Question 1

Suppose the annual growth rate of GDP in Nepal is 5 percent. In 35 years, GDP in Nepal will double

Accepted Answer

A)  1.75 times. 
B)  2.5 times. 
C)  7 times. 
D)  24.5 times. 
A)  1.75 times. 
B)  2.5 times. 
C)  7 times. 
D)  24.5 times.

Question 2

Why does depreciation decrease the stock of capital?

Accepted Answer

As capital stock items such as buildings

Question 3

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, economist Daron Acemoglu categorizes which of the following as participatory institutions?

Accepted Answer

A)  democracies, monarchies, and dictatorships 
B)  constitutionally limited monarchies and democracies 
C)  monarchies, dictatorships, and tightly controlled oligarchies 
D)  tightly controlled oligarchies, democracies, and constitutionally limited monarchies 
A)  democracies, monarchies, and dictatorships 
B)  constitutionally limited monarchies and democracies 
C)  monarchies, dictatorships, and tightly controlled oligarchies 
D)  tightly controlled oligarchies, democracies, and constitutionally limited monarchies

Question 4

If real GDP is 100 in year 1, and grows at a rate of 3 percent per year for 9 years, what will the GDP be in 9 years?

Accepted Answer

GDP [9 yea

Question 5

If a country runs a trade deficit to finance increased current consumption, it will have to increase consumption in the future to pay back its borrowings.

Accepted Answer

A) True 
 B)False

Question 6

Suppose the growth rate of GDP in the United States is 4.2 percent. If 2.9 percent and 1.3 percent of GDP growth are due, respectively, to capital and labor growth, the amount resulting from technological progress is

Accepted Answer

A)  0 percent. 
B)  1.3 percent. 
C)  2.9 percent. 
D)  4.2 percent. 
A)  0 percent. 
B)  1.3 percent. 
C)  2.9 percent. 
D)  4.2 percent.

Question 7

Explain the connection between property rights and economic growth.

Accepted Answer

Clear property rights provide property o

Question 8

The substantial increase in clear property rights has severely impeded growth in many developing countries.

Accepted Answer

A) True 
 B)False

Question 9

-Refer to Figure 8A.1. Capital deepening occurs as long as

Accepted Answer

A)  total saving exceeds depreciation. 
B)  depreciation exceeds total saving. 
C)  total saving and depreciation are equal. 
D)  the level of Y is increasing. 
A)  total saving exceeds depreciation. 
B)  depreciation exceeds total saving. 
C)  total saving and depreciation are equal. 
D)  the level of Y is increasing.

Question 10

Convergence refers to closing the gap in ________ between poorer countries and richer countries.

Accepted Answer

A)  real GDP 
B)  real GDP per capita 
C)  the growth rate in real GDP 
D)  the growth rate in real GDP per capita 
A)  real GDP 
B)  real GDP per capita 
C)  the growth rate in real GDP 
D)  the growth rate in real GDP per capita

Question 11

Recall the Application about the relationship between economic growth and inequality to answer the following question(s).
-According to this Application, Berg and Ostrey found that

Accepted Answer

A)  levels of equality or inequality had no direct bearing on long periods of growth. 
B)  inequality promoted longer periods of growth than did equality. 
C)  when there was more equality, spells of growth within a country tended to last longer. 
D)  when there was more equality, any signs of growth were short-lived. 
A)  levels of equality or inequality had no direct bearing on long periods of growth. 
B)  inequality promoted longer periods of growth than did equality. 
C)  when there was more equality, spells of growth within a country tended to last longer. 
D)  when there was more equality, any signs of growth were short-lived.

Question 12

Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be

Accepted Answer

A)  183.49. 
B)  236. 
C)  237.62. 
D)  239.24. 
A)  183.49. 
B)  236. 
C)  237.62. 
D)  239.24.

Question 13

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

Accepted Answer

A)  providing food to a nation suffering from a famine 
B)  foreign aid given to Mexico to build new schools 
C)  higher salaries for members of Congress 
D)  subsidizing airport construction in Seattle 
A)  providing food to a nation suffering from a famine 
B)  foreign aid given to Mexico to build new schools 
C)  higher salaries for members of Congress 
D)  subsidizing airport construction in Seattle

Question 14

Nations that borrow from abroad to support current investment will

Accepted Answer

A)  always be better off in the future. 
B)  always sacrifice future consumption. 
C)  be better off in the future if the investments are profitable. 
D)  sacrifice future consumption only if the investments are profitable. 
A)  always be better off in the future. 
B)  always sacrifice future consumption. 
C)  be better off in the future if the investments are profitable. 
D)  sacrifice future consumption only if the investments are profitable.

Question 15

Suppose that for a given firm, the increase in output resulting from the last worker hired is less than the increase in output of the previous worker hired. This is an example of

Accepted Answer

A)  diminishing returns. 
B)  constant returns. 
C)  increasing return. 
D)  capital deepening. 
A)  diminishing returns. 
B)  constant returns. 
C)  increasing return. 
D)  capital deepening.

Question 16

Suppose you were interested in increasing technological progress in your country. Suggest some ways to do it.

Accepted Answer

The text offers a number of possibilitie

Question 17

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

Accepted Answer

A)  builders constructing a new office building that uses less energy 
B)  an increase in Florida's orange crop resulting from a mild winter 
C)  the invention of wireless internet access 
D)  the development of blue tooth headsets 
A)  builders constructing a new office building that uses less energy 
B)  an increase in Florida's orange crop resulting from a mild winter 
C)  the invention of wireless internet access 
D)  the development of blue tooth headsets

Question 18

If a nation with a low level of GDP per capita converges to a richer nation, the poor nation

Accepted Answer

A)  experiences low growth rates. 
B)  enters into a free trade agreement with the richer nation. 
C)  experiences a rate of high growth such that its GDP per capita increases to that of the richer nation. 
D)  experiences a rate of low growth such that its GDP per capita increases to that of the richer nation. 
A)  experiences low growth rates. 
B)  enters into a free trade agreement with the richer nation. 
C)  experiences a rate of high growth such that its GDP per capita increases to that of the richer nation. 
D)  experiences a rate of low growth such that its GDP per capita increases to that of the richer nation.

Question 19

Capital deepening is the only mechanism by which economies can grow.

Accepted Answer

A) True 
 B)False

Question 20

An increase in the capital stock will

Accepted Answer

A)  shift the production function downward. 
B)  shift the production function upward. 
C)  flatten the production function. 
D)  steepen the production function. 
A)  shift the production function downward. 
B)  shift the production function upward. 
C)  flatten the production function. 
D)  steepen the production function.

Suppose the annual growth rate of GDP in Nepal is 5 percent. In 35 years, GDP in Nepal will double

Why does depreciation decrease the stock of 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, economist Daron Acemoglu categorizes which of the following as participatory institutions?

If real GDP is 100 in year 1, and grows at a rate of 3 percent per year for 9 years, what will the GDP be in 9 years?

If a country runs a trade deficit to finance increased current consumption, it will have to increase consumption in the future to pay back its borrowings.

Suppose the growth rate of GDP in the United States is 4.2 percent. If 2.9 percent and 1.3 percent of GDP growth are due, respectively, to capital and labor growth, the amount resulting from technological progress is

Explain the connection between property rights and economic growth.

The substantial increase in clear property rights has severely impeded growth in many developing countries.

-Refer to Figure 8A.1. Capital deepening occurs as long as

Convergence refers to closing the gap in ________ between poorer countries and richer countries.

Recall the Application about the relationship between economic growth and inequality to answer the following question(s). -According to this Application, Berg and Ostrey found that

Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be

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

Nations that borrow from abroad to support current investment will

Suppose that for a given firm, the increase in output resulting from the last worker hired is less than the increase in output of the previous worker hired. This is an example of

Suppose you were interested in increasing technological progress in your country. Suggest some ways to do it.

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

If a nation with a low level of GDP per capita converges to a richer nation, the poor nation

Capital deepening is the only mechanism by which economies can grow.

An increase in the capital stock will

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 8: Why Do Economies Grow?

Suppose the annual growth rate of GDP in Nepal is 5 percent. In 35 years, GDP in Nepal will double

Why does depreciation decrease the stock of 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, economist Daron Acemoglu categorizes which of the following as participatory institutions?

If real GDP is 100 in year 1, and grows at a rate of 3 percent per year for 9 years, what will the GDP be in 9 years?

If a country runs a trade deficit to finance increased current consumption, it will have to increase consumption in the future to pay back its borrowings.

Suppose the growth rate of GDP in the United States is 4.2 percent. If 2.9 percent and 1.3 percent of GDP growth are due, respectively, to capital and labor growth, the amount resulting from technological progress is

Explain the connection between property rights and economic growth.

The substantial increase in clear property rights has severely impeded growth in many developing countries.

-Refer to Figure 8A.1. Capital deepening occurs as long as

Convergence refers to closing the gap in ________ between poorer countries and richer countries.

Recall the Application about the relationship between economic growth and inequality to answer the following question(s). -According to this Application, Berg and Ostrey found that

Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be

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

Nations that borrow from abroad to support current investment will

Suppose that for a given firm, the increase in output resulting from the last worker hired is less than the increase in output of the previous worker hired. This is an example of

Suppose you were interested in increasing technological progress in your country. Suggest some ways to do it.

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

If a nation with a low level of GDP per capita converges to a richer nation, the poor nation

Capital deepening is the only mechanism by which economies can grow.

An increase in the capital stock will

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters