Question 1

A small reduction in a country's growth rate is a concern to policy makers because

Accepted Answer

A)  a small change can have large effects on per capita GDP over time. 
B)  a reduction usually leads to future reductions until finally the economy stagnates. 
C)  policy makers focus too much on economic growth and not enough on increasing savings rates. 
D)  the larger GDP is the better the economic welfare will be in the future. 
A)  a small change can have large effects on per capita GDP over time. 
B)  a reduction usually leads to future reductions until finally the economy stagnates. 
C)  policy makers focus too much on economic growth and not enough on increasing savings rates. 
D)  the larger GDP is the better the economic welfare will be in the future.

Question 2

Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?

Accepted Answer

A)  Because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain. 
B)  Because the annual growth rate is compounded over time. 
C)  Because the slower-growing countries save too much. 
D)  Because the slower-growing countries don't export enough. 
A)  Because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain. 
B)  Because the annual growth rate is compounded over time. 
C)  Because the slower-growing countries save too much. 
D)  Because the slower-growing countries don't export enough.

Question 3

-According to the above table, if per capita real GDP is currently $1000, then at a constant annual rate of growth of 8 percent, per capita real GDP ten years from now will be equal to

Accepted Answer

A)  $2000. 
B)  $2140. 
C)  $2160. 
D)  $2590. 
A)  $2000. 
B)  $2140. 
C)  $2160. 
D)  $2590.

Question 4

There are a number of benefits that usually accompany economic growth. The following are such benefits EXCEPT

Accepted Answer

A)  increase in literacy. 
B)  increased expected life-spans. 
C)  political stability. 
D)  urban congestion. 
A)  increase in literacy. 
B)  increased expected life-spans. 
C)  political stability. 
D)  urban congestion.

Question 5

Of the following views on the effects of immigration on the receiving nation's economic growth, which have NOT been suggested by economists Michael Kremer and Julian Simon?

Accepted Answer

A)  Technological progress is driven by population growth. 
B)  Immigrants raise the standard of living of a nation's native population. 
C)  Immigration increases a nation's labor pool and encourages ingenuity. 
D)  Immigration costs the local population jobs and greatly lowers their incomes. 
A)  Technological progress is driven by population growth. 
B)  Immigrants raise the standard of living of a nation's native population. 
C)  Immigration increases a nation's labor pool and encourages ingenuity. 
D)  Immigration costs the local population jobs and greatly lowers their incomes.

Question 6

The relationship between the rate of saving and per capita real GDP is

Accepted Answer

A)  positive. 
B)  negative. 
C)  constant. 
D)  not stable. 
A)  positive. 
B)  negative. 
C)  constant. 
D)  not stable.

Question 7

As more economic development occurs,

Accepted Answer

A)  technological progress slows. 
B)  capital accumulation decreases. 
C)  the population growth rate decreases. 
D)  the population growth rate increases. 
A)  technological progress slows. 
B)  capital accumulation decreases. 
C)  the population growth rate decreases. 
D)  the population growth rate increases.

Question 8

Which of the following is an example of a measure of labor productivity?

Accepted Answer

A)  Farm workers produce 30 bushels of wheat per worker per day. 
B)  Autos get 30 gallons to the mile. 
C)  The growth rate of per capita real GDP is 3.5 percent per year. 
D)  Wages increase by 3.5 percent per year for 5 years. 
A)  Farm workers produce 30 bushels of wheat per worker per day. 
B)  Autos get 30 gallons to the mile. 
C)  The growth rate of per capita real GDP is 3.5 percent per year. 
D)  Wages increase by 3.5 percent per year for 5 years.

Question 9

Innovation is

Accepted Answer

A)  another term for something new. 
B)  the transformation of an invention into something that is useful to humans. 
C)  the term for invention when a firm obtains a patent. 
D)  the term for inventions in the electronic and computer industries. 
A)  another term for something new. 
B)  the transformation of an invention into something that is useful to humans. 
C)  the term for invention when a firm obtains a patent. 
D)  the term for inventions in the electronic and computer industries.

Question 10

-Refer to the above table. Suppose one country has a per capita real GDP of $1000 and another has a per capita real GDP of $10,000, or ten times larger. If both countries have a growth rate of 5 percent, how much larger will per capita real GDP be in the second country be than the first after 50 years?

Accepted Answer

A)  4 times larger 
B)  5 times larger 
C)  8 times larger 
D)  10 times larger 
A)  4 times larger 
B)  5 times larger 
C)  8 times larger 
D)  10 times larger

Question 11

Which of the following is a negative effect of economic growth?

Accepted Answer

A)  higher inflation 
B)  higher unemployment 
C)  environmental pollution 
D)  all of the above 
A)  higher inflation 
B)  higher unemployment 
C)  environmental pollution 
D)  all of the above

Question 12

All of the following unambiguously contribute to economic growth EXCEPT

Accepted Answer

A)  increase in human capital. 
B)  increase in technology. 
C)  increase in labor productivity. 
D)  increase in government spending. 
A)  increase in human capital. 
B)  increase in technology. 
C)  increase in labor productivity. 
D)  increase in government spending.

Question 13

The variable used to measure economic growth is

Accepted Answer

A)  the growth of the money supply. 
B)  the trade surplus. 
C)  the growth in per capita real GDP. 
D)  the number of new jobs created. 
A)  the growth of the money supply. 
B)  the trade surplus. 
C)  the growth in per capita real GDP. 
D)  the number of new jobs created.

Question 14

The faster economic growth is, the

Accepted Answer

A)  steeper the slope of the production possibilities curve. 
B)  farther the production possibilities curve shifts out. 
C)  closer to the origin the production possibilities curve becomes. 
D)  more bowed the production possibilities curve becomes. 
A)  steeper the slope of the production possibilities curve. 
B)  farther the production possibilities curve shifts out. 
C)  closer to the origin the production possibilities curve becomes. 
D)  more bowed the production possibilities curve becomes.

Question 15

One of the problems with the definition of economic growth is that

Accepted Answer

A)  it overstates economic growth because it does not account for leisure time. 
B)  it does not account for the distribution of income. 
C)  it overstates economic growth because it does not account for the reduction in work time. 
D)  it understates economic growth because it does not account for the reduction in work time. 
A)  it overstates economic growth because it does not account for leisure time. 
B)  it does not account for the distribution of income. 
C)  it overstates economic growth because it does not account for the reduction in work time. 
D)  it understates economic growth because it does not account for the reduction in work time.

Question 16

New growth theorists conclude that

Accepted Answer

A)  invention is more important than innovation in spurring economic growth. 
B)  the amount of technological innovation in an economy is independent of the rewards offered for innovation. 
C)  rates of global economic growth are limited by the amount of raw materials available. 
D)  economic growth can continue as long as we keep coming up with new ideas. 
A)  invention is more important than innovation in spurring economic growth. 
B)  the amount of technological innovation in an economy is independent of the rewards offered for innovation. 
C)  rates of global economic growth are limited by the amount of raw materials available. 
D)  economic growth can continue as long as we keep coming up with new ideas.

Question 17

When considering international trade, which of the following would be most conducive to domestic economic growth?

Accepted Answer

A)  a closed economy 
B)  an economy in which its domestic industries are protected by tariffs 
C)  an economy with free and open markets to the outside world 
D)  an economy in which most decisions are made by a central governmental authority 
A)  a closed economy 
B)  an economy in which its domestic industries are protected by tariffs 
C)  an economy with free and open markets to the outside world 
D)  an economy in which most decisions are made by a central governmental authority

Question 18

A system of private property rights

Accepted Answer

A)  enhances economic growth by creating incentives to the Fed to maintain stable prices. 
B)  enhances economic growth by increasing the probability that a person can gain from making investments today. 
C)  retards economic growth by serving the interests of the wealthy only. 
D)  retards economic growth by limiting the options of people who own nothing. 
A)  enhances economic growth by creating incentives to the Fed to maintain stable prices. 
B)  enhances economic growth by increasing the probability that a person can gain from making investments today. 
C)  retards economic growth by serving the interests of the wealthy only. 
D)  retards economic growth by limiting the options of people who own nothing.

Question 19

In the absence of well-defined property rights, we would likely find

Accepted Answer

A)  people with more incentives to take risks. 
B)  people with less incentives to take risks. 
C)  higher economic growth rates. 
D)  increases in investment activity. 
A)  people with more incentives to take risks. 
B)  people with less incentives to take risks. 
C)  higher economic growth rates. 
D)  increases in investment activity.

Question 20

What is the economic role of a patent?

Accepted Answer

Exam 9: Global Economic Growth and Development

A small reduction in a country's growth rate is a concern to policy makers because

Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?

-According to the above table, if per capita real GDP is currently $1000, then at a constant annual rate of growth of 8 percent, per capita real GDP ten years from now will be equal to

There are a number of benefits that usually accompany economic growth. The following are such benefits EXCEPT

Of the following views on the effects of immigration on the receiving nation's economic growth, which have NOT been suggested by economists Michael Kremer and Julian Simon?

The relationship between the rate of saving and per capita real GDP is

As more economic development occurs,

Which of the following is an example of a measure of labor productivity?

Innovation is

Which of the following is a negative effect of economic growth?

All of the following unambiguously contribute to economic growth EXCEPT

The variable used to measure economic growth is

The faster economic growth is, the

One of the problems with the definition of economic growth is that

New growth theorists conclude that

When considering international trade, which of the following would be most conducive to domestic economic growth?

A system of private property rights

In the absence of well-defined property rights, we would likely find

What is the economic role of a patent?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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