Question 1

Which of the following will increase economic freedom?

Accepted Answer

A) freedom to enter and compete in markets 
B) high tariff rates 
C) high taxes 
D) rapid and unpredictable inflation 
A) freedom to enter and compete in markets 
B) high tariff rates 
C) high taxes 
D) rapid and unpredictable inflation

Question 2

Countries with higher levels of economic freedom tend to have

Accepted Answer

A) higher rates of economic growth. 
B) higher levels of per person income. 
C) higher levels of investment. 
D) all of the above. 
A) higher rates of economic growth. 
B) higher levels of per person income. 
C) higher levels of investment. 
D) all of the above.

Question 3

High income countries with larger governments as a share of GDP have generally

Accepted Answer

A) grown less rapidly than their counterparts with smaller governments. 
B) experienced less deadweight losses resulting from taxes and/or government borrowing. 
C) seen the government decrease in size as real GDP rises. 
D) been able to be more economically efficient. 
A) grown less rapidly than their counterparts with smaller governments. 
B) experienced less deadweight losses resulting from taxes and/or government borrowing. 
C) seen the government decrease in size as real GDP rises. 
D) been able to be more economically efficient.

Question 4

Which of the following most accurately states the importance of technology as a source of economic growth for less-developed countries?

Accepted Answer

A) Restraints imposed by the slow advancements in modern technology have severely constrained the growth of less-developed countries. 
B) If modern technology was the only requirement for economic growth,less-developed countries would be growing rapidly. 
C) Most less-developed nations have the necessary complementary factors of production to make good use of modern technology if they could just afford the complex machines. 
D) While modern technology has increased the income levels in less developed countries,it has been unable to improve living standards. 
A) Restraints imposed by the slow advancements in modern technology have severely constrained the growth of less-developed countries. 
B) If modern technology was the only requirement for economic growth,less-developed countries would be growing rapidly. 
C) Most less-developed nations have the necessary complementary factors of production to make good use of modern technology if they could just afford the complex machines. 
D) While modern technology has increased the income levels in less developed countries,it has been unable to improve living standards.

Question 5

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

Accepted Answer

A) United States 
B) France 
C) Ireland 
D) Niger 
A) United States 
B) France 
C) Ireland 
D) Niger

Question 6

Government policies that heavily tax some activities while subsidizing others and that fix or control interest rates will result in

Accepted Answer

A) higher productivity of investment. 
B) lower productivity of investment. 
C) no change in the productivity of investment. 
D) a greater level of investment. 
A) higher productivity of investment. 
B) lower productivity of investment. 
C) no change in the productivity of investment. 
D) a greater level of investment.

Question 7

The purchasing power parity (PPP)method

Accepted Answer

A) calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency. 
B) calculates how much the general price level has increased within one specific country through time. 
C) calculates how much the average standard of living across all countries has changed through time. 
D) is used when one wants to compare dollar values from today with those from more than 100 years ago. 
A) calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency. 
B) calculates how much the general price level has increased within one specific country through time. 
C) calculates how much the average standard of living across all countries has changed through time. 
D) is used when one wants to compare dollar values from today with those from more than 100 years ago.

Question 8

Private ownership and competitive markets are important for economic growth because they provide individuals with a strong incentive to:

Accepted Answer

A) care for resources and use them beneficially. 
B) innovate and introduce new products that are highly valued relative to their cost. 
C) produce goods efficiently. 
D) all of the above are correct. 
A) care for resources and use them beneficially. 
B) innovate and introduce new products that are highly valued relative to their cost. 
C) produce goods efficiently. 
D) all of the above are correct.

Question 9

Countries that have adopted liberal reforms and substantially increased their economic freedom rating in recent years

Accepted Answer

A) experienced falling income levels per capita during 1995-2009. 
B) grew slowly during 1995-2009. 
C) achieved impressive growth rates of real GDP per person during 1995-2009. 
D) have grown less rapidly than high income industrial economies. 
A) experienced falling income levels per capita during 1995-2009. 
B) grew slowly during 1995-2009. 
C) achieved impressive growth rates of real GDP per person during 1995-2009. 
D) have grown less rapidly than high income industrial economies.

Question 10

According to data on GDP growth between 1980 and 2009,

Accepted Answer

A) poor nations stagnated,while the rich nations continued to grow. 
B) poor nations grew rapidly,while the rich nations stagnated. 
C) most of the world's rapidly growing countries were located in Africa. 
D) many poor nations grew more rapidly than wealthy nations,while others continued to stagnate. 
A) poor nations stagnated,while the rich nations continued to grow. 
B) poor nations grew rapidly,while the rich nations stagnated. 
C) most of the world's rapidly growing countries were located in Africa. 
D) many poor nations grew more rapidly than wealthy nations,while others continued to stagnate.

Question 11

During 1980-2009,the per-capita incomes of less-developed countries (LDCs)

Accepted Answer

A) grew rapidly. 
B) declined. 
C) were virtually unchanged. 
D) registered a mixed growth record;some grew rapidly while others stagnated. 
A) grew rapidly. 
B) declined. 
C) were virtually unchanged. 
D) registered a mixed growth record;some grew rapidly while others stagnated.

Question 12

When competition is present and private ownership rights are clearly defined and securely enforced,

Accepted Answer

A) production and trade are encouraged and plunder (taking from others)is discouraged. 
B) people get ahead by helping others in exchange for income. 
C) employers will have to provide prospective employees with at least as good a deal as they could get elsewhere. 
D) all of the above are correct. 
A) production and trade are encouraged and plunder (taking from others)is discouraged. 
B) people get ahead by helping others in exchange for income. 
C) employers will have to provide prospective employees with at least as good a deal as they could get elsewhere. 
D) all of the above are correct.

Question 13

Economic theory and history indicate that open elections and democratically elected governments

Accepted Answer

A) are unique in their ability to produce good economic institutions. 
B) must be accompanied by economic institutions that will allocate resources efficiently,or otherwise democratic institutions will not survive. 
C) reflect only transactions that are based on mutual agreement and voluntary exchange. 
D) are unable to guarantee either the emergence or continuation of economic institutions and policies that will encourage productive behavior. 
A) are unique in their ability to produce good economic institutions. 
B) must be accompanied by economic institutions that will allocate resources efficiently,or otherwise democratic institutions will not survive. 
C) reflect only transactions that are based on mutual agreement and voluntary exchange. 
D) are unable to guarantee either the emergence or continuation of economic institutions and policies that will encourage productive behavior.

Question 14

Which of the following is true?

Accepted Answer

A) in recent decades,the rich countries of the world have consistently grown more rapidly than poor countries. 
B) no LDC was able to achieve a more rapid growth rate than the United States during the 1980 through 2005 period. 
C) during recent decades,most LDCs have stagnated economically. 
D) during 1980 through 2005,the fastest growing countries in the world were mostly LDCs. 
A) in recent decades,the rich countries of the world have consistently grown more rapidly than poor countries. 
B) no LDC was able to achieve a more rapid growth rate than the United States during the 1980 through 2005 period. 
C) during recent decades,most LDCs have stagnated economically. 
D) during 1980 through 2005,the fastest growing countries in the world were mostly LDCs.

Question 15

Which of the following is true regarding the growth record of less-developed countries (LDC's)during the past quarter of a century?

Accepted Answer

A) Some are among the fastest growing countries in the world. 
B) Some are among the slowest growing countries in the world. 
C) The most populous,less-developed countries have experienced declining per capita income levels. 
D) All of the above are true. 
A) Some are among the fastest growing countries in the world. 
B) Some are among the slowest growing countries in the world. 
C) The most populous,less-developed countries have experienced declining per capita income levels. 
D) All of the above are true.

Question 16

When a low-income nation improves its institutions,so that growth results,one reason the growth may be more rapid than would result from a similar improvement in a developed nation that brings the same amount of added capital per worker to each nation,is that

Accepted Answer

A) adding capital has constant returns to scale,rather than diminishing returns,in each nation. 
B) with diminishing returns to scale,and with richer nations starting with more capital per unit labor,the added capital produces smaller increments to production in the higher-income nations. 
C) wage rates are lower in the low-income nation,and lower-income workers are more productive. 
D) capital is always more productive in lower-income nations. 
A) adding capital has constant returns to scale,rather than diminishing returns,in each nation. 
B) with diminishing returns to scale,and with richer nations starting with more capital per unit labor,the added capital produces smaller increments to production in the higher-income nations. 
C) wage rates are lower in the low-income nation,and lower-income workers are more productive. 
D) capital is always more productive in lower-income nations.

Question 17

Dividing a list of data into quartiles will result in how many groups?

Accepted Answer

A) two 
B) four 
C) five 
D) twenty-five 
A) two 
B) four 
C) five 
D) twenty-five

Question 18

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) Switzerland 
C) Zimbabwe 
D) Mexico 
A) Singapore 
B) Switzerland 
C) Zimbabwe 
D) Mexico

Question 19

The sound economic institutions and policies needed for economic growth and prosperity

Accepted Answer

A) emerge from the political process,if they emerge at all. 
B) are unaffected by political decision-making and constitutional rules. 
C) are virtually guaranteed to emerge,if democracy becomes the form of government in a nation. 
D) can only emerge from a democracy 
A) emerge from the political process,if they emerge at all. 
B) are unaffected by political decision-making and constitutional rules. 
C) are virtually guaranteed to emerge,if democracy becomes the form of government in a nation. 
D) can only emerge from a democracy

Question 20

Which of the following calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency so they may be more accurately compared?

Accepted Answer

A) the consumer price parity (CPP)method 
B) the purchasing power parity (PPP)method 
C) the GDP deflator exchange (GDPD
E) method 
D) the inflation conversion factor (ICF)method 
A) the consumer price parity (CPP)method 
B) the purchasing power parity (PPP)method 
C) the GDP deflator exchange (GDPD
E) method 
D) the inflation conversion factor (ICF)method

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

Which of the following will increase economic freedom?

Countries with higher levels of economic freedom tend to have

High income countries with larger governments as a share of GDP have generally

Which of the following most accurately states the importance of technology as a source of economic growth for less-developed countries?

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

Government policies that heavily tax some activities while subsidizing others and that fix or control interest rates will result in

The purchasing power parity (PPP)method

Private ownership and competitive markets are important for economic growth because they provide individuals with a strong incentive to:

Countries that have adopted liberal reforms and substantially increased their economic freedom rating in recent years

According to data on GDP growth between 1980 and 2009,

During 1980-2009,the per-capita incomes of less-developed countries (LDCs)

When competition is present and private ownership rights are clearly defined and securely enforced,

Economic theory and history indicate that open elections and democratically elected governments

Which of the following is true?

Which of the following is true regarding the growth record of less-developed countries (LDC's)during the past quarter of a century?

When a low-income nation improves its institutions,so that growth results,one reason the growth may be more rapid than would result from a similar improvement in a developed nation that brings the same amount of added capital per worker to each nation,is that

Dividing a list of data into quartiles will result in how many groups?

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

The sound economic institutions and policies needed for economic growth and prosperity

Which of the following calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency so they may be more accurately compared?

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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