Question 1

Empirical evidence from 1960 to 2011 shows that convergence in economic growth is occurring in which of the following cases?

Accepted Answer

A) Low-income industrial countries are catching up to high-income industrial countries. 
B) Low-income developing countries are catching up to high-income industrial countries. 
C) Low-income agricultural countries are catching up to high-income developing countries. 
D) All low-income countries are catching up to all high-income countries. 
E) Low-income developing countries are catching up to low-income industrial countries. 
A) Low-income industrial countries are catching up to high-income industrial countries. 
B) Low-income developing countries are catching up to high-income industrial countries. 
C) Low-income agricultural countries are catching up to high-income developing countries. 
D) All low-income countries are catching up to all high-income countries. 
E) Low-income developing countries are catching up to low-income industrial 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 
E) a law restricting foreign direct investment 
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 
E) a law restricting foreign direct investment

Question 3

According to Joseph Schumpeter, the theory of creative destruction describes a process by which

Accepted Answer

A) some new products unleash a gale of destruction that drive other new products out of the market. 
B) new products unleash a gale of destruction that drives old products out of the market. 
C) new products are created by the destruction of capital. 
D) the creation of new products never involves the destruction of old products. 
E) new products are bought out by existing large firms in their efforts to "destroy" competition. 
A) some new products unleash a gale of destruction that drive other new products out of the market. 
B) new products unleash a gale of destruction that drives old products out of the market. 
C) new products are created by the destruction of capital. 
D) the creation of new products never involves the destruction of old products. 
E) new products are bought out by existing large firms in their efforts to "destroy" competition.

Question 4

According to new growth theory, the accumulation of ________ capital is subject to diminishing returns at the ________ level, but not at the level of the economy as a whole.

Accepted Answer

A) physical; firm 
B) technological; personal 
C) knowledge; firm 
D) physical; production 
E) financial; individual 
A) physical; firm 
B) technological; personal 
C) knowledge; firm 
D) physical; production 
E) financial; individual

Question 5

Which of the following is not one of the three sources of technological change?

Accepted Answer

A) additional amounts of existing capital 
B) better machinery and equipment 
C) increases in human capital 
D) better means of organizing and managing production 
A) additional amounts of existing capital 
B) better machinery and equipment 
C) increases in human capital 
D) better means of organizing and managing production

Question 6

The former Soviet Union consistently increased the amount of capital available to its workers, but found that increases in capital resulted in progressively smaller and smaller increases in GDP per worker.This phenomenon is referred to as

Accepted Answer

A) a rising standard of living. 
B) diminishing returns to capital. 
C) new growth theory. 
D) a shift of the per-worker production function. 
E) diseconomies of scale. 
A) a rising standard of living. 
B) diminishing returns to capital. 
C) new growth theory. 
D) a shift of the per-worker production function. 
E) diseconomies of scale.

Question 7

Some of the policies used by the Chinese government result in investment being 50 percent of GDP. As a result

Accepted Answer

A) China's recent growth may be at the expense of the long term health of the economy. 
B) China is very well positioned to grow in the long term. 
C) China has sacrificed short term economic activity for long term growth. 
D) Consumer spending drives economic growth. 
E) Many state run firms that are more productive than private firms in other countries. 
A) China's recent growth may be at the expense of the long term health of the economy. 
B) China is very well positioned to grow in the long term. 
C) China has sacrificed short term economic activity for long term growth. 
D) Consumer spending drives economic growth. 
E) Many state run firms that are more productive than private firms in other countries.

Question 8

Most of the countries of Africa are considered newly industrializing countries.

Accepted Answer

A) True 
 B)False

Question 9

Some economists argue that the productivity slowdown from mid-1970s to mid-1990s actually didn't happen, but just "appeared" to happen because

Accepted Answer

A) services were becoming a more important part of the economy and it was hard to measure increases of output from services. 
B) new environmental laws had passed that forced firms to spend to reduce pollution, and this spending did not raise output. 
C) increased spending on health and safety raised worker productivity. 
D) A and B 
E) B and C 
A) services were becoming a more important part of the economy and it was hard to measure increases of output from services. 
B) new environmental laws had passed that forced firms to spend to reduce pollution, and this spending did not raise output. 
C) increased spending on health and safety raised worker productivity. 
D) A and B 
E) B and C

Question 10

According to new growth theory

Accepted Answer

A) physical capital is nonexcludable. 
B) knowledge capital is excludable. 
C) knowledge capital is subject to increasing returns. 
D) knowledge capital is rival and excludable. 
E) knowledge capital can be exhausted by advanced economies. 
A) physical capital is nonexcludable. 
B) knowledge capital is excludable. 
C) knowledge capital is subject to increasing returns. 
D) knowledge capital is rival and excludable. 
E) knowledge capital can be exhausted by advanced economies.

Question 11

Figure 7.3   Alt text for Figure 7.3: In figure 7.3, a graph, comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.3: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.2 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000), B ($60000, $16000), C ($70000, $16400), D ($80000, $16500), and E ($60000, $17000)are plotted.The curve labelled Production function 1, passes through points A, B, C, and D.The curve labelled Production function 2, passes through point E.These 5 points are connected to their respective coordinates on the x and y-axis with dotted lines.
-Refer to Figure 7.3.Which of the following would cause an economy to move from a point like A in the figure above to a point like B?

Accepted Answer

A) an improvement in technology 
B) a decrease in capital per hour worked 
C) an increase in capital per hour worked 
D) a technological regression 
E) a rise in the population 
A) an improvement in technology 
B) a decrease in capital per hour worked 
C) an increase in capital per hour worked 
D) a technological regression 
E) a rise in the population

Question 12

Under the Soviet system of communism,

Accepted Answer

A) managerial pay was determined by the extent to which managers could lower the per-unit costs of production. 
B) technological progress was slow because managers had little incentive to develop new technologies. 
C) competitive pressures in the Soviet Union allowed the country's technological progress to keep pace with the rest of the world. 
D) the per-worker production function in the Soviet Union shifted up more rapidly than production functions in other countries. 
E) worker's incentives exert effort were too strong, ultimately leading to a reduction in productivity. 
A) managerial pay was determined by the extent to which managers could lower the per-unit costs of production. 
B) technological progress was slow because managers had little incentive to develop new technologies. 
C) competitive pressures in the Soviet Union allowed the country's technological progress to keep pace with the rest of the world. 
D) the per-worker production function in the Soviet Union shifted up more rapidly than production functions in other countries. 
E) worker's incentives exert effort were too strong, ultimately leading to a reduction in productivity.

Question 13

According to Nobel Laureate Douglass North, one reason why the Industrial Revolution occurred in England before many other countries was because the King of England consistently maintained control over the court system and the government.

Accepted Answer

A) True 
 B)False

Question 14

Technological change will

Accepted Answer

A) shift the per-worker production function up. 
B) shift the per-worker production function down. 
C) move the economy to a point beneath the per-worker production function. 
D) move the economy along a given per-worker production function. 
E) make the per-worker production flatter. 
A) shift the per-worker production function up. 
B) shift the per-worker production function down. 
C) move the economy to a point beneath the per-worker production function. 
D) move the economy along a given per-worker production function. 
E) make the per-worker production flatter.

Question 15

Significant economic growth did not begin in the world until

Accepted Answer

A) 1000 CE. 
B) 1750 CE. 
C) 1820 CE. 
D) the 20th century CE. 
E) 1500 CE. 
A) 1000 CE. 
B) 1750 CE. 
C) 1820 CE. 
D) the 20th century CE. 
E) 1500 CE.

Question 16

In the long run, a country will experience an increasing standard of living only if it experiences

Accepted Answer

A) a high rate of consumption. 
B) continuous technological change. 
C) a high rate of labour-force growth. 
D) a slow rate of population growth. 
E) a high rate of capital accumulation. 
A) a high rate of consumption. 
B) continuous technological change. 
C) a high rate of labour-force growth. 
D) a slow rate of population growth. 
E) a high rate of capital accumulation.

Question 17

Figure 7.4   Alt text for Figure 7.4: In figure 7.4, a graph representing per-worker production functions.
Long description for Figure 7.4: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.3 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000), B ($60000, $16000), C ($70000, $16400), D ($60000, $17000), and E ($60000, $15000)are plotted.The curve labelled, Production function 1, passes through point E.The curve labelled, Production function 2, passes through points A, B, and C.The curve labelled, Production function 3, passes through point D.These 5 points are connected to their respective coordinates on the x-axis and y-axis with dotted lines.
-Refer to Figure 7.4.Suppose the economy gains more capital per hour worked and experiences technological change.This is shown in the figure above by the movement from

Accepted Answer

A) E to B to D. 
B) A to B to C. 
C) A to E. 
D) A to D. 
E) D to A. 
A) E to B to D. 
B) A to B to C. 
C) A to E. 
D) A to D. 
E) D to A.

Question 18

Figure 7.1   Alt text for Figure 7.1: In figure 7.1, a graph comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.1: The x-axis is labelled, capital per hour worked, K/L, with values 40,000 and 60,000 marked.The y-axis is labelled, real GDP per hour worked, Y/L, with 0 at the vertex.3 concave curves, each originating from the vertex are shown.4 points A, B, C, and D are plotted such that point A has 40,000 as the x coordinate, and points B, C, and D have 60,000 as the x coordinate.The 3 curves pass through these points.The curve labelled, Production function 1, passes through point B.The curve labelled, Production function 2, passes through points A and C.The curve labelled, Production function 3, passes through point D.
-Refer to Figure 7.1.Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from

Accepted Answer

A) A to C. 
B) B to C. 
C) C to D. 
D) D to C. 
E) A to D. 
A) A to C. 
B) B to C. 
C) C to D. 
D) D to C. 
E) A to D.

Question 19

A small economy increased its capital per hour worked (K/L)from $40,000 to $50,000.As a result, real GDP per worker (Y/L)grew from $20,000 to $25,000.If the economy increases its capital per hour worked by another $10,000 to $60,000, but there is no change in technology, by how much more and in what direction will output per worker change?

Accepted Answer

A) Output per worker will increase by exactly $5,000. 
B) Output per worker will increase by more than $5,000. 
C) Output per worker will increase by less than $5,000. 
D) Output per worker will fall by more than $5,000. 
E) Output per worker will increase by more than $10,000. 
A) Output per worker will increase by exactly $5,000. 
B) Output per worker will increase by more than $5,000. 
C) Output per worker will increase by less than $5,000. 
D) Output per worker will fall by more than $5,000. 
E) Output per worker will increase by more than $10,000.

Question 20

Table 7.2  
-Refer to Table 7.2.Calculate the GDP per capita for each country in the table.Which country has the highest standard of living? Why?

Accepted Answer

GDP per capita = GDP / Population.
GDP p

Empirical evidence from 1960 to 2011 shows that convergence in economic growth is occurring in which of the following cases?

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

According to Joseph Schumpeter, the theory of creative destruction describes a process by which

According to new growth theory, the accumulation of capital is subject to diminishing returns at the level, but not at the level of the economy as a whole.

Which of the following is not one of the three sources of technological change?

The former Soviet Union consistently increased the amount of capital available to its workers, but found that increases in capital resulted in progressively smaller and smaller increases in GDP per worker.This phenomenon is referred to as

Some of the policies used by the Chinese government result in investment being 50 percent of GDP. As a result

Most of the countries of Africa are considered newly industrializing countries.

Some economists argue that the productivity slowdown from mid-1970s to mid-1990s actually didn't happen, but just "appeared" to happen because

According to new growth theory

Under the Soviet system of communism,

According to Nobel Laureate Douglass North, one reason why the Industrial Revolution occurred in England before many other countries was because the King of England consistently maintained control over the court system and the government.

Technological change will

Significant economic growth did not begin in the world until

In the long run, a country will experience an increasing standard of living only if it experiences

Table 7.2 -Refer to Table 7.2.Calculate the GDP per capita for each country in the table.Which country has the highest standard of living? Why?

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

Empirical evidence from 1960 to 2011 shows that convergence in economic growth is occurring in which of the following cases?

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

According to Joseph Schumpeter, the theory of creative destruction describes a process by which

According to new growth theory, the accumulation of ________ capital is subject to diminishing returns at the ________ level, but not at the level of the economy as a whole.

Which of the following is not one of the three sources of technological change?

The former Soviet Union consistently increased the amount of capital available to its workers, but found that increases in capital resulted in progressively smaller and smaller increases in GDP per worker.This phenomenon is referred to as

Some of the policies used by the Chinese government result in investment being 50 percent of GDP. As a result

Most of the countries of Africa are considered newly industrializing countries.

Some economists argue that the productivity slowdown from mid-1970s to mid-1990s actually didn't happen, but just "appeared" to happen because

According to new growth theory

Under the Soviet system of communism,

According to Nobel Laureate Douglass North, one reason why the Industrial Revolution occurred in England before many other countries was because the King of England consistently maintained control over the court system and the government.

Technological change will

Significant economic growth did not begin in the world until

In the long run, a country will experience an increasing standard of living only if it experiences

Table 7.2 -Refer to Table 7.2.Calculate the GDP per capita for each country in the table.Which country has the highest standard of living? Why?

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

According to new growth theory, the accumulation of capital is subject to diminishing returns at the level, but not at the level of the economy as a whole.