need to calculate per capita growth of output? Give an example.

Accepted Answer

You would need to know populat

Question 13

What is the new growth theory?

Accepted Answer

New growth theory is a theory

Question 14

Network externalities:

Accepted Answer

A) can explain why more efficient technologies displace less efficient technologies. 
B) can explain why the economy fails to adopt the most efficient technologies. 
C) reduce the cost of switching to new technologies without network externalities. 
D) can explain why technological lock-in no longer occurs. 
A) can explain why more efficient technologies displace less efficient technologies. 
B) can explain why the economy fails to adopt the most efficient technologies. 
C) reduce the cost of switching to new technologies without network externalities. 
D) can explain why technological lock-in no longer occurs.

Question 15

Which of the following is a potential cost of long-run growth?

Accepted Answer

A) Increased unemployment 
B) Resource exhaustion 
C) Higher trade surplus 
D) Higher budget deficits 
A) Increased unemployment 
B) Resource exhaustion 
C) Higher trade surplus 
D) Higher budget deficits

Question 16

Adam Smith stressed specialization and division of labor as causes of economic growth.

Accepted Answer

A) True 
 B)False

Question 17

The rule of 72 implies that a country will double its income in about 4 years if its growth rate is:

Accepted Answer

A) 8 percent. 
B) 12 percent. 
C) 18 percent. 
D) 25 percent. 
A) 8 percent. 
B) 12 percent. 
C) 18 percent. 
D) 25 percent.

Question 18

One of the predictions of the Classical growth model is that the long-run growth in per capita output disappears due to diminishing marginal productivity of labor and capital.Real world experiences suggest otherwise.Explain why.

Accepted Answer

Classical economists' predictions were w

Question 19

According to Malthus, a fixed quantity of land and a growing population combined to produce:

Accepted Answer

A) continuous but variable economic growth. 
B) accelerating economic growth. 
C) a stationary state in which growth ceased. 
D) a stationary state in which the economy grew, but at a fixed and unchangeable rate. 
A) continuous but variable economic growth. 
B) accelerating economic growth. 
C) a stationary state in which growth ceased. 
D) a stationary state in which the economy grew, but at a fixed and unchangeable rate.

Question 20

The rule of 72 implies that a country with a growth rate of 8 percent will double its income in about:

Accepted Answer

A) 4 years. 
B) 6 years. 
C) 9 years. 
D) 12 years. 
A) 4 years. 
B) 6 years. 
C) 9 years. 
D) 12 years.

Exam 27: The Classical Long-Run Policy Model: Growth and Supply-Side Policies

If investment in technology is similar to investment in capital,why does new growth theory separate the two?

The rule of 72 implies that a country with a growth rate of 2 percent:

Which of the following is not likely to contribute to economic growth?

Jamaica has far less capital than Singapore. Based on this, the Classical growth model would predict that as each accumulates more capital Jamaica would grow:

If the positive externalities associated with learning by doing are sufficiently great, production will be characterized by:

If per capita output falls by 2 percent and population grows by 3 percent, output:

If a country's population is 30 million and its GDP is $8.5 billion, its per capita output is:

How have markets contributed to growth?

Suppose that a business discovers an opportunity that requires funds to exploit. What effect would this have in the market for loanable funds?

The rule of 72 implies that a country with a growth rate of 6 percent will double its income in about:

People's knowledge is a type of capital, called human capital.

If you know the percent change in output,what additional information would you need to calculate per capita growth of output? Give an example.

What is the new growth theory?

Network externalities:

Which of the following is a potential cost of long-run growth?

Adam Smith stressed specialization and division of labor as causes of economic growth.

The rule of 72 implies that a country will double its income in about 4 years if its growth rate is:

One of the predictions of the Classical growth model is that the long-run growth in per capita output disappears due to diminishing marginal productivity of labor and capital.Real world experiences suggest otherwise.Explain why.

According to Malthus, a fixed quantity of land and a growing population combined to produce:

The rule of 72 implies that a country with a growth rate of 8 percent will double its income in about:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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