Question 1

According to the Classical growth model, the most important source of economic growth is:

Accepted Answer

A) population growth. 
B) capital accumulation. 
C) technological development. 
D) increasing returns to scale. 
A) population growth. 
B) capital accumulation. 
C) technological development. 
D) increasing returns to scale.

Question 2

In the early 2000s, analysts feared that low academic achievement in math in the United States may reduce U.S. economic growth by as much as half a percentage point per year. In terms of factors leading to growth, the low math scores indicate that the United States may be at a growing disadvantage in terms of:

Accepted Answer

A) social capital. 
B) human capital. 
C) growth-compatible institutions. 
D) technology. 
A) social capital. 
B) human capital. 
C) growth-compatible institutions. 
D) technology.

Question 3

A resource the United States lacked in the 20th century and had to import was:

Accepted Answer

A) minerals. 
B) land. 
C) labor. 
D) technological creativity. 
A) minerals. 
B) land. 
C) labor. 
D) technological creativity.

Question 4

If output increases by 5 percent and population growth is 3 percent, per capita output grows by about:

Accepted Answer

A) 2 percent. 
B) 3 percent. 
C) 5 percent. 
D) 8 percent. 
A) 2 percent. 
B) 3 percent. 
C) 5 percent. 
D) 8 percent.

Question 5

What is the Classical growth model? How is it different from new growth theory?

Accepted Answer

The Classical growth model is a model of

Question 6

Market economies have been successful in leading to economic growth because they have:

Accepted Answer

A) allowed companies that pollute to avoid paying any penalty for doing so. 
B) ignored private property rights. 
C) channeled individual efforts toward production and growth. 
D) taken advantage of increased government subsidies. 
A) allowed companies that pollute to avoid paying any penalty for doing so. 
B) ignored private property rights. 
C) channeled individual efforts toward production and growth. 
D) taken advantage of increased government subsidies.

Question 7

Modern macroeconomics developed as an attempt to explain:

Accepted Answer

A) long-run growth. 
B) persistent inflation. 
C) balance of trade problems. 
D) short-run business cycles. 
A) long-run growth. 
B) persistent inflation. 
C) balance of trade problems. 
D) short-run business cycles.

Question 8

What is median income? Why is it a better measurement of living standards than per capita output?

Accepted Answer

The median income is the income level th

Question 9

Which of the following is an example of the development of human capital?

Accepted Answer

A) Designing robots used to manufacture cars 
B) Contributing to well-developed financial markets 
C) Conducting on-the-job training 
D) Fostering trust among firms that allows short-term credit 
A) Designing robots used to manufacture cars 
B) Contributing to well-developed financial markets 
C) Conducting on-the-job training 
D) Fostering trust among firms that allows short-term credit

Question 10

The rule of 72 implies that a country will double its income in about 18 years if its growth rate is:

Accepted Answer

A) 4 percent. 
B) 6 percent. 
C) 8 percent. 
D) 12 percent. 
A) 4 percent. 
B) 6 percent. 
C) 8 percent. 
D) 12 percent.

Question 11

Say's Law allows growth theorists to:

Accepted Answer

A) ignore aggregate demand and focus only on aggregate supply. 
B) ignore aggregate supply and focus only on aggregate demand. 
C) assume that aggregate supply is determined by aggregate demand. 
D) assume that aggregate demand is always less than aggregate supply. 
A) ignore aggregate demand and focus only on aggregate supply. 
B) ignore aggregate supply and focus only on aggregate demand. 
C) assume that aggregate supply is determined by aggregate demand. 
D) assume that aggregate demand is always less than aggregate supply.

Question 12

One reason why the Soviet Union grew slowly in the 20th century compared to the United States and Western Europe was that it:

Accepted Answer

A) did not invest as much in capital goods. 
B) invested in too many consumer goods. 
C) licensed too many private enterprises, creating destructive competition. 
D) did not provide incentives for individuals to produce what consumers valued. 
A) did not invest as much in capital goods. 
B) invested in too many consumer goods. 
C) licensed too many private enterprises, creating destructive competition. 
D) did not provide incentives for individuals to produce what consumers valued.

Question 13

If per capita output increases 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 14

Suppose that consumers decide to save less and spend more. 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 15

List and briefly describe the three types of capital.

Accepted Answer

Economists often think of three types of

Question 16

Most economists explain China's growth after 1980 as primarily due to a more educated population.

Accepted Answer

A) True 
 B)False

Question 17

While all agree that technology is important,no one is sure what are the best policies that promote technological growth.Explain why this statement is valid.

Accepted Answer

No one is sure what the best technologic

Question 18

Specialization allows individuals to:

Accepted Answer

A) broaden their skill base. 
B) become more self-sufficient. 
C) focus their attention on one aspect of production. 
D) better understand the entire production process. 
A) broaden their skill base. 
B) become more self-sufficient. 
C) focus their attention on one aspect of production. 
D) better understand the entire production process.

Question 19

The law of diminishing marginal productivity implies that increasing only one input will:

Accepted Answer

A) not increase output. 
B) lead to smaller and smaller increases in output. 
C) lead to identical increases in output. 
D) lead to larger and larger increases in output. 
A) not increase output. 
B) lead to smaller and smaller increases in output. 
C) lead to identical increases in output. 
D) lead to larger and larger increases in output.

Question 20

Classical growth theory argued that economic growth was limited because of diminishing marginal productivity.

Accepted Answer

A) True 
 B)False

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

According to the Classical growth model, the most important source of economic growth is:

A resource the United States lacked in the 20th century and had to import was:

If output increases by 5 percent and population growth is 3 percent, per capita output grows by about:

What is the Classical growth model? How is it different from new growth theory?

Market economies have been successful in leading to economic growth because they have:

Modern macroeconomics developed as an attempt to explain:

What is median income? Why is it a better measurement of living standards than per capita output?

Which of the following is an example of the development of human capital?

The rule of 72 implies that a country will double its income in about 18 years if its growth rate is:

Say's Law allows growth theorists to:

One reason why the Soviet Union grew slowly in the 20th century compared to the United States and Western Europe was that it:

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

Suppose that consumers decide to save less and spend more. What effect would this have in the market for loanable funds?

List and briefly describe the three types of capital.

Most economists explain China's growth after 1980 as primarily due to a more educated population.

While all agree that technology is important,no one is sure what are the best policies that promote technological growth.Explain why this statement is valid.

Specialization allows individuals to:

The law of diminishing marginal productivity implies that increasing only one input will:

Classical growth theory argued that economic growth was limited because of diminishing marginal productivity.

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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