Question 1

Most economists believe that convergence of GDP per capita ________ between developed nations and ________ between developing and developed nations.

Accepted Answer

A)  has occurred; has occurred 
B)  has not occurred; has occurred 
C)  has occurred; has not occurred 
D)  has not occurred; has not occurred 
A)  has occurred; has occurred 
B)  has not occurred; has occurred 
C)  has occurred; has not occurred 
D)  has not occurred; has not occurred

Question 2

The stock of capital ________ with any gross investment and ________ with any depreciation.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 3

Economic growth is severely impeded in economies

Accepted Answer

A)  with a lack of clear property rights. 
B)  with a strong market system. 
C)  with high rates of convergence. 
D)  which encourage induced innovation. 
A)  with a lack of clear property rights. 
B)  with a strong market system. 
C)  with high rates of convergence. 
D)  which encourage induced innovation.

Question 4

The idea that investment in comprehensive education in developing countries leads to permanent increases in the rate of technological progress is an example of

Accepted Answer

A)  increasing economic inequality. 
B)  capital deepening. 
C)  new growth theory. 
D)  a trade-off between human capital and technology. 
A)  increasing economic inequality. 
B)  capital deepening. 
C)  new growth theory. 
D)  a trade-off between human capital and technology.

Question 5

The capital deepening model developed by Robert Solow shows the links among which three items?

Accepted Answer

saving, de

Question 6

To reduce labor costs, companies often invent machines and methods to produce products and reduce the amount of labor required. This is called

Accepted Answer

A)  downsizing. 
B)  induced innovation. 
C)  failed labor utilization. 
D)  anti-union. 
A)  downsizing. 
B)  induced innovation. 
C)  failed labor utilization. 
D)  anti-union.

Question 7

Which of the following is the best example of a person NOT having clear property rights?

Accepted Answer

A)  a city parks worker who inherits his uncle's town house 
B)  a dairy farmer who pays off the mortgage on his farm 
C)  a medical student who lives on campus for his first year of studies 
D)  a retired college professor who builds a bungalow on her oceanfront property 
A)  a city parks worker who inherits his uncle's town house 
B)  a dairy farmer who pays off the mortgage on his farm 
C)  a medical student who lives on campus for his first year of studies 
D)  a retired college professor who builds a bungalow on her oceanfront property

Question 8

An economy is better off with an increase in the stock of capital.

Accepted Answer

A) True 
 B)False

Question 9

Suppose real GDP was 120 in year 1 and 156 in year 2. The growth rate of real GDP is

Accepted Answer

A)  5.6 percent. 
B)  18 percent. 
C)  30 percent. 
D)  36 percent. 
A)  5.6 percent. 
B)  18 percent. 
C)  30 percent. 
D)  36 percent.

Question 10

Recall the Application about the effect of global warming on economic growth to answer the following question(s).
-According to this Application, a study of municipalities in Latin and South America found that a one degree Celsius rise in temperature was associated with

Accepted Answer

A)  no measurable change in per capita income. 
B)  a small decline in real income and a small increase in per capita real income. 
C)  a slight increase in municipal per capita income. 
D)  a decline in municipal per capita income. 
A)  no measurable change in per capita income. 
B)  a small decline in real income and a small increase in per capita real income. 
C)  a slight increase in municipal per capita income. 
D)  a decline in municipal per capita income.

Question 11

Education is an integral part of economic growth.

Accepted Answer

A) True 
 B)False

Question 12

Trade deficits always lead to future decreases in consumption if the trade deficits

Accepted Answer

A)  support current investment. 
B)  support current consumption. 
C)  support either current investment or current consumption. 
D)  require borrowing from abroad. 
A)  support current investment. 
B)  support current consumption. 
C)  support either current investment or current consumption. 
D)  require borrowing from abroad.

Question 13

Gross investment minus depreciation is equal to

Accepted Answer

A)  gross domestic product. 
B)  net investment. 
C)  personal investment. 
D)  nominal investment. 
A)  gross domestic product. 
B)  net investment. 
C)  personal investment. 
D)  nominal investment.

Question 14

-Refer to Figure 8A.2. If the economy were saving at the rate S?,

Accepted Answer

A)  saving would equal depreciation at e1. 
B)  capital stock would increase until the economy reached K2. 
C)  the economy would grow until it reached e2. 
D)  all of the above 
A)  saving would equal depreciation at e1. 
B)  capital stock would increase until the economy reached K2. 
C)  the economy would grow until it reached e2. 
D)  all of the above

Question 15

Models of growth that account for technological progress are part of

Accepted Answer

A)  creative destruction theory. 
B)  new growth theory. 
C)  growth accounting. 
D)  all of the above 
A)  creative destruction theory. 
B)  new growth theory. 
C)  growth accounting. 
D)  all of the above

Question 16

Net investment plus depreciation is equal to

Accepted Answer

A)  gross depreciation. 
B)  gross domestic product. 
C)  gross exports. 
D)  gross investment. 
A)  gross depreciation. 
B)  gross domestic product. 
C)  gross exports. 
D)  gross investment.

Question 17

Recall the Application about growth in China and India to answer the following question(s). From 1978 to 2004, China grew at a rate of 9.3 percent per year and India grew at a rate of 5.4 percent per year.
-According to this Application, China's growth rate was faster than India's during this 26 year period because

Accepted Answer

A)  China received more contributions from human capital than India received. 
B)  China invested more in physical capital than India invested. 
C)  China's growth was based more on human capital and India's growth was based more on physical capital. 
D)  China's growth was based more on human capital and India's growth was based more on technological progress. 
A)  China received more contributions from human capital than India received. 
B)  China invested more in physical capital than India invested. 
C)  China's growth was based more on human capital and India's growth was based more on physical capital. 
D)  China's growth was based more on human capital and India's growth was based more on technological progress.

Question 18

Recall the Application about growth in China and India to answer the following question(s). From 1978 to 2004, China grew at a rate of 9.3 percent per year and India grew at a rate of 5.4 percent per year.
-According to this Application, based on the analysis of the sources of growth in China and India, and assuming that nothing changes, it can be concluded that

Accepted Answer

A)  India's long-term growth prospects are not as strong those for China. 
B)  the growth rate in China should significantly slow down in the near future, but the growth rate in India will continue to rapidly increase in the near and distant future. 
C)  there is convergence between the nations in Asia. 
D)  China's reliance on technology for economic growth makes it less likely to keep pace with the growth rate in India. 
A)  India's long-term growth prospects are not as strong those for China. 
B)  the growth rate in China should significantly slow down in the near future, but the growth rate in India will continue to rapidly increase in the near and distant future. 
C)  there is convergence between the nations in Asia. 
D)  China's reliance on technology for economic growth makes it less likely to keep pace with the growth rate in India.

Question 19

-Refer to Figure 8A.1. When the economy reaches K,

Accepted Answer

A)  depreciation equals saving. 
B)  depreciation is zero. 
C)  capital stock increases. 
D)  economic growth through capital deepening continues to increase. 
A)  depreciation equals saving. 
B)  depreciation is zero. 
C)  capital stock increases. 
D)  economic growth through capital deepening continues to increase.

Question 20

According to the method of growth accounting, which of the following contribute to economic growth?

Accepted Answer

A)  capital growth 
B)  labor growth 
C)  technological progress 
D)  all of the above 
A)  capital growth 
B)  labor growth 
C)  technological progress 
D)  all of the above

Most economists believe that convergence of GDP per capita between developed nations and between developing and developed nations.

The stock of capital with any gross investment and with any depreciation.

Economic growth is severely impeded in economies

The idea that investment in comprehensive education in developing countries leads to permanent increases in the rate of technological progress is an example of

The capital deepening model developed by Robert Solow shows the links among which three items?

To reduce labor costs, companies often invent machines and methods to produce products and reduce the amount of labor required. This is called

Which of the following is the best example of a person NOT having clear property rights?

An economy is better off with an increase in the stock of capital.

Suppose real GDP was 120 in year 1 and 156 in year 2. The growth rate of real GDP is

Recall the Application about the effect of global warming on economic growth to answer the following question(s). -According to this Application, a study of municipalities in Latin and South America found that a one degree Celsius rise in temperature was associated with

Education is an integral part of economic growth.

Trade deficits always lead to future decreases in consumption if the trade deficits

Gross investment minus depreciation is equal to

-Refer to Figure 8A.2. If the economy were saving at the rate S?,

Models of growth that account for technological progress are part of

Net investment plus depreciation is equal to

-Refer to Figure 8A.1. When the economy reaches K,

According to the method of growth accounting, which of the following contribute to economic growth?

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?

Most economists believe that convergence of GDP per capita ________ between developed nations and ________ between developing and developed nations.

The stock of capital ________ with any gross investment and ________ with any depreciation.

Economic growth is severely impeded in economies

The idea that investment in comprehensive education in developing countries leads to permanent increases in the rate of technological progress is an example of

The capital deepening model developed by Robert Solow shows the links among which three items?

To reduce labor costs, companies often invent machines and methods to produce products and reduce the amount of labor required. This is called

Which of the following is the best example of a person NOT having clear property rights?

An economy is better off with an increase in the stock of capital.

Suppose real GDP was 120 in year 1 and 156 in year 2. The growth rate of real GDP is

Recall the Application about the effect of global warming on economic growth to answer the following question(s). -According to this Application, a study of municipalities in Latin and South America found that a one degree Celsius rise in temperature was associated with

Education is an integral part of economic growth.

Trade deficits always lead to future decreases in consumption if the trade deficits

Gross investment minus depreciation is equal to

-Refer to Figure 8A.2. If the economy were saving at the rate S?,

Models of growth that account for technological progress are part of

Net investment plus depreciation is equal to

-Refer to Figure 8A.1. When the economy reaches K,

According to the method of growth accounting, which of the following contribute to economic growth?

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

Most economists believe that convergence of GDP per capita between developed nations and between developing and developed nations.

The stock of capital with any gross investment and with any depreciation.