Question 1

Explain how market economies are generally better able to achieve technological progress than are centrally planned economies.

Accepted Answer

In a centrally planned economy, decision

Question 2

High-income countries have ________ and ________ as compared to developing countries.

Accepted Answer

A) low rates of savings; high rates of growth 
B) low rates of savings; low rates of growth 
C) high rates of savings; high rates of growth 
D) high rates of savings; low rates of growth 
A) low rates of savings; high rates of growth 
B) low rates of savings; low rates of growth 
C) high rates of savings; high rates of growth 
D) high rates of savings; low rates of growth

Question 3

If real GDP per capita in Canada is $8,000, what will real GDP per capita in Canada be after 5 years if real GDP per capita grows at an annual rate of 3.2%?

Accepted Answer

A) $8,520 
B) $9,280 
C) $9,365 
D) $10,560 
E) $12,350 
A) $8,520 
B) $9,280 
C) $9,365 
D) $10,560 
E) $12,350

Question 4

According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law.The consequence of a weak rule of law is

Accepted Answer

A) difficulty in attracting investment and low economic growth. 
B) a decrease in cash transactions and increased efficiency. 
C) more risk taking on the part of entrepreneurs and greater economic investment. 
D) strong property rights enforcement leading to greater investment. 
E) higher levels of foreign investment. 
A) difficulty in attracting investment and low economic growth. 
B) a decrease in cash transactions and increased efficiency. 
C) more risk taking on the part of entrepreneurs and greater economic investment. 
D) strong property rights enforcement leading to greater investment. 
E) higher levels of foreign investment.

Question 5

Which of the following is an example of the way the financial markets in the United States can encourage technological progress more efficiently than other countries?

Accepted Answer

A) Even when entrepreneurs cannot secure sufficient funding for projects from banks, venture capital firms may be willing to lend money. 
B) The level of legal protection for investors in the United States is relatively low. 
C) Because the financial market in the United States is so large, the quantity of trading in corporate stocks and bonds makes those investments less liquid. 
D) Banks in the United States are more willing to take on risk because the government guarantees each bank cannot lose more than $100,000 on any given loan that defaults. 
E) The low American savings rates increases the number of people willing to lend to new businesses. 
A) Even when entrepreneurs cannot secure sufficient funding for projects from banks, venture capital firms may be willing to lend money. 
B) The level of legal protection for investors in the United States is relatively low. 
C) Because the financial market in the United States is so large, the quantity of trading in corporate stocks and bonds makes those investments less liquid. 
D) Banks in the United States are more willing to take on risk because the government guarantees each bank cannot lose more than $100,000 on any given loan that defaults. 
E) The low American savings rates increases the number of people willing to lend to new businesses.

Question 6

Figure 7.2   Alt text for Figure 7.2: In figure 7.2, a graph comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.2: The x-axis is labelled, capital per hour worked.The y-axis is labelled, real GDP per hour worked, Y/L.A concave curve originates from 0 at the vertex and passes through 2 points ($35,000, 1,850)and (40,000, $2000), toward the end of the x-axis.These 2 points are connected to their respective coordinates on the x-axis and y-axis with dotted lines.
-Refer to Figure 7.2.Assuming no technological change, if Canada increases capital per hour worked by $40,000 every year between 2015 and 2020, we would expect to see

Accepted Answer

A) real GDP per hour worked will increase by the same increment each year between 2015 and 2020. 
B) real GDP per hour worked will be lower in 2020 than it was in 2015. 
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. 
E) the per worker production function will become steeper every year. 
A) real GDP per hour worked will increase by the same increment each year between 2015 and 2020. 
B) real GDP per hour worked will be lower in 2020 than it was in 2015. 
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. 
E) the per worker production function will become steeper every year.

Question 7

What is "brain drain"?

Accepted Answer

A) the tendency for highly educated workers in high-income countries to move to low-income countries to volunteer their services 
B) increased recruiting efforts that attempt to raise the average level of education in developed nations 
C) foreign direct investment that flows from a developed country to a developing country 
D) the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries 
E) the mental fatigue caused by the increased availability of information 
A) the tendency for highly educated workers in high-income countries to move to low-income countries to volunteer their services 
B) increased recruiting efforts that attempt to raise the average level of education in developed nations 
C) foreign direct investment that flows from a developed country to a developing country 
D) the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries 
E) the mental fatigue caused by the increased availability of information

Question 8

Until recently, many developing countries

Accepted Answer

A) were quite open to foreign investment. 
B) encouraged foreign direct investment but discouraged foreign portfolio investment. 
C) sealed themselves off from foreign investment. 
D) encouraged foreign portfolio investment but discouraged foreign direct investment. 
E) allowed their citizens to freely invest in other countries. 
A) were quite open to foreign investment. 
B) encouraged foreign direct investment but discouraged foreign portfolio investment. 
C) sealed themselves off from foreign investment. 
D) encouraged foreign portfolio investment but discouraged foreign direct investment. 
E) allowed their citizens to freely invest in other countries.

Question 9

As predicted by the economic growth model, countries that start with lower levels of GDP per capita always grow faster than countries that start with higher levels of GDP per capita.

Accepted Answer

A) True 
 B)False

Question 10

Explain three reasons why the productivity slowdown of 1973-1994 occurred.

Accepted Answer

Three explanations have been suggested f

Question 11

Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500.If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns?

Accepted Answer

A) by less than $500 
B) by exactly $500 
C) by more than $500 but less than $5,000 
D) by more than $5,000 but less than $20,000 
E) by more than $20,000 
A) by less than $500 
B) by exactly $500 
C) by more than $500 but less than $5,000 
D) by more than $5,000 but less than $20,000 
E) by more than $20,000

Question 12

When additions of input to a fixed quantity of another input lead to progressively smaller increases in output, we say we are facing

Accepted Answer

A) diminishing returns. 
B) negative returns. 
C) accelerating returns. 
D) decreasing production. 
E) diseconomies of scale. 
A) diminishing returns. 
B) negative returns. 
C) accelerating returns. 
D) decreasing production. 
E) diseconomies of scale.

Question 13

________ is considered a high-income country, ________ a developing country, and ________ a newly industrializing country.

Accepted Answer

A) Japan; Hong Kong; South Korea 
B) The United States; Somalia; Taiwan 
C) Canada; France; Singapore 
D) Honduras; New Zealand; South Korea 
E) India; Russia; Canada 
A) Japan; Hong Kong; South Korea 
B) The United States; Somalia; Taiwan 
C) Canada; France; Singapore 
D) Honduras; New Zealand; South Korea 
E) India; Russia; Canada

Question 14

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.Which of the following combinations of points illustrates changes in the Soviet Union's economy from 1950 to 1980?

Accepted Answer

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

Question 15

The owner of a firm wants some advice on how to increase productivity.Suggest three ways the entrepreneur could increase labour productivity through improving technology.

Accepted Answer

There are three main ways to improve tec

Question 16

China has experienced much higher rates of economic growth than Mexico. Which of the following is NOT an explanation of Mexico's lower growth rate?

Accepted Answer

A) Mexico's government exercises more control of its economy than China's does. 
B) Mexico has already exploited the easiest ways to increase economic growth. 
C) Mexico suffers high levels of government corruption. 
D) Mexico's geographic location makes it an unappealing location for foreign direct investment. 
E) Mexico's banks are reluctant to make loans to business. 
A) Mexico's government exercises more control of its economy than China's does. 
B) Mexico has already exploited the easiest ways to increase economic growth. 
C) Mexico suffers high levels of government corruption. 
D) Mexico's geographic location makes it an unappealing location for foreign direct investment. 
E) Mexico's banks are reluctant to make loans to business.

Question 17

Globalization is defined as the process of countries becoming ________ open to foreign trade and ________ open to foreign investment.

Accepted Answer

A) more; less 
B) more; more 
C) less; more 
D) less; less 
A) more; less 
B) more; more 
C) less; more 
D) less; less

Question 18

All of the following are reasons why China is unlikely to maintain high enough rates of productivity growth to catch-up with the standard of living in the Canada except

Accepted Answer

A) Canada invests more in research and development.than does China. 
B) much of China's growth is likely due to the transition from a centrally-planned economy to a market economy. 
C) because of the low birth rate in China, the labour force will soon decline. 
D) the Chinese migration of rural workers to more productive urban jobs. 
A) Canada invests more in research and development.than does China. 
B) much of China's growth is likely due to the transition from a centrally-planned economy to a market economy. 
C) because of the low birth rate in China, the labour force will soon decline. 
D) the Chinese migration of rural workers to more productive urban jobs.

Question 19

Policies to promote growth by increasing saving and investment work through

Accepted Answer

A) decreasing the supply of loanable funds, lowering the interest rate, and raising the level of investment in physical capital. 
B) increasing the supply of loanable funds, increasing the interest rate, and raising the level of investment in physical capital. 
C) increasing the supply of loanable funds, lowering the interest rate, and lowering the level of investment in physical capital. 
D) increasing the supply of loanable funds, lowering the interest rate, and raising the level of investment in physical capital. 
A) decreasing the supply of loanable funds, lowering the interest rate, and raising the level of investment in physical capital. 
B) increasing the supply of loanable funds, increasing the interest rate, and raising the level of investment in physical capital. 
C) increasing the supply of loanable funds, lowering the interest rate, and lowering the level of investment in physical capital. 
D) increasing the supply of loanable funds, lowering the interest rate, and raising the level of investment in physical capital.

Question 20

Between 1960 and now, deaths rates among children have

Accepted Answer

A) declined in most high-income countries and have risen in most low-income countries. 
B) declined in nearly all countries, including most low-income countries. 
C) remained relatively unchanged in most high-income countries and have declined in most low-income countries. 
D) declined in most high-income countries and have remained relatively unchanged in most low-income countries. 
E) risen in virtually all countries. 
A) declined in most high-income countries and have risen in most low-income countries. 
B) declined in nearly all countries, including most low-income countries. 
C) remained relatively unchanged in most high-income countries and have declined in most low-income countries. 
D) declined in most high-income countries and have remained relatively unchanged in most low-income countries. 
E) risen in virtually all countries.

Explain how market economies are generally better able to achieve technological progress than are centrally planned economies.

High-income countries have and as compared to developing countries.

If real GDP per capita in Canada is $8,000, what will real GDP per capita in Canada be after 5 years if real GDP per capita grows at an annual rate of 3.2%?

According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law.The consequence of a weak rule of law is

Which of the following is an example of the way the financial markets in the United States can encourage technological progress more efficiently than other countries?

What is "brain drain"?

Until recently, many developing countries

As predicted by the economic growth model, countries that start with lower levels of GDP per capita always grow faster than countries that start with higher levels of GDP per capita.

Explain three reasons why the productivity slowdown of 1973-1994 occurred.

Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500.If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns?

When additions of input to a fixed quantity of another input lead to progressively smaller increases in output, we say we are facing

is considered a high-income country, a developing country, and a newly industrializing country.

The owner of a firm wants some advice on how to increase productivity.Suggest three ways the entrepreneur could increase labour productivity through improving technology.

China has experienced much higher rates of economic growth than Mexico. Which of the following is NOT an explanation of Mexico's lower growth rate?

Globalization is defined as the process of countries becoming open to foreign trade and open to foreign investment.

All of the following are reasons why China is unlikely to maintain high enough rates of productivity growth to catch-up with the standard of living in the Canada except

Policies to promote growth by increasing saving and investment work through

Between 1960 and now, deaths rates among children have

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

Explain how market economies are generally better able to achieve technological progress than are centrally planned economies.

High-income countries have ________ and ________ as compared to developing countries.

If real GDP per capita in Canada is $8,000, what will real GDP per capita in Canada be after 5 years if real GDP per capita grows at an annual rate of 3.2%?

According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law.The consequence of a weak rule of law is

Which of the following is an example of the way the financial markets in the United States can encourage technological progress more efficiently than other countries?

What is "brain drain"?

Until recently, many developing countries

As predicted by the economic growth model, countries that start with lower levels of GDP per capita always grow faster than countries that start with higher levels of GDP per capita.

Explain three reasons why the productivity slowdown of 1973-1994 occurred.

Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500.If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns?

When additions of input to a fixed quantity of another input lead to progressively smaller increases in output, we say we are facing

________ is considered a high-income country, ________ a developing country, and ________ a newly industrializing country.

The owner of a firm wants some advice on how to increase productivity.Suggest three ways the entrepreneur could increase labour productivity through improving technology.

China has experienced much higher rates of economic growth than Mexico. Which of the following is NOT an explanation of Mexico's lower growth rate?

Globalization is defined as the process of countries becoming ________ open to foreign trade and ________ open to foreign investment.

All of the following are reasons why China is unlikely to maintain high enough rates of productivity growth to catch-up with the standard of living in the Canada except

Policies to promote growth by increasing saving and investment work through

Between 1960 and now, deaths rates among children have

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

High-income countries have and as compared to developing countries.

is considered a high-income country, a developing country, and a newly industrializing country.

Globalization is defined as the process of countries becoming open to foreign trade and open to foreign investment.