Question 1

A concern about long-run economic growth was important in economics:

Accepted Answer

A) from the time of Adam Smith and his The Wealth of Nations. 
B) from the time of Karl Marx and his Das Kapital. 
C) from the time of John M. Keynes and his General Theory. 
D) only since the 1970s. 
A) from the time of Adam Smith and his The Wealth of Nations. 
B) from the time of Karl Marx and his Das Kapital. 
C) from the time of John M. Keynes and his General Theory. 
D) only since the 1970s.

Question 2

The legal system is an example of:

Accepted Answer

A) social capital. 
B) physical capital. 
C) human capital. 
D) entrepreneurial capital. 
A) social capital. 
B) physical capital. 
C) human capital. 
D) entrepreneurial capital.

Question 3

Classical growth economists who applied the law of diminishing marginal productivity to capital concluded that:

Accepted Answer

A) both output and per capita output could grow indefinitely. 
B) output could grow indefinitely but per capita output could not. 
C) per capita output could grow indefinitely but output could not. 
D) neither output nor per capita output could grow indefinitely. 
A) both output and per capita output could grow indefinitely. 
B) output could grow indefinitely but per capita output could not. 
C) per capita output could grow indefinitely but output could not. 
D) neither output nor per capita output could grow indefinitely.

Question 4

Which of the following does not provide an example of network externalities?

Accepted Answer

A) The Internet 
B) The telephone system 
C) A language 
D) A patent 
A) The Internet 
B) The telephone system 
C) A language 
D) A patent

Question 5

What effect would we expect in the market for loanable funds if people increase their saving?

Accepted Answer

A) Supply will shift right and demand will not change. 
B) Supply will shift left and demand will not change. 
C) Demand will shift right and supply will not change. 
D) Demand will shift left and supply will not change. 
A) Supply will shift right and demand will not change. 
B) Supply will shift left and demand will not change. 
C) Demand will shift right and supply will not change. 
D) Demand will shift left and supply will not change.

Question 6

What effect would we expect in the market for loanable funds if some people discover a new business opportunity that requires investment?

Accepted Answer

A) Supply will shift right and demand will not change. 
B) Supply will shift left and demand will not change. 
C) Demand will shift right and supply will not change. 
D) Demand will shift left and supply will not change. 
A) Supply will shift right and demand will not change. 
B) Supply will shift left and demand will not change. 
C) Demand will shift right and supply will not change. 
D) Demand will shift left and supply will not change.

Question 7

Suppose Thailand grows at a rate of 8 percent, Malaysia grows at a rate of 6 percent, and both countries have the same initial per capita output level. Using the rule of 72, it follows that in 36 years Thailand's per capita output will be:

Accepted Answer

A) 25 percent larger than Malaysia's per capita output. 
B) 33 percent larger than Malaysia's per capita output. 
C) 50 percent larger than Malaysia's per capita output. 
D) 100 percent larger than Malaysia's per capita output. 
A) 25 percent larger than Malaysia's per capita output. 
B) 33 percent larger than Malaysia's per capita output. 
C) 50 percent larger than Malaysia's per capita output. 
D) 100 percent larger than Malaysia's per capita output.

Question 8

Historically economic growth through the market has:

Accepted Answer

A) on average hurt the poor. 
B) not affected the poor. 
C) helped both rich and poor. 
D) helped the poor at the expense of the rich. 
A) on average hurt the poor. 
B) not affected the poor. 
C) helped both rich and poor. 
D) helped the poor at the expense of the rich.

Question 9

Positive externalities of technological change result from:

Accepted Answer

A) capital accumulation. 
B) the common knowledge embodied in many technologies. 
C) patents. 
D) increasing returns to scale. 
A) capital accumulation. 
B) the common knowledge embodied in many technologies. 
C) patents. 
D) increasing returns to scale.

Question 10

What is Say's Law? What is the reasoning behind it?

Accepted Answer

Say's Law states that supply creates its

Question 11

What is the Classical growth model? Explain how,according to this model,saving plays a key role in growth.

Accepted Answer

The Classical growth model is a model of

Question 12

The most important policy implication of the Classical growth model is that:

Accepted Answer

A) policies to slow population growth will accelerate economic growth. 
B) policies to stimulate technological development will stimulate economic growth. 
C) policies to stimulate saving and investment will stimulate economic growth. 
D) budget deficits will stimulate economic growth. 
A) policies to slow population growth will accelerate economic growth. 
B) policies to stimulate technological development will stimulate economic growth. 
C) policies to stimulate saving and investment will stimulate economic growth. 
D) budget deficits will stimulate economic growth.

Question 13

As a result of the Great Depression, economic thought placed greater emphasis on:

Accepted Answer

A) long-run growth. 
B) short-run fluctuations. 
C) international transactions. 
D) the problem of inflation. 
A) long-run growth. 
B) short-run fluctuations. 
C) international transactions. 
D) the problem of inflation.

Question 14

If median income is unchanged from one year to the next, then per capita income:

Accepted Answer

A) is also constant. 
B) is increasing. 
C) is decreasing. 
D) could be increasing, decreasing, or constant. 
A) is also constant. 
B) is increasing. 
C) is decreasing. 
D) could be increasing, decreasing, or constant.

Question 15

According to the Classical growth model, population growth:

Accepted Answer

A) eventually reduces output. 
B) eventually reduces output per worker. 
C) does not affect output. 
D) does not affect output per worker. 
A) eventually reduces output. 
B) eventually reduces output per worker. 
C) does not affect output. 
D) does not affect output per worker.

Question 16

The growth model in which capital accumulation plays the key role is called the:

Accepted Answer

A) new growth model. 
B) Classical growth model. 
C) new Classical growth model. 
D) Keynesian model. 
A) new growth model. 
B) Classical growth model. 
C) new Classical growth model. 
D) Keynesian model.

Question 17

Over the last three decades, the Chinese government has adopted a series of market-oriented reforms that have shifted control of many parts of the Chinese economy from government officials to private individuals. These reforms have most likely stimulated China's growth for which of the following reasons?

Accepted Answer

A) They have provided individuals with a greater incentive to be efficient. 
B) They have decreased domestic competition. 
C) They have increased economies of scale. 
D) They have decreased entrepreneurship. 
A) They have provided individuals with a greater incentive to be efficient. 
B) They have decreased domestic competition. 
C) They have increased economies of scale. 
D) They have decreased entrepreneurship.

Question 18

Compounding means that changes in living standards depend:

Accepted Answer

A) only on the initial level of income. 
B) only on the accumulation of changes in income since the initial year. 
C) on both the initial level of income and the accumulation of changes in income every year since the initial year. 
D) on neither the initial level of income nor the accumulation of changes in income since the initial year. 
A) only on the initial level of income. 
B) only on the accumulation of changes in income since the initial year. 
C) on both the initial level of income and the accumulation of changes in income every year since the initial year. 
D) on neither the initial level of income nor the accumulation of changes in income since the initial year.

Question 19

If a country's population is 5 million and its output is $195 billion, its per capita output is:

Accepted Answer

A) $1,960. 
B) $9,800. 
C) $19,960. 
D) $39,000. 
A) $1,960. 
B) $9,800. 
C) $19,960. 
D) $39,000.

Question 20

Which country is experiencing higher growth per capita? Country A whose economy is growing at a 9 percent rate and whose population is growing at a 7 percent rate or country B whose economy is growing at a 2 percent rate and whose population is declining at a 1 percent rate?

Accepted Answer

Use the following formula to compute the

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

A concern about long-run economic growth was important in economics:

The legal system is an example of:

Classical growth economists who applied the law of diminishing marginal productivity to capital concluded that:

Which of the following does not provide an example of network externalities?

What effect would we expect in the market for loanable funds if people increase their saving?

What effect would we expect in the market for loanable funds if some people discover a new business opportunity that requires investment?

Suppose Thailand grows at a rate of 8 percent, Malaysia grows at a rate of 6 percent, and both countries have the same initial per capita output level. Using the rule of 72, it follows that in 36 years Thailand's per capita output will be:

Historically economic growth through the market has:

Positive externalities of technological change result from:

What is Say's Law? What is the reasoning behind it?

What is the Classical growth model? Explain how,according to this model,saving plays a key role in growth.

The most important policy implication of the Classical growth model is that:

As a result of the Great Depression, economic thought placed greater emphasis on:

If median income is unchanged from one year to the next, then per capita income:

According to the Classical growth model, population growth:

The growth model in which capital accumulation plays the key role is called the:

Compounding means that changes in living standards depend:

If a country's population is 5 million and its output is $195 billion, its per capita output is:

Which country is experiencing higher growth per capita? Country A whose economy is growing at a 9 percent rate and whose population is growing at a 7 percent rate or country B whose economy is growing at a 2 percent rate and whose population is declining at a 1 percent rate?

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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