Exam 8: Why Do Economies Grow?

Increasing the stock of capital while holding the labor force constant will ________ output at a(n)________ rate.

Technological progress occurs when the economy gets more output

Suppose consumers save 17 percent of their incomes. If the government collects 10 dollar in taxes from each taxpayer and invested it in infrastructure, total social investment will ________ per taxpayer.

In the short run, if the stock of capital ________ there will be more depreciation.

Decreases in the stock of capital will lead to

-Refer to Figure 8A.1. Suppose that the economy starts with a capital stock of . Then total saving is given by point ________ and depreciation by point ________.

Draw a graph showing the Solow model. Illustrate and explain the point at which capital deepening ceases.

Human capital includes investments in education and skills.

Suppose the annual growth rate of GDP in Belize is 3.5 percent. In 20 years, GDP in Belize will double

Technological progress means that we produce more output with the same amount of inputs.

According to the Solow model, technological progress will cause output to increase for two reasons. What are these two reasons?

A defining feature of new growth theory is that it involves economic models of growth which account for

Which of the following is NOT an example of technological progress?

Monopoly profits lead to technological process by

Which of the following uses of tax revenues collected by the government leads to increased capital deepening?

Explain the effect of trade deficits on economic growth.

Recall the Application about the lack of property rights in Peru, and why clear property rights are important for economic growth in developing countries, to answer the following question(s). Clear property rights give owners an incentive to make long-term investments in their property, and are vital for the property owners to be able to borrow funds. -According to this Application, clear property rights

When one company is the sole seller of certain products in a market, it is called a

Recall the Application about the effect of global warming on economic growth to answer the following question(s). -According to this Application, over time, as economies adapt to higher temperatures,

Recall the Application about cultural factors in England and their relevance to the Industrial Revolution to answer the following question(s). In studying the economic history of England before the Industrial Revolution, Professor Gregory Clark found that children of the more affluent members of English society were more likely to survive than those of the less affluent. Coupled with the slow growth of population over several centuries, this differential survival of the wealthy had the effect of creating downward mobility for the rich, as their sons and daughter increasingly populated the society. -According to the Application, the cultural habits of the rich filtered down through English society. These habits included all of the following virtues EXCEPT