Exam 17: Economic Growth: Resources, technology, ideas, and Institutions

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 might illustrate a __________ growth theory argument that technological change __________.

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 ______________________.

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

According to economist Benjamin Friedman,sustained economic growth can make people more willing to work toward improving the environment and reducing poverty.

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 __________________.

The Real GDP of country X doubled in 20 years.It follows that the annual growth rate in country X during this time period was

Exhibit 17-2 -Refer to Exhibit 17-2.Assume that the starting point is always point 1.Which of the production function graphs shown, (a)or (b),represents an increase in the quantity of labor,and which represents an increase in the technology coefficient,respectively?

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

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

A useful rule of thumb called the "Rule of 70" states that if something grows at a constant rate of Z percent per year,it doubles in size approximately every __________ years.

Using the labor market,the production function Real GDP = T (L,K),and the LRAS curve,describe the process by which a decrease in income taxes impacts economic growth.

The range of laws,rules,and regulations that define the allowed forms of use and transfer of resources is called the __________ structure of the economy.

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

Using the production function Real GDP = T (L,K),define the term production function and describe what each of the variables (T,L,and K)represents.When graphed with Real GDP on the vertical axis and labor on the horizontal axis,which variable(s)can shift the production function and which variable(s)can cause a movement along the production function?

An economy growing at a steady rate of 2.3 percent per year doubles in size approximately every __________ years.

Production functions used in economic growth theory are always limited to two inputs: labor and capital.

New growth theory holds that technology is __________ and that the more resources that go to develop technology,the __________ technology that is produced.

Meta-ideas involve

When income taxes fall,the supply of labor curve shifts rightward,ultimately leading to the LRAS curve shifting rightward (economic growth).

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.