Question 1

Investment in both physical and human capital tends to enhance economic growth because it generally

Accepted Answer

A) increases consumption during the current period. 
B) makes it possible for individuals to produce more goods and services per hour worked. 
C) encourages firms to expand output by employing more low productivity workers. 
D) encourages workers to unionize and thereby fight for higher wages. 
A) increases consumption during the current period. 
B) makes it possible for individuals to produce more goods and services per hour worked. 
C) encourages firms to expand output by employing more low productivity workers. 
D) encourages workers to unionize and thereby fight for higher wages.

Question 2

When a nation's institutional environment is more favorable, it will

Accepted Answer

A) attract more physical investment. 
B) encourage individuals to invest more heavily in human capital. 
C) encourage the development and efficient use of natural resources. 
D) all of the above. 
A) attract more physical investment. 
B) encourage individuals to invest more heavily in human capital. 
C) encourage the development and efficient use of natural resources. 
D) all of the above.

Question 3

The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of

Accepted Answer

A) rapid growth of capital formation if population increased above the subsistence level. 
B) rapid growth of population if income increased above the subsistence level. 
C) rapid growth of government if income increased above the subsistence level. 
D) political democracy if income increased above the subsistence level. 
A) rapid growth of capital formation if population increased above the subsistence level. 
B) rapid growth of population if income increased above the subsistence level. 
C) rapid growth of government if income increased above the subsistence level. 
D) political democracy if income increased above the subsistence level.

Question 4

When competition is present and property rights secure, people will be encouraged to

Accepted Answer

A) plunder the resources of others. 
B) pay the lowest possible wages. 
C) provide others with things that they value in exchange for income. 
D) Invest in other countries where markets are less competitive and property rights less secure. 
A) plunder the resources of others. 
B) pay the lowest possible wages. 
C) provide others with things that they value in exchange for income. 
D) Invest in other countries where markets are less competitive and property rights less secure.

Question 5

Which of the following is most likely to be a major source of growth in per capita GDP?

Accepted Answer

A) a high investment/GDP ratio 
B) a high rate of inflation 
C) rapid population growth 
D) rapid growth in the money supply 
A) a high investment/GDP ratio 
B) a high rate of inflation 
C) rapid population growth 
D) rapid growth in the money supply

Question 6

How can increased investment help a country achieve increased economic growth? What costs are involved?

Accepted Answer

Countries can profit from investment in

Question 7

Which of the following is a driving force underlying economic growth?

Accepted Answer

A) trade restrictions that protect domestic businesses from competition with foreign producers 
B) regulations that require businesses to obtain permission from the government before starting a new business 
C) tax increases that expand the revenues of the government 
D) entrepreneurial discovery and production of improved products 
A) trade restrictions that protect domestic businesses from competition with foreign producers 
B) regulations that require businesses to obtain permission from the government before starting a new business 
C) tax increases that expand the revenues of the government 
D) entrepreneurial discovery and production of improved products

Question 8

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

Accepted Answer

A) high and variable rates of inflation 
B) tariffs and quotas that restrict international trade 
C) a legal system that provides for secure property rights and even-handed enforcement of contracts 
D) high marginal tax rates 
A) high and variable rates of inflation 
B) tariffs and quotas that restrict international trade 
C) a legal system that provides for secure property rights and even-handed enforcement of contracts 
D) high marginal tax rates

Question 9

When a country's inflation rate varies substantially from year-to-year and is therefore difficult to predict, this will

Accepted Answer

A) reduce the volume of trade and the gains derived from it. 
B) reduce the risk accompanying investment. 
C) encourage entrepreneurs to innovate and develop better products. 
D) increase the level of foreign investment in the country. 
A) reduce the volume of trade and the gains derived from it. 
B) reduce the risk accompanying investment. 
C) encourage entrepreneurs to innovate and develop better products. 
D) increase the level of foreign investment in the country.

Question 10

Which of the following is true for the world as a whole?

Accepted Answer

A) During the past 200 years, the income per person of the world has increased sharply, but there has been little change in the years of life expectancy at birth. 
B) During the past 200 years, the years of life expectancy at birth has increased sharply, but there has been little change in the world's income per person. 
C) During the 800 years between 1000 and 1800, the increases in both world income per person and life expectancy at birth were small, but both of these indicators have increased sharply during the past 200 years. 
D) Both income per person and life expectancy rose steadily during 1000-1800, but neither of these indicators have increased much during the past 200 years as the population of the world has become larger and larger. 
A) During the past 200 years, the income per person of the world has increased sharply, but there has been little change in the years of life expectancy at birth. 
B) During the past 200 years, the years of life expectancy at birth has increased sharply, but there has been little change in the world's income per person. 
C) During the 800 years between 1000 and 1800, the increases in both world income per person and life expectancy at birth were small, but both of these indicators have increased sharply during the past 200 years. 
D) Both income per person and life expectancy rose steadily during 1000-1800, but neither of these indicators have increased much during the past 200 years as the population of the world has become larger and larger.

Question 11

Stable money and prices are a key source of economic growth because

Accepted Answer

A) they allow activist policymakers to fine tune the economy. 
B) uncertainty and instability in prices will attract investors and business decision makers. 
C) price instability increases capital formation. 
D) price stability reduces the risks that accompany investment and other long-term commitments. 
A) they allow activist policymakers to fine tune the economy. 
B) uncertainty and instability in prices will attract investors and business decision makers. 
C) price instability increases capital formation. 
D) price stability reduces the risks that accompany investment and other long-term commitments.

Question 12

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

Accepted Answer

A) help a country achieve more rapid economic growth. 
B) promote more efficient use of investment capital by entrepreneurs. 
C) retard economic progress. 
D) increase the profits of business firms. 
A) help a country achieve more rapid economic growth. 
B) promote more efficient use of investment capital by entrepreneurs. 
C) retard economic progress. 
D) increase the profits of business firms.

Question 13

Most economists believe that the poor economic performance of countries located in tropical areas is primarily the result of

Accepted Answer

A) the hot climate that saps the energy of people in tropical countries. 
B) the poor institutional quality in most tropical countries. 
C) the lack of natural resources in most tropical countries. 
D) the failure of rich countries to provide foreign aid to tropical countries. 
A) the hot climate that saps the energy of people in tropical countries. 
B) the poor institutional quality in most tropical countries. 
C) the lack of natural resources in most tropical countries. 
D) the failure of rich countries to provide foreign aid to tropical countries.

Question 14

An increase in per capita income will generally lead to

Accepted Answer

A) more material goods, but a decline in the quality of the environment. 
B) a reduction in life expectancy because working conditions are less desirable. 
C) an increase in the number of hours worked by residents. 
D) an increase in the living standards of most people. 
A) more material goods, but a decline in the quality of the environment. 
B) a reduction in life expectancy because working conditions are less desirable. 
C) an increase in the number of hours worked by residents. 
D) an increase in the living standards of most people.

Question 15

An open capital market affects a nation's economic growth by

Accepted Answer

A) channeling capital into productive projects and away from wasteful projects. 
B) rewarding investors who find the most productive projects and invest in them. 
C) making the lowest-cost capital available from around the world. 
D) all of the above. 
A) channeling capital into productive projects and away from wasteful projects. 
B) rewarding investors who find the most productive projects and invest in them. 
C) making the lowest-cost capital available from around the world. 
D) all of the above.

Question 16

During the past 1000 years, the income per person of the world has

Accepted Answer

A) increased each century, and it is now five times greater than the level of 1000 years ago. 
B) risen rapidly in Western Europe, North America, Japan, and Australia, but there has been little change in income per person in other parts of the world. 
C) increased by approximately tenfold during the past 200 years, but there was only a small increase during the 800 years prior to 1800. 
D) persistently increased, but the largest increases occurred during the 1200 to 1800 era. 
A) increased each century, and it is now five times greater than the level of 1000 years ago. 
B) risen rapidly in Western Europe, North America, Japan, and Australia, but there has been little change in income per person in other parts of the world. 
C) increased by approximately tenfold during the past 200 years, but there was only a small increase during the 800 years prior to 1800. 
D) persistently increased, but the largest increases occurred during the 1200 to 1800 era.

Question 17

Which of the following would be most likely to improve the standard of living of a less-developed country?

Accepted Answer

A) development of strong labor unions. 
B) more foreign investment, attracted by the expectation of economic and political stability. 
C) adoption of trade barriers (higher tariffs and quotas). 
D) widespread use of price controls to allocate goods and resources. 
A) development of strong labor unions. 
B) more foreign investment, attracted by the expectation of economic and political stability. 
C) adoption of trade barriers (higher tariffs and quotas). 
D) widespread use of price controls to allocate goods and resources.

Question 18

When per capita real GDP is increasing, real output is growing

Accepted Answer

A) more rapidly than prices. 
B) more rapidly than population. 
C) less rapidly than prices. 
D) less rapidly than population. 
A) more rapidly than prices. 
B) more rapidly than population. 
C) less rapidly than prices. 
D) less rapidly than population.

Question 19

Are abundant natural resources good or bad for economic growth?

Accepted Answer

The answer to this question is debatable

Question 20

Which of the following is true?

Accepted Answer

A) in recent decades, the rich countries of the world have consistently grown more rapidly than poor countries. 
B) no LDC was able to achieve a more rapid growth rate than the United States during the 1980 through 2005 period. 
C) during recent decades, most LDCs have stagnated economically. 
D) during 1980 through 2005, the fastest growing countries in the world were mostly LDCs. 
A) in recent decades, the rich countries of the world have consistently grown more rapidly than poor countries. 
B) no LDC was able to achieve a more rapid growth rate than the United States during the 1980 through 2005 period. 
C) during recent decades, most LDCs have stagnated economically. 
D) during 1980 through 2005, the fastest growing countries in the world were mostly LDCs.

Investment in both physical and human capital tends to enhance economic growth because it generally

When a nation's institutional environment is more favorable, it will

The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of

When competition is present and property rights secure, people will be encouraged to

Which of the following is most likely to be a major source of growth in per capita GDP?

How can increased investment help a country achieve increased economic growth? What costs are involved?

Which of the following is a driving force underlying economic growth?

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

When a country's inflation rate varies substantially from year-to-year and is therefore difficult to predict, this will

Which of the following is true for the world as a whole?

Stable money and prices are a key source of economic growth because

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

Most economists believe that the poor economic performance of countries located in tropical areas is primarily the result of

An increase in per capita income will generally lead to

An open capital market affects a nation's economic growth by

During the past 1000 years, the income per person of the world has

Which of the following would be most likely to improve the standard of living of a less-developed country?

When per capita real GDP is increasing, real output is growing

Are abundant natural resources good or bad for 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

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 16: Creating an Environment for Growth and Prosperity

Investment in both physical and human capital tends to enhance economic growth because it generally

When a nation's institutional environment is more favorable, it will

The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of

When competition is present and property rights secure, people will be encouraged to

Which of the following is most likely to be a major source of growth in per capita GDP?

How can increased investment help a country achieve increased economic growth? What costs are involved?

Which of the following is a driving force underlying economic growth?

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

When a country's inflation rate varies substantially from year-to-year and is therefore difficult to predict, this will

Which of the following is true for the world as a whole?

Stable money and prices are a key source of economic growth because

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

Most economists believe that the poor economic performance of countries located in tropical areas is primarily the result of

An increase in per capita income will generally lead to

An open capital market affects a nation's economic growth by

During the past 1000 years, the income per person of the world has

Which of the following would be most likely to improve the standard of living of a less-developed country?

When per capita real GDP is increasing, real output is growing

Are abundant natural resources good or bad for 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

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters