Question 1

According to Joseph Schumpeter which of the following would be an indicator of on-going economic growth?

Accepted Answer

A) new products displacing older ones 
B) growing concentration of wealth 
C) a more equal distribution of wealth 
D) growing government deficits 
E) consolidation of firms in key industries 
A) new products displacing older ones 
B) growing concentration of wealth 
C) a more equal distribution of wealth 
D) growing government deficits 
E) consolidation of firms in key industries

Question 2

If, after an outflow of workers in a country, it now takes more capital per hour worked to get the same amount of GDP per hour worked, this indicates ________ the per-worker production function in that country.

Accepted Answer

A) a movement up 
B) a movement down 
C) an upward shift of 
D) a downward shift of 
E) a pivot to the left 
A) a movement up 
B) a movement down 
C) an upward shift of 
D) a downward shift of 
E) a pivot to the left

Question 3

The Industrial Revolution

Accepted Answer

A) marked the beginning of significant economic growth in the world. 
B) started in France around the year 1750. 
C) produced goods exclusively using human or animal power. 
D) had no impact on standards of living in the world. 
E) marked the beginning of poverty around the world. 
A) marked the beginning of significant economic growth in the world. 
B) started in France around the year 1750. 
C) produced goods exclusively using human or animal power. 
D) had no impact on standards of living in the world. 
E) marked the beginning of poverty around the world.

Question 4

Because firms can free ride on the research and development of other firms,

Accepted Answer

A) firms choose a level of research and development where the marginal cost of research is equal to the economy's marginal return of research. 
B) firms choose a level of research and development where the marginal cost of research is above the economy's marginal return of research. 
C) firms choose a level of research and development where the marginal cost of research is below the economy's marginal return of research. 
D) firms choose a level of research and development where the marginal cost of research is below the individual firm's marginal return of research. 
E) firms will always face marginal costs of research and development that exceed their marginal return of research. 
A) firms choose a level of research and development where the marginal cost of research is equal to the economy's marginal return of research. 
B) firms choose a level of research and development where the marginal cost of research is above the economy's marginal return of research. 
C) firms choose a level of research and development where the marginal cost of research is below the economy's marginal return of research. 
D) firms choose a level of research and development where the marginal cost of research is below the individual firm's marginal return of research. 
E) firms will always face marginal costs of research and development that exceed their marginal return of research.

Question 5

According to the text, there are three ways the government can help increase the accumulation of knowledge capital.What are they?

Accepted Answer

A) protecting intellectual property rights, subsidizing research and development, and subsidizing education 
B) increasing taxes on firms, eliminating patents, and increasing the minimum wage 
C) encouraging the use of trade secrets, expanding student loan programs, and increasing the minimum wage 
D) reducing taxes on capital, increasing Social Security payments, and lowering the exchange rate 
E) reducing taxes on interest payments; enforcing contracts; and privatizing education 
A) protecting intellectual property rights, subsidizing research and development, and subsidizing education 
B) increasing taxes on firms, eliminating patents, and increasing the minimum wage 
C) encouraging the use of trade secrets, expanding student loan programs, and increasing the minimum wage 
D) reducing taxes on capital, increasing Social Security payments, and lowering the exchange rate 
E) reducing taxes on interest payments; enforcing contracts; and privatizing education

Question 6

A patent grants an inventor exclusive rights to a product for how long?

Accepted Answer

A) 14 years 
B) 17 years 
C) 20 years 
D) 50 years 
E) the lifetime of the product 
A) 14 years 
B) 17 years 
C) 20 years 
D) 50 years 
E) the lifetime of the product

Question 7

Which of the following is not a reason why low-income countries do not experience rapid growth?

Accepted Answer

A) failure to enforce the rule of law 
B) globalization 
C) wars and revolutions 
D) poor public education and health 
E) lot rates of saving and investment 
A) failure to enforce the rule of law 
B) globalization 
C) wars and revolutions 
D) poor public education and health 
E) lot rates of saving and investment

Question 8

In the eighteenth century, Honoré Blanc, a French gunsmith, revolutionized the arms manufacturing industry by focusing on interchangeable parts and standardization and the integration of the assembly line.What impact did his methods for producing muskets have on the per-worker production function?

Accepted Answer

A) It became flatter. 
B) It shifted up. 
C) It shifted down. 
D) It became linear. 
E) It no longer passed through the origin. 
A) It became flatter. 
B) It shifted up. 
C) It shifted down. 
D) It became linear. 
E) It no longer passed through the origin.

Question 9

By offering more generous unemployment insurance programs, Canadians can expect

Accepted Answer

A) to pay less in taxes than in the United States. 
B) workers to gain new skills quickly in response to fluctuations in the labour market. 
C) shorter periods of unemployment for their workers. 
D) longer periods of unemployment for their workers. 
E) more frequent periods of high unemployment. 
A) to pay less in taxes than in the United States. 
B) workers to gain new skills quickly in response to fluctuations in the labour market. 
C) shorter periods of unemployment for their workers. 
D) longer periods of unemployment for their workers. 
E) more frequent periods of high unemployment.

Question 10

Increased foreign direct investment in India has contributed to its recent economic growth.

Accepted Answer

A) True 
 B)False

Question 11

Despite its close relationship with the richest country in the world, Mexico's economy has not grown faster than the American economy. Over the same period, the Chinese economy was able to grow much faster than both the US and Mexico. Which answer best explains Mexico's slower growth.

Accepted Answer

A) Mexico's corruption and weak financial sector make lending difficult. 
B) American firms refuse to invest in Mexico. 
C) Mexico has not yet received sufficient aid from rich countries for it to grow. 
D) Mexico's GDP per capita was originally lower than China's making it harder for Mexico to encourage economic growth. 
E) Mexico's people don't additional economic development to occur. 
A) Mexico's corruption and weak financial sector make lending difficult. 
B) American firms refuse to invest in Mexico. 
C) Mexico has not yet received sufficient aid from rich countries for it to grow. 
D) Mexico's GDP per capita was originally lower than China's making it harder for Mexico to encourage economic growth. 
E) Mexico's people don't additional economic development to occur.

Question 12

According to new growth theory,

Accepted Answer

A) technological change is influenced by economic incentives. 
B) centrally-planned economies are the most efficient. 
C) growth in real GDP per capita occurs only if there are increasing returns. 
D) economic growth is determined by forces outside the control of the market system. 
E) capital accumulation will accelerate GDP growth. 
A) technological change is influenced by economic incentives. 
B) centrally-planned economies are the most efficient. 
C) growth in real GDP per capita occurs only if there are increasing returns. 
D) economic growth is determined by forces outside the control of the market system. 
E) capital accumulation will accelerate GDP growth.

Question 13

Economic growth optimists site which of the following when arguing that economic growth in Canada is likely to accelerate?

Accepted Answer

A) falling productivity gains from information technology 
B) a shrinking working age population 
C) difficulty in measuring the productivity gains from information technology 
D) increasing energy efficiency 
E) the limited adoption of new technology by consumers 
A) falling productivity gains from information technology 
B) a shrinking working age population 
C) difficulty in measuring the productivity gains from information technology 
D) increasing energy efficiency 
E) the limited adoption of new technology by consumers

Question 14

You are an economic advisor to the Prime Minister.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?

Accepted Answer

A) a reduction in sales taxes 
B) an investment tax credit 
C) a reduction in taxes on luxury yachts 
D) opt out for those who oppose vaccination 
E) all of the above 
A) a reduction in sales taxes 
B) an investment tax credit 
C) a reduction in taxes on luxury yachts 
D) opt out for those who oppose vaccination 
E) all of the above

Question 15

If Canada and Bolivia have annual per capita growth rates of 3.2% and 1.35%, respectively, and if Canada's per capita GDP is higher, then in the long run

Accepted Answer

A) real GDP per capita in Canada will always be 1.9% higher than real GDP per capital in Bolivia. 
B) the difference between the level of real GDP per capita in Canada and real GDP per capita in Bolivia will shrink over time. 
C) the difference between the level of real GDP per capita in Canada and real GDP per capita in Bolivia will increase over time. 
D) the difference between the level of real GDP per capita in Canada and real GDP per capita in Bolivia will always be $1.9 trillion. 
A) real GDP per capita in Canada will always be 1.9% higher than real GDP per capital in Bolivia. 
B) the difference between the level of real GDP per capita in Canada and real GDP per capita in Bolivia will shrink over time. 
C) the difference between the level of real GDP per capita in Canada and real GDP per capita in Bolivia will increase over time. 
D) the difference between the level of real GDP per capita in Canada and real GDP per capita in Bolivia will always be $1.9 trillion.

Question 16

An increase in ________ shifts the production function ________, and makes it possible to produce a higher level of GDP with ________ capital per hour worked.

Accepted Answer

A) technology; down; the same amount of 
B) technology; up; the same amount of 
C) consumption; up; a lesser amount 
D) labour productivity; down; the same amount of 
E) capital stock; up; a lesser amount 
A) technology; down; the same amount of 
B) technology; up; the same amount of 
C) consumption; up; a lesser amount 
D) labour productivity; down; the same amount of 
E) capital stock; up; a lesser amount

Question 17

According to Douglass North, the Industrial Revolution occurred in England because

Accepted Answer

A) the British Parliament took control of the government and could credibly commit to upholding property rights. 
B) the British monarchy took control of the government and pledged not to raise taxes arbitrarily. 
C) the British courts became tied to the king and began to refuse to enforce property rights. 
D) the British Parliament instituted a command economy structure and implemented a planned economy. 
E) the British navy was the most powerful in the world. 
A) the British Parliament took control of the government and could credibly commit to upholding property rights. 
B) the British monarchy took control of the government and pledged not to raise taxes arbitrarily. 
C) the British courts became tied to the king and began to refuse to enforce property rights. 
D) the British Parliament instituted a command economy structure and implemented a planned economy. 
E) the British navy was the most powerful in the world.

Question 18

Table 7.1  
-Refer to Table 7.1.Based on the table above, which country has a higher standard of living and why?

Accepted Answer

A) Sweden has a higher standard of living because its GDP is higher. 
B) Ireland has a higher standard of living because its GDP per capita is higher. 
C) Sweden has a higher standard of living because its GDP per capita is higher. 
D) Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden. 
E) Ireland and Sweden have almost identical standards of living. 
A) Sweden has a higher standard of living because its GDP is higher. 
B) Ireland has a higher standard of living because its GDP per capita is higher. 
C) Sweden has a higher standard of living because its GDP per capita is higher. 
D) Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden. 
E) Ireland and Sweden have almost identical standards of living.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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. 
E) countries around the world all have access to the same technology. 
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. 
E) countries around the world all have access to the same technology.

According to Joseph Schumpeter which of the following would be an indicator of on-going economic growth?

If, after an outflow of workers in a country, it now takes more capital per hour worked to get the same amount of GDP per hour worked, this indicates ________ the per-worker production function in that country.

The Industrial Revolution

Because firms can free ride on the research and development of other firms,

According to the text, there are three ways the government can help increase the accumulation of knowledge capital.What are they?

A patent grants an inventor exclusive rights to a product for how long?

Which of the following is not a reason why low-income countries do not experience rapid growth?

In the eighteenth century, Honoré Blanc, a French gunsmith, revolutionized the arms manufacturing industry by focusing on interchangeable parts and standardization and the integration of the assembly line.What impact did his methods for producing muskets have on the per-worker production function?

By offering more generous unemployment insurance programs, Canadians can expect

Increased foreign direct investment in India has contributed to its recent economic growth.

Despite its close relationship with the richest country in the world, Mexico's economy has not grown faster than the American economy. Over the same period, the Chinese economy was able to grow much faster than both the US and Mexico. Which answer best explains Mexico's slower growth.

According to new growth theory,

Economic growth optimists site which of the following when arguing that economic growth in Canada is likely to accelerate?

You are an economic advisor to the Prime Minister.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?

If Canada and Bolivia have annual per capita growth rates of 3.2% and 1.35%, respectively, and if Canada's per capita GDP is higher, then in the long run

An increase in shifts the production function , and makes it possible to produce a higher level of GDP with capital per hour worked.

According to Douglass North, the Industrial Revolution occurred in England because

Table 7.1 -Refer to Table 7.1.Based on the table above, which country has a higher standard of living and why?

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

Knowledge capital is nonrival in the sense that

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 7: Long-Run Economic Growth: Sources and Policies

According to Joseph Schumpeter which of the following would be an indicator of on-going economic growth?

If, after an outflow of workers in a country, it now takes more capital per hour worked to get the same amount of GDP per hour worked, this indicates ________ the per-worker production function in that country.

The Industrial Revolution

Because firms can free ride on the research and development of other firms,

According to the text, there are three ways the government can help increase the accumulation of knowledge capital.What are they?

A patent grants an inventor exclusive rights to a product for how long?

Which of the following is not a reason why low-income countries do not experience rapid growth?

In the eighteenth century, Honoré Blanc, a French gunsmith, revolutionized the arms manufacturing industry by focusing on interchangeable parts and standardization and the integration of the assembly line.What impact did his methods for producing muskets have on the per-worker production function?

By offering more generous unemployment insurance programs, Canadians can expect

Increased foreign direct investment in India has contributed to its recent economic growth.

Despite its close relationship with the richest country in the world, Mexico's economy has not grown faster than the American economy. Over the same period, the Chinese economy was able to grow much faster than both the US and Mexico. Which answer best explains Mexico's slower growth.

According to new growth theory,

Economic growth optimists site which of the following when arguing that economic growth in Canada is likely to accelerate?

You are an economic advisor to the Prime Minister.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?

If Canada and Bolivia have annual per capita growth rates of 3.2% and 1.35%, respectively, and if Canada's per capita GDP is higher, then in the long run

An increase in ________ shifts the production function ________, and makes it possible to produce a higher level of GDP with ________ capital per hour worked.

According to Douglass North, the Industrial Revolution occurred in England because

Table 7.1 -Refer to Table 7.1.Based on the table above, which country has a higher standard of living and why?

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

Knowledge capital is nonrival in the sense that

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

An increase in shifts the production function , and makes it possible to produce a higher level of GDP with capital per hour worked.