Exam 17: Market Failure: Externalities, public Goods, and Asymmetric Information

Stan Laurel and Oliver Hardy acted separately in comedy shorts for the Hal Roach Studio for over a decade without greatly distinguishing themselves from hundreds of other screen comedians.Then in 1927,Roach writer-director Leo McCarey tried them out as a comedy team in one more routine short.Only then was the fantastic chemistry between "the fiddle and the bow" realized.The rest is immortality.This story relates to the "new growth theory" idea of

Suppose the population of a country falls,but its Real GDP remains constant.As a result,there is __________ economic growth.

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________,and a rise in capital __________________.

An increase in nominal GDP

Using the production function Real GDP = T (L,K),and the LRAS curve,describe the process by which a decline in taxes on the returns to capital impacts economic growth.

Absolute real economic growth is an increase in __________ from one period to the next.

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in capital________________________,and a rise in the technology coefficient __________________.

In 1961,President Kennedy committed the United States to a manned lunar mission by the end of the decade.Few thought it could actually be done,but of course it did,with five months to spare.This story illustrates the __________ growth theory argument that technological change __________.

Two Harvard economists,Robert Barro and Rachel McCleary,have researched the role that ________________ plays in economic growth.

Meta-ideas involve

If an economy's steady annual growth rate falls from 3.5 percent to 2.5 percent,this adds __________ years to the time it takes for the economy to double in size.

Country X experiences an increase in Real GDP and an increase in per-capita Real GDP.It follows that

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________which shifts the LRAS curve ____________ resulting in ______________________.

The economist credited with pioneering the "new growth theory" is

When interest rates fall in a given economy,it causes firms to borrow __________ funds used for purchasing capital goods.The result will be a(n)___________ in the level of capital employed in the economy.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis),this then causes ____________________ which makes the LRAS curve shift ____________ resulting in ______________________.

Compare a property rights system in which people are allowed to keep one-third of the monetary rewards of their labor with a system in which they keep two-thirds.An economist would expect that more people to decide to go to work under the __________ system and that many of those already working would decide to work more under the __________ system.

New growth theory puts emphasis on

Research by Harvard economists Barro and McCleary revealed that church attendance and economic growth have a(n)_______________ relationship.They also found that specific religious beliefs (in heaven,hell,and afterlife)and economic growth have a(n)___________ relationship.

In the production function,the variable H represents hunger.

When a country's GDP is higher one year than it was the previous year,absolute real economic growth has occurred.