Question 1

Globalization refers to

Accepted Answer

A)  the process of establishing a common world currency. 
B)  the willingness of individuals within a given country to share knowledge with one another. 
C)  the process of countries becoming more open to foreign trade and investment. 
D)  the reduction in growth rates of real GDP per capita as a result of trade with foreign countries. 
A)  the process of establishing a common world currency. 
B)  the willingness of individuals within a given country to share knowledge with one another. 
C)  the process of countries becoming more open to foreign trade and investment. 
D)  the reduction in growth rates of real GDP per capita as a result of trade with foreign countries.

Question 2

Which of the following policies would not help promote economic growth?

Accepted Answer

A)  a law requiring that the funds in an individual retirement account be taxed 
B)  a law restricting elected officials from accepting expensive gifts and trips from private individuals 
C)  a law that funds prenatal care for all expectant mothers 
D)  a law that subsidizes research in nanotechnology 
A)  a law requiring that the funds in an individual retirement account be taxed 
B)  a law restricting elected officials from accepting expensive gifts and trips from private individuals 
C)  a law that funds prenatal care for all expectant mothers 
D)  a law that subsidizes research in nanotechnology

Question 3

Small differences in economic growth rates result in small differences in living standards.

Accepted Answer

A) True 
 B)False

Question 4

An economic growth model explains

Accepted Answer

A)  changes in real GDP per capita in the long run. 
B)  how changes in the money supply affect real interest rates. 
C)  changes in government tax policies over time. 
D)  the growth rate of the price level over time. 
A)  changes in real GDP per capita in the long run. 
B)  how changes in the money supply affect real interest rates. 
C)  changes in government tax policies over time. 
D)  the growth rate of the price level over time.

Question 5

Which of the following would you expect to result in faster economic growth?

Accepted Answer

A)  the invention of new computers that increase labor productivity 
B)  a decrease in the average level of education in the economy 
C)  a decrease in the stock of capital per worker 
D)  a decrease in research and development spending 
A)  the invention of new computers that increase labor productivity 
B)  a decrease in the average level of education in the economy 
C)  a decrease in the stock of capital per worker 
D)  a decrease in research and development spending

Question 6

Foreign direct investment in the United States declined 42 percent in the first quarter of 2009.This means that

Accepted Answer

A)  people or firms in other countries reduced their purchases of stocks and bonds in the United States by 42 percent in the first quarter of 2009. 
B)  people or firms in the United States reduced their purchases of stocks and bonds in foreign countries by 42 percent in the first quarter of 2009. 
C)  people or firms in other countries reduced their building of facilities of purchases of facilities in the United States by 42 percent in the first quarter of 2009. 
D)  people or firms in the United States reduced their building of facilities or purchases of facilities in foreign countries by 42 percent in the first quarter of 2009. 
A)  people or firms in other countries reduced their purchases of stocks and bonds in the United States by 42 percent in the first quarter of 2009. 
B)  people or firms in the United States reduced their purchases of stocks and bonds in foreign countries by 42 percent in the first quarter of 2009. 
C)  people or firms in other countries reduced their building of facilities of purchases of facilities in the United States by 42 percent in the first quarter of 2009. 
D)  people or firms in the United States reduced their building of facilities or purchases of facilities in foreign countries by 42 percent in the first quarter of 2009.

Question 7

Suppose that in 2011 real GDP grew in Estonia by 3% and that the population increased by 5%.Therefore in 2011,Estonia experienced

Accepted Answer

A)  economic growth, but not an increase in living standards. 
B)  economic growth and an increase in living standards. 
C)  no economic growth, but an increase in living standards. 
D)  no economic growth and no increase in living standards. 
A)  economic growth, but not an increase in living standards. 
B)  economic growth and an increase in living standards. 
C)  no economic growth, but an increase in living standards. 
D)  no economic growth and no increase in living standards.

Question 8

Describe the process of "creative destruction" using a specific example.

Accepted Answer

Creative destruction,based on the ideas

Question 9

If real GDP per capita in Ireland is estimated to be $7,400 in 2012,what will real GDP per capita be in 2017 if real GDP per capita grows at an annual rate of 2.8%?

Accepted Answer

A)  $7,607 
B)  $8,496 
C)  $9,472 
D)  $20,720 
A)  $7,607 
B)  $8,496 
C)  $9,472 
D)  $20,720

Question 10

Figure 22-2
  
-Refer to Figure 22-2.Assuming no technological change,if the United States increases capital per hour worked by $40,000 every year between 2010 and 2014,we would expect to see

Accepted Answer

A)  real GDP per hour worked will increase by the same increment each year between 2010 and 2014. 
B)  real GDP per hour worked will be lower in 2014 than it was in 2010. 
C)  the per-worker production function will get flatter over time. 
D)  the per-worker production function will shift up every year there is increase in capital per hour worked. 
A)  real GDP per hour worked will increase by the same increment each year between 2010 and 2014. 
B)  real GDP per hour worked will be lower in 2014 than it was in 2010. 
C)  the per-worker production function will get flatter over time. 
D)  the per-worker production function will shift up every year there is increase in capital per hour worked.

Question 11

Which of the following advances contributed to the "new economy" of the mid-1990s?

Accepted Answer

A)  the increased use of the Internet in selling products and services 
B)  expanded cell phone use 
C)  the lower cost and increased availability of laptop computers 
D)  all of the above 
A)  the increased use of the Internet in selling products and services 
B)  expanded cell phone use 
C)  the lower cost and increased availability of laptop computers 
D)  all of the above

Question 12

Why do some economists point to a decline in the quality of labor as an explanation for the productivity slowdown in the mid-1970s?

Accepted Answer

A)  The average level of education of citizens of the United States rose dramatically during this period of time. 
B)  The skill level required to perform many jobs increased during this period of time, although the skills of the labor force did not increase as quickly. 
C)  Scores on standardized tests during that period of time began to rise. 
D)  Increases in the amount of capital available reduced labor quality. 
A)  The average level of education of citizens of the United States rose dramatically during this period of time. 
B)  The skill level required to perform many jobs increased during this period of time, although the skills of the labor force did not increase as quickly. 
C)  Scores on standardized tests during that period of time began to rise. 
D)  Increases in the amount of capital available reduced labor quality.

Question 13

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.

Accepted Answer

A)  decrease; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  increase; increase 
A)  decrease; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  increase; increase

Question 14

The Soviet Union's economy grew rapidly in terms of GDP per hour worked in the 1950s,but eventually this growth slowed.Why did this occur?

Accepted Answer

A)  Capital per hour worked grew rapidly from 1950 to 1980, but technological change occurred very slowly. 
B)  Capital per hour worked grew slowly, but technological change grew very rapidly. 
C)  Increasing implementation of new technologies eventually suffered diminishing marginal returns. 
D)  The centrally planned economy invested too heavily in technological change. 
A)  Capital per hour worked grew rapidly from 1950 to 1980, but technological change occurred very slowly. 
B)  Capital per hour worked grew slowly, but technological change grew very rapidly. 
C)  Increasing implementation of new technologies eventually suffered diminishing marginal returns. 
D)  The centrally planned economy invested too heavily in technological change.

Question 15

Knowledge capital is nonrival in the sense that

Accepted Answer

A)  two people can use the same knowledge to develop and produce a product. 
B)  firms do not compete to be the first to develop new technologies. 
C)  no single company can be excluded from the benefits of new technologies. 
D)  firms can benefit from the research and development of rival firms without paying for that benefit. 
A)  two people can use the same knowledge to develop and produce a product. 
B)  firms do not compete to be the first to develop new technologies. 
C)  no single company can be excluded from the benefits of new technologies. 
D)  firms can benefit from the research and development of rival firms without paying for that benefit.

Question 16

Firms free ride on the research and development of other firms when they

Accepted Answer

A)  buy a firm's newly developed product, and then give it away to consumers. 
B)  use knowledge other firms have developed without paying for that knowledge. 
C)  license a new technology from a firm that developed the new technology. 
D)  choose a level of research and development that is inefficiently high. 
A)  buy a firm's newly developed product, and then give it away to consumers. 
B)  use knowledge other firms have developed without paying for that knowledge. 
C)  license a new technology from a firm that developed the new technology. 
D)  choose a level of research and development that is inefficiently high.

Question 17

Which of the following best explains why productivity growth in the United States has been faster than in other leading industrialized nations?

Accepted Answer

A)  There are fewer government regulations in the United States regarding the way firms can hire and fire workers. 
B)  The financial systems of foreign countries are generally more efficient than those in the United States. 
C)  European countries have more flexible policies regarding the number of hours employees are permitted to work. 
D)  Job mobility in the United States is more restricted than it is in many foreign countries. 
A)  There are fewer government regulations in the United States regarding the way firms can hire and fire workers. 
B)  The financial systems of foreign countries are generally more efficient than those in the United States. 
C)  European countries have more flexible policies regarding the number of hours employees are permitted to work. 
D)  Job mobility in the United States is more restricted than it is in many foreign countries.

Question 18

China's economy is fueled primarily by

Accepted Answer

A)  fixed asset investment, such as investing in buildings and roads. 
B)  foreign portfolio investment, such as the purchase of European stocks and bonds. 
C)  technological innovation, such as advances in medical care. 
D)  consumer spending on domestic goods and services. 
A)  fixed asset investment, such as investing in buildings and roads. 
B)  foreign portfolio investment, such as the purchase of European stocks and bonds. 
C)  technological innovation, such as advances in medical care. 
D)  consumer spending on domestic goods and services.

Question 19

The purchase by an individual or firm of stock or bonds issued in another country is called

Accepted Answer

A)  foreign exchange arbitrage. 
B)  foreign direct investment. 
C)  foreign portfolio investment. 
D)  global stock exchange. 
A)  foreign exchange arbitrage. 
B)  foreign direct investment. 
C)  foreign portfolio investment. 
D)  global stock exchange.

Question 20

The "new economy" that emerged in the mid-1990s is based on

Accepted Answer

A)  manufacturing. 
B)  financial services. 
C)  information technology. 
D)  retail sales. 
A)  manufacturing. 
B)  financial services. 
C)  information technology. 
D)  retail sales.

Globalization refers to

Which of the following policies would not help promote economic growth?

Small differences in economic growth rates result in small differences in living standards.

An economic growth model explains

Which of the following would you expect to result in faster economic growth?

Foreign direct investment in the United States declined 42 percent in the first quarter of 2009.This means that

Suppose that in 2011 real GDP grew in Estonia by 3% and that the population increased by 5%.Therefore in 2011,Estonia experienced

Describe the process of "creative destruction" using a specific example.

If real GDP per capita in Ireland is estimated to be $7,400 in 2012,what will real GDP per capita be in 2017 if real GDP per capita grows at an annual rate of 2.8%?

Figure 22-2 -Refer to Figure 22-2.Assuming no technological change,if the United States increases capital per hour worked by $40,000 every year between 2010 and 2014,we would expect to see

Which of the following advances contributed to the "new economy" of the mid-1990s?

Why do some economists point to a decline in the quality of labor as an explanation for the productivity slowdown in the mid-1970s?

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should the equilibrium level of loanable funds and the rate of long-term growth.

The Soviet Union's economy grew rapidly in terms of GDP per hour worked in the 1950s,but eventually this growth slowed.Why did this occur?

Knowledge capital is nonrival in the sense that

Firms free ride on the research and development of other firms when they

Which of the following best explains why productivity growth in the United States has been faster than in other leading industrialized nations?

China's economy is fueled primarily by

The purchase by an individual or firm of stock or bonds issued in another country is called

The "new economy" that emerged in the mid-1990s is based on

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 11: Long-Run Economic Growth: Sources and Policies

Globalization refers to

Which of the following policies would not help promote economic growth?

Small differences in economic growth rates result in small differences in living standards.

An economic growth model explains

Which of the following would you expect to result in faster economic growth?

Foreign direct investment in the United States declined 42 percent in the first quarter of 2009.This means that

Suppose that in 2011 real GDP grew in Estonia by 3% and that the population increased by 5%.Therefore in 2011,Estonia experienced

Describe the process of "creative destruction" using a specific example.

If real GDP per capita in Ireland is estimated to be $7,400 in 2012,what will real GDP per capita be in 2017 if real GDP per capita grows at an annual rate of 2.8%?

Figure 22-2 -Refer to Figure 22-2.Assuming no technological change,if the United States increases capital per hour worked by $40,000 every year between 2010 and 2014,we would expect to see

Which of the following advances contributed to the "new economy" of the mid-1990s?

Why do some economists point to a decline in the quality of labor as an explanation for the productivity slowdown in the mid-1970s?

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.

The Soviet Union's economy grew rapidly in terms of GDP per hour worked in the 1950s,but eventually this growth slowed.Why did this occur?

Knowledge capital is nonrival in the sense that

Firms free ride on the research and development of other firms when they

Which of the following best explains why productivity growth in the United States has been faster than in other leading industrialized nations?

China's economy is fueled primarily by

The purchase by an individual or firm of stock or bonds issued in another country is called

The "new economy" that emerged in the mid-1990s is based on

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should the equilibrium level of loanable funds and the rate of long-term growth.