Question 1

The purchasing power parity method of comparing income levels across countries

Accepted Answer

A) calculates the cost of purchasing a common bundle of goods in each country and then uses this price index to convert each country's income to a common currency. 
B) uses the exchange rate to convert the income level of each country to a common currency. 
C) uses the prime interest rate in each country to convert the income level of each country to a common currency. 
D) calculates the ratio of imports relative to exports in each country and then uses this ratio to convert each country's income to a common currency. 
A) calculates the cost of purchasing a common bundle of goods in each country and then uses this price index to convert each country's income to a common currency. 
B) uses the exchange rate to convert the income level of each country to a common currency. 
C) uses the prime interest rate in each country to convert the income level of each country to a common currency. 
D) calculates the ratio of imports relative to exports in each country and then uses this ratio to convert each country's income to a common currency.

Question 2

During 1980 through 2010,

Accepted Answer

A) the per capita income of high-income industrial countries declined. 
B) the fastest growing economies in the world were LDCs. 
C) almost all LDCs grew more rapidly than the high-income industrial economies. 
D) most of the countries with rapid growth rates during the last two decades were located in South America. 
A) the per capita income of high-income industrial countries declined. 
B) the fastest growing economies in the world were LDCs. 
C) almost all LDCs grew more rapidly than the high-income industrial economies. 
D) most of the countries with rapid growth rates during the last two decades were located in South America.

Question 3

Which of the following helps low income countries grow rapidly relative to high income countries?

Accepted Answer

A) Low income countries are in a better position to save a larger share of their income. 
B) Low income countries can copy (or borrow at a low cost) technologies and practices that have been successful in high income countries. 
C) Low income countries generally have legal systems that protect property rights and enforce contracts in a more evenhanded manner. 
D) Low income countries generally have more favorable weather 
A) Low income countries are in a better position to save a larger share of their income. 
B) Low income countries can copy (or borrow at a low cost) technologies and practices that have been successful in high income countries. 
C) Low income countries generally have legal systems that protect property rights and enforce contracts in a more evenhanded manner. 
D) Low income countries generally have more favorable weather

Question 4

The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without

Accepted Answer

A) securely defined property rights. 
B) abundant domestic natural resources. 
C) significant capital formation. 
D) adopting modern technology. 
A) securely defined property rights. 
B) abundant domestic natural resources. 
C) significant capital formation. 
D) adopting modern technology.

Question 5

Compared to those in low-income countries, the residents of countries with high per person incomes nearly always

Accepted Answer

A) live longer. 
B) have a lower illiteracy rate. 
C) have a lower infant mortality rate. 
D) all of the above. 
A) live longer. 
B) have a lower illiteracy rate. 
C) have a lower infant mortality rate. 
D) all of the above.

Question 6

In order to achieve a high economic freedom rating, a country must

Accepted Answer

A) provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B) refrain from creating barriers that limit domestic and international trade. 
C) rely more fully on markets rather than governments to allocate goods and resources. 
D) all of the above. 
A) provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B) refrain from creating barriers that limit domestic and international trade. 
C) rely more fully on markets rather than governments to allocate goods and resources. 
D) all of the above.

Question 7

Which of the following countries have instituted liberal reforms and substantially improved their economic freedom rating since 1990?

Accepted Answer

A) Japan and Italy 
B) Nigeria and Pakistan 
C) Sierra Leone and Zimbabwe 
D) Estonia and Hungary 
A) Japan and Italy 
B) Nigeria and Pakistan 
C) Sierra Leone and Zimbabwe 
D) Estonia and Hungary

Question 8

Which of the following will increase economic freedom?

Accepted Answer

A) institutions and policies supportive of voluntary exchange 
B) high tariff rates 
C) high taxes 
D) rapid and unpredictable inflation 
E) all of the above 
A) institutions and policies supportive of voluntary exchange 
B) high tariff rates 
C) high taxes 
D) rapid and unpredictable inflation 
E) all of the above

Question 9

Which countries undertook economic reforms in the 1960's that resulted in more economic freedom and stronger economic growth?

Accepted Answer

A) Venezuela and Zimbabwe 
B) Malawi and Niger 
C) Hong Kong and Singapore 
D) United States and Switzerland 
A) Venezuela and Zimbabwe 
B) Malawi and Niger 
C) Hong Kong and Singapore 
D) United States and Switzerland

Question 10

The sound economic institutions and policies needed for economic growth and prosperity

Accepted Answer

A) emerge from the political process, if they emerge at all. 
B) are unaffected by political decision-making and constitutional rules. 
C) are virtually guaranteed to emerge, if democracy becomes the form of government in a nation. 
D) can only emerge from a democracy 
A) emerge from the political process, if they emerge at all. 
B) are unaffected by political decision-making and constitutional rules. 
C) are virtually guaranteed to emerge, if democracy becomes the form of government in a nation. 
D) can only emerge from a democracy

Question 11

Countries with lower levels of economic freedom tend to have

Accepted Answer

A) lower levels of economic growth 
B) higher levels of per person income 
C) higher levels of investment 
D) all of the above 
A) lower levels of economic growth 
B) higher levels of per person income 
C) higher levels of investment 
D) all of the above

Question 12

Which of the following adopted reforms that have substantially improved their economic freedom rating since 1980?

Accepted Answer

A) Ireland 
B) China 
C) New Zealand 
D) All of the above. 
A) Ireland 
B) China 
C) New Zealand 
D) All of the above.

Question 13

When a low-income nation improves its institutions, so that growth results, one reason the growth may be more rapid than would result from a similar improvement in a developed nation that brings the same amount of added capital per worker to each nation, is that

Accepted Answer

A) adding capital has constant returns to scale, rather than diminishing returns, in each nation. 
B) with diminishing returns to scale, and with richer nations starting with more capital per unit labor, the added capital produces smaller increments to production in the higher-income nations. 
C) wage rates are lower in the low-income nation, and lower-income workers are more productive. 
D) capital is always more productive in lower-income nations. 
A) adding capital has constant returns to scale, rather than diminishing returns, in each nation. 
B) with diminishing returns to scale, and with richer nations starting with more capital per unit labor, the added capital produces smaller increments to production in the higher-income nations. 
C) wage rates are lower in the low-income nation, and lower-income workers are more productive. 
D) capital is always more productive in lower-income nations.

Question 14

Economic theory and history indicate that open elections and democratically elected governments

Accepted Answer

A) are unique in their ability to produce good economic institutions. 
B) must be accompanied by economic institutions that will allocate resources efficiently, or otherwise democratic institutions will not survive. 
C) reflect only transactions that are based on mutual agreement and voluntary exchange. 
D) are unable to guarantee either the emergence or continuation of economic institutions and policies that will encourage productive behavior. 
A) are unique in their ability to produce good economic institutions. 
B) must be accompanied by economic institutions that will allocate resources efficiently, or otherwise democratic institutions will not survive. 
C) reflect only transactions that are based on mutual agreement and voluntary exchange. 
D) are unable to guarantee either the emergence or continuation of economic institutions and policies that will encourage productive behavior.

Question 15

Which of the following most accurately states the importance of technology as a source of economic growth for less-developed countries?

Accepted Answer

A) Restraints imposed by the slow advancements in modern technology have severely constrained the growth of less-developed countries. 
B) If modern technology was the only requirement for economic growth, less-developed countries would be growing rapidly. 
C) Most less-developed nations have the necessary complementary factors of production to make good use of modern technology if they could just afford the complex machines. 
D) While modern technology has increased the income levels in less developed countries, it has been unable to improve living standards. 
A) Restraints imposed by the slow advancements in modern technology have severely constrained the growth of less-developed countries. 
B) If modern technology was the only requirement for economic growth, less-developed countries would be growing rapidly. 
C) Most less-developed nations have the necessary complementary factors of production to make good use of modern technology if they could just afford the complex machines. 
D) While modern technology has increased the income levels in less developed countries, it has been unable to improve living standards.

Question 16

Authoritarian political regimes

Accepted Answer

A) never produce sound economic institutions, due to corruption. 
B) have produced movement toward sound economic institutions in Chile, South Korea and several other nations. 
C) will generally produce sound economic institutions and policies. 
D) are necessary for the emergence of sound institutions, but not for their continued operation. 
A) never produce sound economic institutions, due to corruption. 
B) have produced movement toward sound economic institutions in Chile, South Korea and several other nations. 
C) will generally produce sound economic institutions and policies. 
D) are necessary for the emergence of sound institutions, but not for their continued operation.

Question 17

The GDP figures fail to count labor services and other household production. Once this omission is taken into account,

Accepted Answer

A) the income differences between the high and low income countries are small. 
B) the differences in living standards between the high and low income countries are small. 
C) the income differences between the high and low income countries are still huge. 
D) the life expectancy in the high and low income countries is approximately the same. 
A) the income differences between the high and low income countries are small. 
B) the differences in living standards between the high and low income countries are small. 
C) the income differences between the high and low income countries are still huge. 
D) the life expectancy in the high and low income countries is approximately the same.

Question 18

Countries that have a higher degree of economic freedom tend to

Accepted Answer

A) invest a larger share of their output, but the productivity of that investment is lower than for economies that are less free. 
B) invest a smaller share of their output, but the productivity of that investment is higher than for economies that are less free. 
C) invest a larger share of their output and the productivity of that investment is higher than for the economies that are less free. 
D) invest a smaller share of their output and the productivity of that investment is lower than for economies that are less free. 
A) invest a larger share of their output, but the productivity of that investment is lower than for economies that are less free. 
B) invest a smaller share of their output, but the productivity of that investment is higher than for economies that are less free. 
C) invest a larger share of their output and the productivity of that investment is higher than for the economies that are less free. 
D) invest a smaller share of their output and the productivity of that investment is lower than for economies that are less free.

Question 19

(I) Countries with more economic freedom during the past quarter of a century had a lower average per capita GDP. (II) Countries with more economic freedom during the past quarter of a century generally achieved higher rates of economic growth.

Accepted Answer

A) Both I and II are true. 
B) Both I and II are false. 
C) I is true; II is false. 
D) I is false; II is true. 
A) Both I and II are true. 
B) Both I and II are false. 
C) I is true; II is false. 
D) I is false; II is true.

Question 20

Which of the following is true?

Accepted Answer

A) economic freedom is present if a country is a political democracy. 
B) economic freedom ratings indicate the consistency of a nation's institutions and policies with personal choice, freedom of exchange, and protection of private property. 
C) economies that are highly free tend to grow less rapidly than those with less economic freedom. 
D) all of the above are correct. 
A) economic freedom is present if a country is a political democracy. 
B) economic freedom ratings indicate the consistency of a nation's institutions and policies with personal choice, freedom of exchange, and protection of private property. 
C) economies that are highly free tend to grow less rapidly than those with less economic freedom. 
D) all of the above are correct.

The purchasing power parity method of comparing income levels across countries

During 1980 through 2010,

Which of the following helps low income countries grow rapidly relative to high income countries?

The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without

Compared to those in low-income countries, the residents of countries with high per person incomes nearly always

In order to achieve a high economic freedom rating, a country must

Which of the following countries have instituted liberal reforms and substantially improved their economic freedom rating since 1990?

Which of the following will increase economic freedom?

Which countries undertook economic reforms in the 1960's that resulted in more economic freedom and stronger economic growth?

The sound economic institutions and policies needed for economic growth and prosperity

Countries with lower levels of economic freedom tend to have

Which of the following adopted reforms that have substantially improved their economic freedom rating since 1980?

When a low-income nation improves its institutions, so that growth results, one reason the growth may be more rapid than would result from a similar improvement in a developed nation that brings the same amount of added capital per worker to each nation, is that

Economic theory and history indicate that open elections and democratically elected governments

Which of the following most accurately states the importance of technology as a source of economic growth for less-developed countries?

Authoritarian political regimes

The GDP figures fail to count labor services and other household production. Once this omission is taken into account,

Countries that have a higher degree of economic freedom tend to

(I) Countries with more economic freedom during the past quarter of a century had a lower average per capita GDP. (II) Countries with more economic freedom during the past quarter of a century generally achieved higher rates of economic growth.

Which of the following is true?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 17: Institutions, Policies, and Cross-Country Differences in Income and Growth

The purchasing power parity method of comparing income levels across countries

During 1980 through 2010,

Which of the following helps low income countries grow rapidly relative to high income countries?

The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without

Compared to those in low-income countries, the residents of countries with high per person incomes nearly always

In order to achieve a high economic freedom rating, a country must

Which of the following countries have instituted liberal reforms and substantially improved their economic freedom rating since 1990?

Which of the following will increase economic freedom?

Which countries undertook economic reforms in the 1960's that resulted in more economic freedom and stronger economic growth?

The sound economic institutions and policies needed for economic growth and prosperity

Countries with lower levels of economic freedom tend to have

Which of the following adopted reforms that have substantially improved their economic freedom rating since 1980?

When a low-income nation improves its institutions, so that growth results, one reason the growth may be more rapid than would result from a similar improvement in a developed nation that brings the same amount of added capital per worker to each nation, is that

Economic theory and history indicate that open elections and democratically elected governments

Which of the following most accurately states the importance of technology as a source of economic growth for less-developed countries?

Authoritarian political regimes

The GDP figures fail to count labor services and other household production. Once this omission is taken into account,

Countries that have a higher degree of economic freedom tend to

(I) Countries with more economic freedom during the past quarter of a century had a lower average per capita GDP. (II) Countries with more economic freedom during the past quarter of a century generally achieved higher rates of economic growth.

Which of the following is true?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters