Question 1

Historically, the effect of economic growth generally has been to make:

Accepted Answer

A) the poor poorer and the rich richer. 
B) the poor richer and the rich poorer. 
C) all income levels richer. 
D) the rich richer but not affect the poor. 
A) the poor poorer and the rich richer. 
B) the poor richer and the rich poorer. 
C) all income levels richer. 
D) the rich richer but not affect the poor.

Question 2

We can show economic growth in terms of the production possibility curve by:

Accepted Answer

A) movement along the production possibility curve. 
B) shifting from a point inside the curve to a point on the production possibility curve. 
C) shifting the production possibility curve outward. 
D) jumping to a point outside the production possibility curve. 
A) movement along the production possibility curve. 
B) shifting from a point inside the curve to a point on the production possibility curve. 
C) shifting the production possibility curve outward. 
D) jumping to a point outside the production possibility curve.

Question 3

Unlike Classical growth theory, new growth theory emphasizes the importance of:

Accepted Answer

A) the law of diminishing marginal productivity. 
B) human capital. 
C) population growth. 
D) technology. 
A) the law of diminishing marginal productivity. 
B) human capital. 
C) population growth. 
D) technology.

Question 4

Other things equal, according to the Classical growth model, if Malaysia saves more than Thailand, Malaysia should grow faster than Thailand.

Accepted Answer

A) True 
 B)False

Question 5

According to the Classical growth model, an economy that increases its saving will grow:

Accepted Answer

A) slowly because consumption and aggregate demand will be reduced. 
B) slowly because interest rates will fall, causing investment to decline. 
C) quickly since the increase in saving will permit greater investment. 
D) quickly since the increase in saving will permit more rapid technological progress. 
A) slowly because consumption and aggregate demand will be reduced. 
B) slowly because interest rates will fall, causing investment to decline. 
C) quickly since the increase in saving will permit greater investment. 
D) quickly since the increase in saving will permit more rapid technological progress.

Question 6

Saving and investment are often viewed as among the sources of economic growth.Why are saving and investment more of a challenge in developing countries than in developed countries?

Accepted Answer

Saving and investment are often more of

Question 7

Growth compatible institutions:

Accepted Answer

A) have incentives built into them that lead people to put forth effort. 
B) encourage people to pursue activities that inhibit growth in others. 
C) allow people to gain income for themselves by creating impediments for others. 
D) encourage people to spend a lot of time in leisure pursuits. 
A) have incentives built into them that lead people to put forth effort. 
B) encourage people to pursue activities that inhibit growth in others. 
C) allow people to gain income for themselves by creating impediments for others. 
D) encourage people to spend a lot of time in leisure pursuits.

Question 8

The idea behind Say's Law is that people work because:

Accepted Answer

A) they like to work. 
B) they want to buy things. 
C) they want to accumulate wealth. 
D) work gives them social status. 
A) they like to work. 
B) they want to buy things. 
C) they want to accumulate wealth. 
D) work gives them social status.

Question 9

Learning by doing suggests that:

Accepted Answer

A) greater experience increases efficiency. 
B) greater experience increases production costs. 
C) diminishing marginal productivity occurs more rapidly. 
D) patents are more valuable. 
A) greater experience increases efficiency. 
B) greater experience increases production costs. 
C) diminishing marginal productivity occurs more rapidly. 
D) patents are more valuable.

Question 10

The growth produced by markets:

Accepted Answer

A) makes everyone better off and improves the distribution of income as well. 
B) affects the wealthy more than it affects the poor. 
C) makes the average person better off but may worsen the distribution of income. 
D) affects the level of income but not its distribution. 
A) makes everyone better off and improves the distribution of income as well. 
B) affects the wealthy more than it affects the poor. 
C) makes the average person better off but may worsen the distribution of income. 
D) affects the level of income but not its distribution.

Question 11

An economy grows when its population increases.

Accepted Answer

A) True 
 B)False

Question 12

New growth theory emphasizes the importance of increases in what factor in explaining growth?

Accepted Answer

A) Capital 
B) Labor 
C) Technology 
D) Land 
A) Capital 
B) Labor 
C) Technology 
D) Land

Question 13

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. This "drag will become increasingly apparent…as other countries dismantle regulatory obstacles and alter tax laws that put them at a disadvantage." In terms of sources of growth, the quotation suggests that some other countries are currently at a disadvantage because 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.

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

Historically, the effect of economic growth generally has been to make:

We can show economic growth in terms of the production possibility curve by:

Unlike Classical growth theory, new growth theory emphasizes the importance of:

Other things equal, according to the Classical growth model, if Malaysia saves more than Thailand, Malaysia should grow faster than Thailand.

According to the Classical growth model, an economy that increases its saving will grow:

Saving and investment are often viewed as among the sources of economic growth.Why are saving and investment more of a challenge in developing countries than in developed countries?

Growth compatible institutions:

The idea behind Say's Law is that people work because:

Learning by doing suggests that:

The growth produced by markets:

An economy grows when its population increases.

New growth theory emphasizes the importance of increases in what factor in explaining growth?

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

Filters