Question 1

Which of the following countries has the highest per capita income?

Accepted Answer

A) Malawi 
B) Ireland 
C) Sierra Leone 
D) Mexico 
A) Malawi 
B) Ireland 
C) Sierra Leone 
D) Mexico B

Question 2

On average,countries that have a larger degree of economic freedom tend to have

Accepted Answer

A) higher per capita income levels,but slower rates of economic growth,than countries with less economic freedom. 
B) lower per capita income levels,but more rapid rates of economic growth,than countries with less economic freedom. 
C) both higher per capita income levels and more rapid growth rates than countries with less economic freedom. 
D) both lower income levels and slower growth rates than countries with less economic freedom. 
A) higher per capita income levels,but slower rates of economic growth,than countries with less economic freedom. 
B) lower per capita income levels,but more rapid rates of economic growth,than countries with less economic freedom. 
C) both higher per capita income levels and more rapid growth rates than countries with less economic freedom. 
D) both lower income levels and slower growth rates than countries with less economic freedom. C

Question 3

From the viewpoint of economic growth,why is the legal structure of a country crucially important? What are some of the key attributes of a legal system that will encourage economic growth?

Accepted Answer

Perhaps it is easier to answer the second question first.The key attributes of a sound legal system are protection of people and their property,unbiased enforcement of contracts,and independence of the legal system from political manipulation.These attributes are important because they provide the foundation for the smooth operation of markets,gains from trade,and gains from capital formation and entrepreneurship.In turn,these are the factors that drive economic growth.

Question 4

Which of the following economies is the least economically free?

Accepted Answer

A) Singapore 
B) Hong Kong 
C) Democratic Republic of Congo 
D) United States 
A) Singapore 
B) Hong Kong 
C) Democratic Republic of Congo 
D) United States

Question 5

Countries with higher levels of economic freedom tend to have

Accepted Answer

A) higher life expectancy and lower infant mortality. 
B) better environmental quality. 
C) better access to sanitary water and lower disease rates. 
D) All of the above. 
A) higher life expectancy and lower infant mortality. 
B) better environmental quality. 
C) better access to sanitary water and lower disease rates. 
D) All of the above.

Question 6

Which of the following economies is least economically free?

Accepted Answer

A) Singapore 
B) Hong Kong 
C) Algeria 
D) United States 
A) Singapore 
B) Hong Kong 
C) Algeria 
D) United States

Question 7

Which of the following countries has had the highest growth rate of per capita GDP over the past 25 years?

Accepted Answer

A) South Korea 
B) Japan 
C) United States 
D) Zambia 
A) South Korea 
B) Japan 
C) United States 
D) Zambia

Question 8

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 9

Which of the following has contributed to China's economic growth since 1980?

Accepted Answer

A) the rapid growth of foreign aid from European countries 
B) nationalization of many private industries 
C) increased restrictions on international trade 
D) increased privatization of the agricultural and small-business sectors 
A) the rapid growth of foreign aid from European countries 
B) nationalization of many private industries 
C) increased restrictions on international trade 
D) increased privatization of the agricultural and small-business sectors

Question 10

(I)Other things constant,countries that invest more will grow more rapidly.
(II)The private investment rate of the most economically free countries is nearly twice as much as that of the least free countries.

Accepted Answer

A) I is true;II is false. 
B) I is false,II is true. 
C) Both I and II are true. 
D) Both I and II are false. 
A) I is true;II is false. 
B) I is false,II is true. 
C) Both I and II are true. 
D) Both I and II are false.

Question 11

Which of the following countries began economic liberalization in the 1970s and have achieved an impressive record of economic growth since that time?

Accepted Answer

A) Venezuela and Zimbabwe 
B) China and Chile 
C) Mexico and Canada 
D) United States and Norway 
A) Venezuela and Zimbabwe 
B) China and Chile 
C) Mexico and Canada 
D) United States and Norway

Question 12

Private investment as a share of the economy tends to be higher in countries

Accepted Answer

A) with low levels of economic freedom. 
B) with high levels of economic freedom. 
C) with economic freedom ratings near zero. 
D) that have experienced a sharp reduction in economic freedom during the most recent decade. 
A) with low levels of economic freedom. 
B) with high levels of economic freedom. 
C) with economic freedom ratings near zero. 
D) that have experienced a sharp reduction in economic freedom during the most recent decade.

Question 13

According to the Economic Freedom of the World measure,the United States was

Accepted Answer

A) the freest economy in the world during 1980-2000. 
B) the third freest economy in the world,behind only Hong Kong and Singapore during 1980-2000. 
C) less free than Australia and Canada throughout the 1980-2000 era. 
D) less free than the large economies of Western Europe throughout the 1980-2000 era. 
A) the freest economy in the world during 1980-2000. 
B) the third freest economy in the world,behind only Hong Kong and Singapore during 1980-2000. 
C) less free than Australia and Canada throughout the 1980-2000 era. 
D) less free than the large economies of Western Europe throughout the 1980-2000 era.

Question 14

Countries with more economic freedom have levels of economic growth that

Accepted Answer

A) are generally higher than those of nations with less economic freedom. 
B) are similar to those of nations with less economic freedom since the level of investment,not economic freedom,determines the growth rate. 
C) cannot continue at high levels because too little government planning is being done. 
D) are generally lower than the growth rates of countries with less economic freedom. 
A) are generally higher than those of nations with less economic freedom. 
B) are similar to those of nations with less economic freedom since the level of investment,not economic freedom,determines the growth rate. 
C) cannot continue at high levels because too little government planning is being done. 
D) are generally lower than the growth rates of countries with less economic freedom.

Question 15

Which of the following is a key characteristic of economic freedom?

Accepted Answer

A) subsidies and regulations that favor business 
B) central planning 
C) reliance on open markets 
D) import quotas that protect domestic businesses from rivals 
A) subsidies and regulations that favor business 
B) central planning 
C) reliance on open markets 
D) import quotas that protect domestic businesses from rivals

Question 16

Which of the following is important in the development of a large economy dominated by trade between parties who do not know each other (depersonalized exchange)?

Accepted Answer

A) having few or minimal constitutional rules to avoid preventing the democratic institutions of a country from working to their fullest potential 
B) having a sound legal system that protects property and enforces contracts 
C) the presence of abundant natural resources 
D) heavy government regulation and control of prices so that individuals do not try to take advantage of one another in market exchange 
A) having few or minimal constitutional rules to avoid preventing the democratic institutions of a country from working to their fullest potential 
B) having a sound legal system that protects property and enforces contracts 
C) the presence of abundant natural resources 
D) heavy government regulation and control of prices so that individuals do not try to take advantage of one another in market exchange

Question 17

In order to achieve a high rating on the Economic Freedom of the World index,a country must

Accepted Answer

A) provide for the even-handed protection of private property and rely primarily on open markets and voluntary exchange to coordinate economic activity. 
B) use central planning to direct investment and resolve the three basic economic problems of what,how,and for whom goods will be produced. 
C) protect domestic businesses from foreign rivals who generally provide shoddy products. 
D) protect domestic workers from businesses that are unwilling to pay high wages and provide quality working conditions. 
A) provide for the even-handed protection of private property and rely primarily on open markets and voluntary exchange to coordinate economic activity. 
B) use central planning to direct investment and resolve the three basic economic problems of what,how,and for whom goods will be produced. 
C) protect domestic businesses from foreign rivals who generally provide shoddy products. 
D) protect domestic workers from businesses that are unwilling to pay high wages and provide quality working conditions.

Question 18

Countries that have a higher degree of economic freedom tend to

Accepted Answer

A) invest a larger share of their output,but the productivity of that investment is lower than for economies that are less free. 
B) invest a smaller share of their output,but the productivity of that investment is higher than for economies that are less free. 
C) invest a larger share of their output and the productivity of that investment is higher than for the economies that are less free. 
D) invest a smaller share of their output and the productivity of that investment is lower than for economies that are less free. 
A) invest a larger share of their output,but the productivity of that investment is lower than for economies that are less free. 
B) invest a smaller share of their output,but the productivity of that investment is higher than for economies that are less free. 
C) invest a larger share of their output and the productivity of that investment is higher than for the economies that are less free. 
D) invest a smaller share of their output and the productivity of that investment is lower than for economies that are less free.

Question 19

Which of the following will increase economic freedom?

Accepted Answer

A) an increase in tariff rates imposed on imported goods 
B) an increase in government spending as a share of the economy 
C) elimination of regulations that make it difficult to start a business 
D) an increase in the rate of inflation and its variability 
A) an increase in tariff rates imposed on imported goods 
B) an increase in government spending as a share of the economy 
C) elimination of regulations that make it difficult to start a business 
D) an increase in the rate of inflation and its variability

Question 20

According to the Economic Freedom of the World (EFW)rating,which of the following countries has the lowest level of economic freedom?

Accepted Answer

A) Singapore 
B) Canada 
C) Hong Kong 
D) Brazil 
A) Singapore 
B) Canada 
C) Hong Kong 
D) Brazil

Exam 17: Institutions,policies,and Cross-Country Differences in Income and Growth

Which of the following countries has the highest per capita income?

On average,countries that have a larger degree of economic freedom tend to have

From the viewpoint of economic growth,why is the legal structure of a country crucially important? What are some of the key attributes of a legal system that will encourage economic growth?

Which of the following economies is the least economically free?

Countries with higher levels of economic freedom tend to have

Which of the following economies is least economically free?

Which of the following countries has had the highest growth rate of per capita GDP over the past 25 years?

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

Which of the following has contributed to China's economic growth since 1980?

(I)Other things constant,countries that invest more will grow more rapidly. (II)The private investment rate of the most economically free countries is nearly twice as much as that of the least free countries.

Which of the following countries began economic liberalization in the 1970s and have achieved an impressive record of economic growth since that time?

Private investment as a share of the economy tends to be higher in countries

According to the Economic Freedom of the World measure,the United States was

Countries with more economic freedom have levels of economic growth that

Which of the following is a key characteristic of economic freedom?

Which of the following is important in the development of a large economy dominated by trade between parties who do not know each other (depersonalized exchange)?

In order to achieve a high rating on the Economic Freedom of the World index,a country must

Countries that have a higher degree of economic freedom tend to

Which of the following will increase economic freedom?

According to the Economic Freedom of the World (EFW)rating,which of the following countries has the lowest level of economic freedom?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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