Question 1

By offering less generous unemployment insurance programs, the United States can expect

Accepted Answer

A)  citizens to pay more in taxes than citizens pay in Europe. 
B)  workers to be slow in gaining new skills in response to fluctuations in the labor market. 
C)  shorter periods of unemployment for their workers. 
D)  longer periods of unemployment for their workers. 
A)  citizens to pay more in taxes than citizens pay in Europe. 
B)  workers to be slow in gaining new skills in response to fluctuations in the labor market. 
C)  shorter periods of unemployment for their workers. 
D)  longer periods of unemployment for their workers.

Question 2

Which of the following accurately describes the impact of the rule of law on a country's economic growth rate?

Accepted Answer

A)  Countries with a strong rule of law have faster economic growth. 
B)  Countries with a weak rule of law have faster economic growth. 
C)  Countries that enforce property rights through lawsuits have slower economic growth. 
D)  Countries where favoritism and bribery are common have stronger rates of growth. 
A)  Countries with a strong rule of law have faster economic growth. 
B)  Countries with a weak rule of law have faster economic growth. 
C)  Countries that enforce property rights through lawsuits have slower economic growth. 
D)  Countries where favoritism and bribery are common have stronger rates of growth.

Question 3

Which of the following government policies would most likely result in an increase in economic growth?

Accepted Answer

A)  a decrease in the life of a patent from 20 years to 15 years 
B)  a decrease in the interest rate at which the government provides student loans 
C)  a decrease in government spending on grants issued through the National Institutes of Health 
D)  decreased copyright protection on music and movies 
A)  a decrease in the life of a patent from 20 years to 15 years 
B)  a decrease in the interest rate at which the government provides student loans 
C)  a decrease in government spending on grants issued through the National Institutes of Health 
D)  decreased copyright protection on music and movies

Question 4

Which of the following is a true statement regarding the economic growth model's predictions and how it actually affects the real world?

Accepted Answer

A)  The growth model predicts that poor countries should catch up with rich countries, but developing countries are not catching up to lower-income industrialized countries as a group. 
B)  The growth model predicts that poor countries will never catch up with rich countries, but lower-income industrialized countries are catching up to higher-income industrialized countries as a group. 
C)  The growth model predicts that poor countries will catch up with rich countries, but lower-income industrialized countries are not catching up to higher-income industrialized countries as a group. 
D)  The growth model predicts that poor countries will catch up with rich countries, and this is what we observe across all developmental categories of countries. 
A)  The growth model predicts that poor countries should catch up with rich countries, but developing countries are not catching up to lower-income industrialized countries as a group. 
B)  The growth model predicts that poor countries will never catch up with rich countries, but lower-income industrialized countries are catching up to higher-income industrialized countries as a group. 
C)  The growth model predicts that poor countries will catch up with rich countries, but lower-income industrialized countries are not catching up to higher-income industrialized countries as a group. 
D)  The growth model predicts that poor countries will catch up with rich countries, and this is what we observe across all developmental categories of countries.

Question 5

To what do economists attribute the rapid growth of labor productivity in the United States relative to other countries?

Accepted Answer

A)  the flexibility of U.S. labor markets and the efficiency of the U.S. financial system 
B)  the strict government rules in the United States that regulate a firm's ability to hire and fire workers 
C)  the low rate of job mobility in the United States 
D)  the high level of unemployment benefits the United States pays relative to other countries like Canada 
A)  the flexibility of U.S. labor markets and the efficiency of the U.S. financial system 
B)  the strict government rules in the United States that regulate a firm's ability to hire and fire workers 
C)  the low rate of job mobility in the United States 
D)  the high level of unemployment benefits the United States pays relative to other countries like Canada

Question 6

A small economy increased its capital per hour worked (K/L) from $40,000 to $50,000. As a result, real GDP per worker (Y/L) grew from $20,000 to $25,000. If the economy increases its capital per hour worked by another $10,000 to $60,000, but there is no change in technology, by how much more and in what direction will output per worker change?

Accepted Answer

A)  Output per worker will increase by exactly $5,000. 
B)  Output per worker will increase by more than $5,000. 
C)  Output per worker will increase by less than $5,000. 
D)  Output per worker will fall by more than $5,000. 
A)  Output per worker will increase by exactly $5,000. 
B)  Output per worker will increase by more than $5,000. 
C)  Output per worker will increase by less than $5,000. 
D)  Output per worker will fall by more than $5,000.

Question 7

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 8

How do government policies that enforce property rights affect economic growth?

Accepted Answer

Without enforceable property rights, ent

Question 9

Would you expect to see higher or lower growth rates for countries that start out with a relatively low level of real GDP per capita? Explain using the concept of "catch-up" and support your answer with a graph.

Accepted Answer

The economic growth model predicts that

Question 10

GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The average annual growth rate of GDP was

Accepted Answer

A)  4%. 
B)  7%. 
C)  10%. 
D)  40%. 
A)  4%. 
B)  7%. 
C)  10%. 
D)  40%.

Question 11

Table 22-1
  
-Refer to Table 22-1. Based on the table above, which country has a higher standard of living and why?

Accepted Answer

A)  Sweden has a higher standard of living because their GDP is higher. 
B)  Ireland has a higher standard of living because their GDP per capita is higher. 
C)  Sweden has a higher standard of living because their GDP per capita is higher. 
D)  Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden. 
A)  Sweden has a higher standard of living because their GDP is higher. 
B)  Ireland has a higher standard of living because their GDP per capita is higher. 
C)  Sweden has a higher standard of living because their GDP per capita is higher. 
D)  Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden.

Question 12

The productivity slowdown experience in the United States from the mid-1970s to the mid-1990s was actually a global phenomenon.

Accepted Answer

A) True 
 B)False

Question 13

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 14

According to the text, there are three ways the government can help increase the accumulation of knowledge capital. What are they?

Accepted Answer

A)  protecting intellectual property rights, subsidizing research and development, and subsidizing education 
B)  increasing taxes on firms, eliminating patents, and increasing the minimum wage 
C)  encouraging the use of trade secrets, expanding student loan programs, and increasing the minimum wage 
D)  reducing taxes on capital, increasing Social Security payments, and lowering the exchange rate 
A)  protecting intellectual property rights, subsidizing research and development, and subsidizing education 
B)  increasing taxes on firms, eliminating patents, and increasing the minimum wage 
C)  encouraging the use of trade secrets, expanding student loan programs, and increasing the minimum wage 
D)  reducing taxes on capital, increasing Social Security payments, and lowering the exchange rate

Question 15

If property rights are not enforced in a country,

Accepted Answer

A)  the market system will still work smoothly. 
B)  entrepreneurs are unlikely to risk their own funds investing in such an economy. 
C)  that country's growth rate will not be affected. 
D)  that country will grow more rapidly because of the reduction of law suits. 
A)  the market system will still work smoothly. 
B)  entrepreneurs are unlikely to risk their own funds investing in such an economy. 
C)  that country's growth rate will not be affected. 
D)  that country will grow more rapidly because of the reduction of law suits.

Question 16

The United States

Accepted Answer

A)  currently is one of the most corrupt countries. 
B)  has never had a significant problem with corruption. 
C)  had a significant problem with corruption in the 1930s. 
D)  currently ranks among the least corrupt countries. 
A)  currently is one of the most corrupt countries. 
B)  has never had a significant problem with corruption. 
C)  had a significant problem with corruption in the 1930s. 
D)  currently ranks among the least corrupt countries.

Question 17

Some factors currently exist that inhibit the growth rate of the Chinese economy. One reason that General Motors has been unwilling to bring its latest technology for building electric and hybrid cars to China is

Accepted Answer

A)  the introduction of free-market reforms. 
B)  the introduction of the relatively new resource of entrepreneurship. 
C)  the lack of laws that predictably enforce property rights. 
D)  the total lack of governmental intervention in the market place. 
A)  the introduction of free-market reforms. 
B)  the introduction of the relatively new resource of entrepreneurship. 
C)  the lack of laws that predictably enforce property rights. 
D)  the total lack of governmental intervention in the market place.

Question 18

In a small European country, it is estimated that changing the level of capital from $8 million to $10 million will increase real GDP from $2 million to $3 million. What level of GDP would you expect the economy to be able to reach if spending on capital continued to rise to $12 million, assuming no technological change and no change in the hours of work?

Accepted Answer

A)  GDP would increase further, but by less than $1 million. 
B)  GDP would increase further by exactly $1 million. 
C)  GDP would increase further by more than $1 million 
D)  GDP would increase further by exactly $4 million. 
A)  GDP would increase further, but by less than $1 million. 
B)  GDP would increase further by exactly $1 million. 
C)  GDP would increase further by more than $1 million 
D)  GDP would increase further by exactly $4 million.

Question 19

How does government support of health and education programs foster economic growth?

Accepted Answer

As the health of the people in a nation

Question 20

According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law. The consequence of a weak rule of law is

Accepted Answer

A)  difficulty in attracting investment and low economic growth. 
B)  a decrease in cash transactions and increased efficiency. 
C)  more risk taking on the part of entrepreneurs and greater economic investment. 
D)  strong property rights enforcement leading to greater investment. 
A)  difficulty in attracting investment and low economic growth. 
B)  a decrease in cash transactions and increased efficiency. 
C)  more risk taking on the part of entrepreneurs and greater economic investment. 
D)  strong property rights enforcement leading to greater investment.

Exam 22: Long-Run Economic Growth: Sources and Policies

By offering less generous unemployment insurance programs, the United States can expect

Which of the following accurately describes the impact of the rule of law on a country's economic growth rate?

Which of the following government policies would most likely result in an increase in economic growth?

Which of the following is a true statement regarding the economic growth model's predictions and how it actually affects the real world?

To what do economists attribute the rapid growth of labor productivity in the United States relative to other countries?

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

How do government policies that enforce property rights affect economic growth?

Would you expect to see higher or lower growth rates for countries that start out with a relatively low level of real GDP per capita? Explain using the concept of "catch-up" and support your answer with a graph.

GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The average annual growth rate of GDP was

Table 22-1 -Refer to Table 22-1. Based on the table above, which country has a higher standard of living and why?

The productivity slowdown experience in the United States from the mid-1970s to the mid-1990s was actually a global phenomenon.

According to new growth theory,

According to the text, there are three ways the government can help increase the accumulation of knowledge capital. What are they?

If property rights are not enforced in a country,

The United States

Some factors currently exist that inhibit the growth rate of the Chinese economy. One reason that General Motors has been unwilling to bring its latest technology for building electric and hybrid cars to China is

How does government support of health and education programs foster economic growth?

According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law. The consequence of a weak rule of law is

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

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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

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