Question 1

What does the fact that U.S. students are falling behind other nations' students in math and science have to do with economic growth?

Accepted Answer

A)  Nothing. People in the United States just don't like to fall behind in anything as a matter of pride. 
B)  If U.S. students don't excel in math and science, the nation will see fewer plays written and fewer pieces of music composed. 
C)  Better technology, a key to economic growth, depends largely on math and science skills. 
D)  Math and science skills don't foster economic growth, but it takes math skills to calculate a nation's rate of economic growth. 
A)  Nothing. People in the United States just don't like to fall behind in anything as a matter of pride. 
B)  If U.S. students don't excel in math and science, the nation will see fewer plays written and fewer pieces of music composed. 
C)  Better technology, a key to economic growth, depends largely on math and science skills. 
D)  Math and science skills don't foster economic growth, but it takes math skills to calculate a nation's rate of economic growth.

Question 2

Economists have found that as a nation's per capita real Gross Domestic Product (GDP) increases,

Accepted Answer

A)  the rate of population growth declines. 
B)  the rate of population growth experiences dramatic increases. 
C)  there is no effect on population growth. 
D)  the rate of population growth increases at the same rate as economic growth. 
A)  the rate of population growth declines. 
B)  the rate of population growth experiences dramatic increases. 
C)  there is no effect on population growth. 
D)  the rate of population growth increases at the same rate as economic growth.

Question 3

The benefits from research and development activities

Accepted Answer

A)  are limited to the firm winning a patent. 
B)  are limited to the firms investing in similar research and development projects. 
C)  are limited to the nation in which the research and development is taking place. 
D)  spill over to others, including foreign residents. 
A)  are limited to the firm winning a patent. 
B)  are limited to the firms investing in similar research and development projects. 
C)  are limited to the nation in which the research and development is taking place. 
D)  spill over to others, including foreign residents.

Question 4

Labor productivity can be increased with

Accepted Answer

A)  education and training of the workforce. 
B)  an increase in capital goods used. 
C)  improvements in management. 
D)  all of the above 
A)  education and training of the workforce. 
B)  an increase in capital goods used. 
C)  improvements in management. 
D)  all of the above

Question 5

An example of a cost of economic growth is

Accepted Answer

A)  longer life spans. 
B)  political instability. 
C)  alienation. 
D)  increases in illiteracy. 
A)  longer life spans. 
B)  political instability. 
C)  alienation. 
D)  increases in illiteracy.

Question 6

Labor productivity rises when

Accepted Answer

A)  average worker output falls. 
B)  business investment falls. 
C)  average worker output rises. 
D)  nominal wages fall. 
A)  average worker output falls. 
B)  business investment falls. 
C)  average worker output rises. 
D)  nominal wages fall.

Question 7

Economic growth is defined as

Accepted Answer

A)  an increase in the satisfaction of all people within a country. 
B)  an increase in per capita real GDP measured by its rate of change per year. 
C)  any increase in per capita nominal GDP measured by its rate of change per year. 
D)  an increase in the supply of money measured by its rate of change per year. 
A)  an increase in the satisfaction of all people within a country. 
B)  an increase in per capita real GDP measured by its rate of change per year. 
C)  any increase in per capita nominal GDP measured by its rate of change per year. 
D)  an increase in the supply of money measured by its rate of change per year.

Question 8

Labor productivity is computed as

Accepted Answer

A)  per capita real GDP divided by the number of workers. 
B)  real GDP divided by population. 
C)  per capita real GDP divided by population. 
D)  real GDP divided by the number of workers. 
A)  per capita real GDP divided by the number of workers. 
B)  real GDP divided by population. 
C)  per capita real GDP divided by population. 
D)  real GDP divided by the number of workers.

Question 9

Labor productivity is defined as

Accepted Answer

A)  the amount of output per worker. 
B)  the amount of input per worker. 
C)  the amount of workers per unit of input. 
D)  the increase in output per unit of machinery. 
A)  the amount of output per worker. 
B)  the amount of input per worker. 
C)  the amount of workers per unit of input. 
D)  the increase in output per unit of machinery.

Question 10

An important foundation of the new growth theory is that

Accepted Answer

A)  we will get more technological advances the more the government is involved. 
B)  we will get more technological advances when the rewards for producing them are greater. 
C)  the growth rate of the capital stock is more important than the growth rate of new knowledge in generating economic growth. 
D)  improvements in labor productivity are poor measures of technological growth. 
A)  we will get more technological advances the more the government is involved. 
B)  we will get more technological advances when the rewards for producing them are greater. 
C)  the growth rate of the capital stock is more important than the growth rate of new knowledge in generating economic growth. 
D)  improvements in labor productivity are poor measures of technological growth.

Question 11

The reason that patents are granted is

Accepted Answer

A)  to encourage a high rate of consumption. 
B)  to protect new techniques developed through research and development. 
C)  to encourage free trade. 
D)  to increase the labor force. 
A)  to encourage a high rate of consumption. 
B)  to protect new techniques developed through research and development. 
C)  to encourage free trade. 
D)  to increase the labor force.

Question 12

By dividing the value of total domestic output (real Gross Domestic Product (GDP)) by the number of workers, economists derive

Accepted Answer

A)  the net domestic product. 
B)  labor productivity. 
C)  the size of the labor force. 
D)  the rate of capital accumulation. 
A)  the net domestic product. 
B)  labor productivity. 
C)  the size of the labor force. 
D)  the rate of capital accumulation.

Question 13

In the United States, a patent lasts

Accepted Answer

A)  7 years. 
B)  14 years. 
C)  20 years. 
D)  forever. 
A)  7 years. 
B)  14 years. 
C)  20 years. 
D)  forever.

Question 14

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of

Accepted Answer

A)  the money supply. 
B)  compounding. 
C)  regression towards the mean. 
D)  averaging. 
A)  the money supply. 
B)  compounding. 
C)  regression towards the mean. 
D)  averaging.

Question 15

The concept of an open economy means that

Accepted Answer

A)  imports should be limited while exports should be expanded. 
B)  a nation's borders are open to flows of imports and exports. 
C)  exports should be controlled but imports should be allowed in without restriction. 
D)  imports and exports should be restricted. 
A)  imports should be limited while exports should be expanded. 
B)  a nation's borders are open to flows of imports and exports. 
C)  exports should be controlled but imports should be allowed in without restriction. 
D)  imports and exports should be restricted.

Question 16

Which of the following factors will NOT increase economic development?

Accepted Answer

A)  Increasing the amount of education in the population. 
B)  Establishing a system of property rights. 
C)  Creative destruction where old jobs, companies and industries are destroyed. 
D)  Increasing the amount of protectionism. 
A)  Increasing the amount of education in the population. 
B)  Establishing a system of property rights. 
C)  Creative destruction where old jobs, companies and industries are destroyed. 
D)  Increasing the amount of protectionism.

Question 17

Which of the following statements is NOT true about using per capita real GDP to measure a nation's economic growth?

Accepted Answer

A)  The definition does not indicate how the increase in growth is being disturbed among the nation's population. 
B)  The definition assumes that some of the increase in productivity goes to the poor. 
C)  The definition has understated actual economic growth because it does not take into consideration changes in leisure. 
D)  The definition is not perfect for measuring increases in a nation's productive capacity. 
A)  The definition does not indicate how the increase in growth is being disturbed among the nation's population. 
B)  The definition assumes that some of the increase in productivity goes to the poor. 
C)  The definition has understated actual economic growth because it does not take into consideration changes in leisure. 
D)  The definition is not perfect for measuring increases in a nation's productive capacity.

Question 18

New growth theorists believe that

Accepted Answer

A)  wealth creation comes from innovation. 
B)  wealth creation comes from saving. 
C)  wealth creation is due to capital spending and not research and development spending since much research and development spending fails to produce an invention. 
D)  inventions spread very rapidly, thereby curtailing the need for more innovations. 
A)  wealth creation comes from innovation. 
B)  wealth creation comes from saving. 
C)  wealth creation is due to capital spending and not research and development spending since much research and development spending fails to produce an invention. 
D)  inventions spread very rapidly, thereby curtailing the need for more innovations.

Question 19

-Refer to the above table. If an economy's current per capita real GDP is $3,000, and if its economy grows at an constant annual rate of 5 percent for 50 years, what will be its per capita real GDP at the end of that period?

Accepted Answer

A)  $13,140 
B)  $21,330 
C)  $34,500 
D)  $55,200 
A)  $13,140 
B)  $21,330 
C)  $34,500 
D)  $55,200

Question 20

According to many economists, as nations become wealthier, what happens to family sizes?

Accepted Answer

A)  They increase. 
B)  They decline. 
C)  There is no effect. 
D)  They increase, but later in life. 
A)  They increase. 
B)  They decline. 
C)  There is no effect. 
D)  They increase, but later in life.

Exam 9: Global Economic Growth and Development

What does the fact that U.S. students are falling behind other nations' students in math and science have to do with economic growth?

Economists have found that as a nation's per capita real Gross Domestic Product (GDP) increases,

The benefits from research and development activities

Labor productivity can be increased with

An example of a cost of economic growth is

Labor productivity rises when

Economic growth is defined as

Labor productivity is computed as

Labor productivity is defined as

An important foundation of the new growth theory is that

The reason that patents are granted is

By dividing the value of total domestic output (real Gross Domestic Product (GDP)) by the number of workers, economists derive

In the United States, a patent lasts

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of

The concept of an open economy means that

Which of the following factors will NOT increase economic development?

Which of the following statements is NOT true about using per capita real GDP to measure a nation's economic growth?

New growth theorists believe that

-Refer to the above table. If an economy's current per capita real GDP is $3,000, and if its economy grows at an constant annual rate of 5 percent for 50 years, what will be its per capita real GDP at the end of that period?

According to many economists, as nations become wealthier, what happens to family sizes?

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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