Question 1

Trade between countries should be

Accepted Answer

A)  encouraged for developed countries but not for developing countries. 
B)  encouraged for both developed and developing countries. 
C)  discouraged for developed countries but encouraged for developing countries. 
D)  discouraged for both developed and developing countries. 
A)  encouraged for developed countries but not for developing countries. 
B)  encouraged for both developed and developing countries. 
C)  discouraged for developed countries but encouraged for developing countries. 
D)  discouraged for both developed and developing countries.

Question 2

A system of private property rights

Accepted Answer

A)  encourages economic growth by creating incentives to invest in capital and to be innovative. 
B)  discourages economic growth by discouraging the development of new ideas and ways of doing things. 
C)  reduces the efficiency of government, which reduces the growth rate of the economy over time. 
D)  encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain. 
A)  encourages economic growth by creating incentives to invest in capital and to be innovative. 
B)  discourages economic growth by discouraging the development of new ideas and ways of doing things. 
C)  reduces the efficiency of government, which reduces the growth rate of the economy over time. 
D)  encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain.

Question 3

Economic growth will

Accepted Answer

A)  shift the production possibilities curve inward. 
B)  shift the production possibilities curve outward. 
C)  shift along the production possibilities curve toward the X-axis. 
D)  be a movement from inside the productions possibilities curve to the curve itself. 
A)  shift the production possibilities curve inward. 
B)  shift the production possibilities curve outward. 
C)  shift along the production possibilities curve toward the X-axis. 
D)  be a movement from inside the productions possibilities curve to the curve itself.

Question 4

Would one expect economic growth to be higher or lower in a country that had poorly defined property rights? Why?

Accepted Answer

Lower, because entrepreneurs are more li

Question 5

Which of the following is NOT a benefit of economic growth?

Accepted Answer

A)  urban congestion 
B)  reduction in illiteracy 
C)  improved health 
D)  longer lives 
A)  urban congestion 
B)  reduction in illiteracy 
C)  improved health 
D)  longer lives

Question 6

According to the text, an open economy is likely to have all the following EXCEPT

Accepted Answer

A)  high economic growth. 
B)  relatively more trade barriers. 
C)  high technological progress. 
D)  relatively more rapid spread of ideas. 
A)  high economic growth. 
B)  relatively more trade barriers. 
C)  high technological progress. 
D)  relatively more rapid spread of ideas.

Question 7

Assume a country produces two types of goods: manufactured goods and agricultural goods. When this country experiences economic growth, we know that

Accepted Answer

A)  the production possibilities curve will shift outward. 
B)  the production possibilities curve will shift inward. 
C)  there will be a movement along the curve toward more manufactured goods. 
D)  there will be movement along the curve toward more agricultural goods. 
A)  the production possibilities curve will shift outward. 
B)  the production possibilities curve will shift inward. 
C)  there will be a movement along the curve toward more manufactured goods. 
D)  there will be movement along the curve toward more agricultural goods.

Question 8

Which of the following factors are considered under "new growth theory"?

Accepted Answer

A)  technology 
B)  research 
C)  innovation 
D)  All of the above are correct. 
A)  technology 
B)  research 
C)  innovation 
D)  All of the above are correct.

Question 9

All of the following are keys to economic development EXCEPT

Accepted Answer

A)  an educated workforce. 
B)  establishment of a system of property rights. 
C)  minimizing "creative destruction." 
D)  open economies. 
A)  an educated workforce. 
B)  establishment of a system of property rights. 
C)  minimizing "creative destruction." 
D)  open economies.

Question 10

Proponents of the new growth theory argue that which of the following is a determinant of economic growth?

Accepted Answer

A)  An effective system of patent protection 
B)  The quality and size of the nation's educational system 
C)  The proportion of income that goes into research and development 
D)  all of the above. 
A)  An effective system of patent protection 
B)  The quality and size of the nation's educational system 
C)  The proportion of income that goes into research and development 
D)  all of the above.

Question 11

What occurs in the second stage of economic development?

Accepted Answer

A)  Most of the labor force works in agriculture. 
B)  The service sector comes to the forefront. 
C)  The manufacturing sector declines in importance. 
D)  Manufacturing gains in importance and employs a large portion of the labor force. 
A)  Most of the labor force works in agriculture. 
B)  The service sector comes to the forefront. 
C)  The manufacturing sector declines in importance. 
D)  Manufacturing gains in importance and employs a large portion of the labor force.

Question 12

The protection of property rights leads to

Accepted Answer

A)  more poverty. 
B)  more illiteracy. 
C)  more capital formation. 
D)  unemployment. 
A)  more poverty. 
B)  more illiteracy. 
C)  more capital formation. 
D)  unemployment.

Question 13

Which of the following is a true statement?

Accepted Answer

A)  The most important sources of economic growth are the quantity and quality of the land and other natural resources a country controls. 
B)  The most important source of economic growth is the rate of population growth since a growing population stimulates demand for goods and services, and provides the labor to produce the goods and services. 
C)  The most important sources of economic growth are the new ideas generated by entrepreneurs in an economic system that permits them to capture the rewards of their entrepreneurial activities. 
D)  The most important source of economic growth is the extent to which the government directly enters into decisions where research and development activities should be directed and who should be involved in research and development activity. 
A)  The most important sources of economic growth are the quantity and quality of the land and other natural resources a country controls. 
B)  The most important source of economic growth is the rate of population growth since a growing population stimulates demand for goods and services, and provides the labor to produce the goods and services. 
C)  The most important sources of economic growth are the new ideas generated by entrepreneurs in an economic system that permits them to capture the rewards of their entrepreneurial activities. 
D)  The most important source of economic growth is the extent to which the government directly enters into decisions where research and development activities should be directed and who should be involved in research and development activity.

Question 14

An increase in a country's saving rate will tend to cause which of the following in the long run?

Accepted Answer

A)  a reduction in per capita real GDP 
B)  an increase in economic growth 
C)  an increase in the unemployment rate 
D)  an increase in the rate of inflation 
A)  a reduction in per capita real GDP 
B)  an increase in economic growth 
C)  an increase in the unemployment rate 
D)  an increase in the rate of inflation

Question 15

When a nation's real per capita Gross Domestic Product (GDP) increases, which of the following is true?

Accepted Answer

A)  Every individual in that nation shares in the economic gain. 
B)  A nation must channel most of the economic gains to its poorest citizens. 
C)  Low income people are guaranteed to lose; they never share in their nation's economic gains. 
D)  We don't know who has most benefited from economic growth unless we look at the distribution of income. 
A)  Every individual in that nation shares in the economic gain. 
B)  A nation must channel most of the economic gains to its poorest citizens. 
C)  Low income people are guaranteed to lose; they never share in their nation's economic gains. 
D)  We don't know who has most benefited from economic growth unless we look at the distribution of income.

Question 16

The more certain private property rights are,

Accepted Answer

A)  the less people need to invest in education or human capital development. 
B)  the less entrepreneurship there will be. 
C)  the more capital accumulation there will be. 
D)  the more an economy must grow to maintain a certain living standard. 
A)  the less people need to invest in education or human capital development. 
B)  the less entrepreneurship there will be. 
C)  the more capital accumulation there will be. 
D)  the more an economy must grow to maintain a certain living standard.

Question 17

Economic growth occurs when there is

Accepted Answer

A)  growth in technology that increases productivity. 
B)  growth in government spending. 
C)  lower taxes on individuals. 
D)  more environmental regulation. 
A)  growth in technology that increases productivity. 
B)  growth in government spending. 
C)  lower taxes on individuals. 
D)  more environmental regulation.

Question 18

According to new growth theory, as technology becomes more important to growth, so does

Accepted Answer

A)  human capital. 
B)  military spending. 
C)  increasing taxes. 
D)  increasing trade barriers. 
A)  human capital. 
B)  military spending. 
C)  increasing taxes. 
D)  increasing trade barriers.

Question 19

The real GDP in a nation has just increased from $2 billion to $2.1 billion.

Accepted Answer

A)  This country has experienced economic growth because there is a $.1 billion increase in real GDP. 
B)  We do not know if this country experienced economic growth since the increase in the population was not given. 
C)  We do not know if this country experienced economic growth since information on nominal GDP was not given. 
D)  This country did not experience economic growth since $.1 billion is not a large number. 
A)  This country has experienced economic growth because there is a $.1 billion increase in real GDP. 
B)  We do not know if this country experienced economic growth since the increase in the population was not given. 
C)  We do not know if this country experienced economic growth since information on nominal GDP was not given. 
D)  This country did not experience economic growth since $.1 billion is not a large number.

Question 20

One important factor that affects economic growth is

Accepted Answer

A)  gold reserves. 
B)  the rate of saving. 
C)  which political party is in power. 
D)  the number of workers in heavy industry. 
A)  gold reserves. 
B)  the rate of saving. 
C)  which political party is in power. 
D)  the number of workers in heavy industry.

Exam 9: Global Economic Growth and Development

Trade between countries should be

A system of private property rights

Economic growth will

Would one expect economic growth to be higher or lower in a country that had poorly defined property rights? Why?

Which of the following is NOT a benefit of economic growth?

According to the text, an open economy is likely to have all the following EXCEPT

Assume a country produces two types of goods: manufactured goods and agricultural goods. When this country experiences economic growth, we know that

Which of the following factors are considered under "new growth theory"?

All of the following are keys to economic development EXCEPT

Proponents of the new growth theory argue that which of the following is a determinant of economic growth?

What occurs in the second stage of economic development?

The protection of property rights leads to

Which of the following is a true statement?

An increase in a country's saving rate will tend to cause which of the following in the long run?

When a nation's real per capita Gross Domestic Product (GDP) increases, which of the following is true?

The more certain private property rights are,

Economic growth occurs when there is

According to new growth theory, as technology becomes more important to growth, so does

The real GDP in a nation has just increased from $2 billion to $2.1 billion.

One important factor that affects economic growth is

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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