Exam 8: Why Do Economies Grow?

Suppose consumers save 8 percent of their incomes. If the government collects 4 dollar in taxes from each taxpayer and invested it in infrastructure, total social investment will ________ per taxpayer.

-Refer to Figure 8A.1. Moving from K0 to

As capital deepening occurs, there will be increased real wages and economic growth.

In a simple economy without government or the foreign sector, saving must equal investment because output is divided into consumption and investment, and income is either consumed or saved.

Suppose that real GDP starts at 100 and grows at a rate of 10 percent per year for two years. In the third year real GDP would be

Recall the Application about the relationship between economic growth and inequality to answer the following question(s). -According to this Application, recent research indicates that

An event that allows the economy to operate more efficiently by producing more outputs without using any more inputs is referred to as

Knowledge and skills are part of ________ in an economy.

A comparison of the average growth rates across time for developed nations indicates that

The point of diminishing returns means that output will decrease at an increasing rate.

An increase in a country's capital stock relative to its work force is known as

Explain the impact of capital deepening on workers.

Nations with low levels of GDP per capita may converge to richer nations if

All growth theory today is "new growth theory" because it considers a broad framework that includes technological progress.

Human capital is equally, if not more, important than physical capital.

Recall the Application about the possibilities of transformative economic growth in authoritarian and participatory political institutions to answer the following question(s). -According to this Application, transformative economic growth, such as that which occurred with the Industrial Revolution, typically requires

When comparing the measure of goods and services of one country to that of another, economists generally compare

Assuming full employment, if the private sector saves 8 percent of its income and the government raises taxes by $500 to finance public investments, total investment will increase by $460.

What are the trade-offs involved in shortening the length of a patent for pharmaceuticals?

Increases in net investment generally result in