Question 1

Technological change allows the economy to produce more output with the same amount of capital and labor.

Accepted Answer

A) True 
 B)False

Question 2

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. 
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.

Question 3

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

Question 4

You have been hired as an economic advisor for a developing country.You have been asked to focus on education as a means for the country's development.Explain to the prime minister how improving education and training can contribute to his country's economic growth,and why it is important for the government to take a proactive role in promoting education.

Accepted Answer

Education raises the level of human capi

Question 5

Increasing the growth rate of GDP per capita and sustaining this growth rate in an economy can

Accepted Answer

A) increase infant mortality. 
B) increase standards of living. 
C) increase the level of poverty. 
D) lower life expectancy. 
A) increase infant mortality. 
B) increase standards of living. 
C) increase the level of poverty. 
D) lower life expectancy.

Question 6

Robert Lucas argues that there are ________ returns to human capital,and these productivity increases are not completely captured by individuals as they decide how much education to purchase.As a result,the market produces ________ education and training.

Accepted Answer

A) increasing; too much 
B) decreasing; too much 
C) increasing; too little 
D) decreasing; too little 
A) increasing; too much 
B) decreasing; too much 
C) increasing; too little 
D) decreasing; too little

Question 7

What is human capital?

Accepted Answer

A) labor productivity 
B) buildings,equipment,and machinery owned by individuals rather than firms 
C) buildings,equipment,and machinery owned by firms 
D) the accumulated knowledge and skills that workers acquire from education,training,and their life experiences 
A) labor productivity 
B) buildings,equipment,and machinery owned by individuals rather than firms 
C) buildings,equipment,and machinery owned by firms 
D) the accumulated knowledge and skills that workers acquire from education,training,and their life experiences

Question 8

According to Joseph Schumpeter,which of the factors of production is central to economic growth?

Accepted Answer

A) land 
B) labor 
C) natural resources 
D) the entrepreneur 
A) land 
B) labor 
C) natural resources 
D) the entrepreneur

Question 9

Does globalization promote economic growth,and how does globalization affect the welfare of a given country's citizens?

Accepted Answer

More globalized countries generally expe

Question 10

Figure 11-1  
-Refer to Figure 11-1.Within a country,the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from

Accepted Answer

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

Question 11

Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita?

Accepted Answer

A) Many of these developing countries do not have a functioning court system that can enforce laws. 
B) Countries that are relatively poor are more likely to experience wars and revolutions. 
C) Countries that are relatively poor are likely to have a lower quality of health care. 
D) all of the above 
A) Many of these developing countries do not have a functioning court system that can enforce laws. 
B) Countries that are relatively poor are more likely to experience wars and revolutions. 
C) Countries that are relatively poor are likely to have a lower quality of health care. 
D) all of the above

Question 12

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) exports were becoming a less important part of the economy,and it was hard to measure decreases in output from exports. 
B) new environmental laws had passed and 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) of the high inflation levels of the 1970s. 
A) exports were becoming a less important part of the economy,and it was hard to measure decreases in output from exports. 
B) new environmental laws had passed and 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) of the high inflation levels of the 1970s.

Question 13

The purchase by an individual or firm of stock or bonds issued in another country is called

Accepted Answer

A) foreign exchange arbitrage. 
B) foreign direct investment. 
C) foreign portfolio investment. 
D) global stock exchange. 
A) foreign exchange arbitrage. 
B) foreign direct investment. 
C) foreign portfolio investment. 
D) global stock exchange.

Question 14

The purchase of stocks and bonds issued in another country is known as foreign direct investment.

Accepted Answer

A) True 
 B)False

Question 15

If real GDP in the United States is growing at an annual rate of 3.2% per capita and Bolivia's real GDP per capita is growing at a rate of 1.3%,which of the following would we expect in the long run? Assume real GDP per capita in the United States begins at a level above that of real GDP per capita in Bolivia.

Accepted Answer

A) Real GDP per capita in the United States will always be 1.9% higher than real GDP per capita in Bolivia. 
B) The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will shrink over time. 
C) The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will increase over time. 
D) The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will always be $1.9 trillion. 
A) Real GDP per capita in the United States will always be 1.9% higher than real GDP per capita in Bolivia. 
B) The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will shrink over time. 
C) The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will increase over time. 
D) The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will always be $1.9 trillion.

Question 16

How can economic growth help a country combat "brain drain"?

Accepted Answer

A) Economic growth increases the incomes of low-skilled workers relative to high-skilled workers. 
B) Economic growth opens up opportunities for better jobs and higher incomes for skilled workers. 
C) Economic growth allows highly skilled persons to earn more in a foreign country than in their native country. 
D) Economic growth combined with decreasing returns to human capital require workers to achieve steadily higher and higher levels of education over time. 
A) Economic growth increases the incomes of low-skilled workers relative to high-skilled workers. 
B) Economic growth opens up opportunities for better jobs and higher incomes for skilled workers. 
C) Economic growth allows highly skilled persons to earn more in a foreign country than in their native country. 
D) Economic growth combined with decreasing returns to human capital require workers to achieve steadily higher and higher levels of education over time.

Question 17

Some researchers have been unable to find evidence of increasing returns to human capital.

Accepted Answer

A) True 
 B)False

Question 18

When firms benefit from the results of research and development they didn't pay for,we say firms

Accepted Answer

A) are litigious. 
B) free ride. 
C) invest in knowledge capital. 
D) maintain a level playing field. 
A) are litigious. 
B) free ride. 
C) invest in knowledge capital. 
D) maintain a level playing field.

Question 19

Foreign direct investment declined worldwide during the recession of 2007-2009.The decline in foreign direct investment in developing countries can make it more difficult for these countries to break out of the vicious cycle of low economic growth and

Accepted Answer

A) overpopulation. 
B) low saving and investment. 
C) a low import/export ratio. 
D) low government spending. 
A) overpopulation. 
B) low saving and investment. 
C) a low import/export ratio. 
D) low government spending.

Question 20

If real GDP per capita in the United States is $8,000,what will real GDP per capita in the United States 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 
A) $8,520 
B) $9,280 
C) $9,365 
D) $10,560

Technological change allows the economy to produce more output with the same amount of capital and labor.

According to new growth theory

The 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

Increasing the growth rate of GDP per capita and sustaining this growth rate in an economy can

Robert Lucas argues that there are returns to human capital,and these productivity increases are not completely captured by individuals as they decide how much education to purchase.As a result,the market produces education and training.

What is human capital?

According to Joseph Schumpeter,which of the factors of production is central to economic growth?

Does globalization promote economic growth,and how does globalization affect the welfare of a given country's citizens?

Figure 11-1 -Refer to Figure 11-1.Within a country,the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from

Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita?

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

The purchase by an individual or firm of stock or bonds issued in another country is called

The purchase of stocks and bonds issued in another country is known as foreign direct investment.

How can economic growth help a country combat "brain drain"?

Some researchers have been unable to find evidence of increasing returns to human capital.

When firms benefit from the results of research and development they didn't pay for,we say firms

Foreign direct investment declined worldwide during the recession of 2007-2009.The decline in foreign direct investment in developing countries can make it more difficult for these countries to break out of the vicious cycle of low economic growth and

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

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 11: Long-Run Economic Growth: Sources and Policies

Technological change allows the economy to produce more output with the same amount of capital and labor.

According to new growth theory

The 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

Increasing the growth rate of GDP per capita and sustaining this growth rate in an economy can

Robert Lucas argues that there are ________ returns to human capital,and these productivity increases are not completely captured by individuals as they decide how much education to purchase.As a result,the market produces ________ education and training.

What is human capital?

According to Joseph Schumpeter,which of the factors of production is central to economic growth?

Does globalization promote economic growth,and how does globalization affect the welfare of a given country's citizens?

Figure 11-1 -Refer to Figure 11-1.Within a country,the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from

Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita?

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

The purchase by an individual or firm of stock or bonds issued in another country is called

The purchase of stocks and bonds issued in another country is known as foreign direct investment.

How can economic growth help a country combat "brain drain"?

Some researchers have been unable to find evidence of increasing returns to human capital.

When firms benefit from the results of research and development they didn't pay for,we say firms

Foreign direct investment declined worldwide during the recession of 2007-2009.The decline in foreign direct investment in developing countries can make it more difficult for these countries to break out of the vicious cycle of low economic growth and

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

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Robert Lucas argues that there are returns to human capital,and these productivity increases are not completely captured by individuals as they decide how much education to purchase.As a result,the market produces education and training.