Question 1

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of

Accepted Answer

A)  the money supply. 
B)  compounding. 
C)  regression towards the mean. 
D)  averaging. 
A)  the money supply. 
B)  compounding. 
C)  regression towards the mean. 
D)  averaging.

Question 2

The three stages of economic development include

Accepted Answer

A)  the agriculture stage, the manufacturing stage, and the service sector stage. 
B)  the computerized stage, the agriculture stage, and the manufacturing stage. 
C)  the feudal stage, the agriculture stage, and the totalitarian stage. 
D)  the agriculture stage, the manufacturing stage, and the socialist stage. 
A)  the agriculture stage, the manufacturing stage, and the service sector stage. 
B)  the computerized stage, the agriculture stage, and the manufacturing stage. 
C)  the feudal stage, the agriculture stage, and the totalitarian stage. 
D)  the agriculture stage, the manufacturing stage, and the socialist stage.

Question 3

According to economist Julian Simon

Accepted Answer

A)  legal immigrants have a favorable impact on the welfare of American citizens, but illegal immigrants have a negative impact. However, the positive effect of the legal immigrants is stronger than the negative impact of the illegal immigrants. 
B)  legal immigrants have a favorable impact on the welfare of American citizens, but illegal immigrants have a negative impact that almost exactly offsets the positive effect of the legal immigrants. 
C)  legal and illegal immigrants have a positive effect on the welfare of American citizens. 
D)  legal and illegal immigrants have a negative effect on the welfare of American citizens. 
A)  legal immigrants have a favorable impact on the welfare of American citizens, but illegal immigrants have a negative impact. However, the positive effect of the legal immigrants is stronger than the negative impact of the illegal immigrants. 
B)  legal immigrants have a favorable impact on the welfare of American citizens, but illegal immigrants have a negative impact that almost exactly offsets the positive effect of the legal immigrants. 
C)  legal and illegal immigrants have a positive effect on the welfare of American citizens. 
D)  legal and illegal immigrants have a negative effect on the welfare of American citizens.

Question 4

Secular stagnation refers to

Accepted Answer

A)  small changes in real GDP growth over the business cycle. 
B)  negligible economic growth over a lengthy period. 
C)  alternate periods of high inflation and periods of high unemployment. 
D)  slower population growth than employment growth. 
A)  small changes in real GDP growth over the business cycle. 
B)  negligible economic growth over a lengthy period. 
C)  alternate periods of high inflation and periods of high unemployment. 
D)  slower population growth than employment growth.

Question 5

Explain the relationship between economic growth and labor productivity.

Accepted Answer

Economic growth equals the sum of the gr

Question 6

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 7

Recently economists have added what factor as a major explanation of economic growth?

Accepted Answer

A)  the growth rate of labor 
B)  the growth rate of capital 
C)  the growth rate in labor and capital productivity 
D)  technology 
A)  the growth rate of labor 
B)  the growth rate of capital 
C)  the growth rate in labor and capital productivity 
D)  technology

Question 8

Which of the following has most likely occurred across advanced countries since 2000?

Accepted Answer

A)  high population growth 
B)  reduced international trade flows with other countries 
C)  a slowdown in productivity growth 
D)  drastic increases in government spending on human capital and physical capital 
A)  high population growth 
B)  reduced international trade flows with other countries 
C)  a slowdown in productivity growth 
D)  drastic increases in government spending on human capital and physical capital

Question 9

Which one of the following is TRUE?

Accepted Answer

A)  Saving deters economic growth, because it takes money out of circulation. 
B)  Saving enables economic growth by providing for investment in the capital stock. 
C)  International comparisons have found no relationship between the rate of saving and the level of per capita real GDP. 
D)  Economies with sophisticated credit markets, such as the United States, have no need for saving. 
A)  Saving deters economic growth, because it takes money out of circulation. 
B)  Saving enables economic growth by providing for investment in the capital stock. 
C)  International comparisons have found no relationship between the rate of saving and the level of per capita real GDP. 
D)  Economies with sophisticated credit markets, such as the United States, have no need for saving.

Question 10

The new growth theory examines the role of

Accepted Answer

A)  technology in economic growth. 
B)  natural resources in economic growth. 
C)  exports in economic growth. 
D)  government in economic growth. 
A)  technology in economic growth. 
B)  natural resources in economic growth. 
C)  exports in economic growth. 
D)  government in economic growth.

Question 11

Which one of the following is TRUE?

Accepted Answer

A)  For every country that experiences an increase in its growth rate, there must be another experiencing a decline. 
B)  Small changes in the annual growth rate amount to a measurable difference in the long-term growth trend of a country. 
C)  Restricting imports will enhance a country's economic growth. 
D)  A well-defined system of property rights benefits only the wealthy, and consequently it produces income inequality that will stifle economic growth. 
A)  For every country that experiences an increase in its growth rate, there must be another experiencing a decline. 
B)  Small changes in the annual growth rate amount to a measurable difference in the long-term growth trend of a country. 
C)  Restricting imports will enhance a country's economic growth. 
D)  A well-defined system of property rights benefits only the wealthy, and consequently it produces income inequality that will stifle economic growth.

Question 12

A reasonable estimate of the world's population that lives on less than $1.5 per day is

Accepted Answer

A)  20 percent. 
B)  40 percent. 
C)  50 percent. 
D)  80 percent. 
A)  20 percent. 
B)  40 percent. 
C)  50 percent. 
D)  80 percent.

Question 13

New growth theorists conclude that

Accepted Answer

A)  invention is more important than innovation in spurring economic growth. 
B)  the amount of technological innovation in an economy is independent of the rewards offered for innovation. 
C)  rates of global economic growth are limited by the amount of raw materials available. 
D)  economic growth can continue as long as we keep coming up with new ideas. 
A)  invention is more important than innovation in spurring economic growth. 
B)  the amount of technological innovation in an economy is independent of the rewards offered for innovation. 
C)  rates of global economic growth are limited by the amount of raw materials available. 
D)  economic growth can continue as long as we keep coming up with new ideas.

Question 14

Economic growth is defined as

Accepted Answer

A)  an increase in the satisfaction of all people within a country. 
B)  an increase in per capita real GDP measured by its rate of change per year. 
C)  any increase in per capita nominal GDP measured by its rate of change per year. 
D)  an increase in the supply of money measured by its rate of change per year. 
A)  an increase in the satisfaction of all people within a country. 
B)  an increase in per capita real GDP measured by its rate of change per year. 
C)  any increase in per capita nominal GDP measured by its rate of change per year. 
D)  an increase in the supply of money measured by its rate of change per year.

Question 15

The development of human capital

Accepted Answer

A)  is a form of investment. 
B)  does not appear to enhance economic growth. 
C)  enhances economic growth, but it does not improve the productivity of the labor force. 
D)  enhances economic growth, but the individuals acquiring the capital are not made better off themselves. 
A)  is a form of investment. 
B)  does not appear to enhance economic growth. 
C)  enhances economic growth, but it does not improve the productivity of the labor force. 
D)  enhances economic growth, but the individuals acquiring the capital are not made better off themselves.

Question 16

New growth theory is concerned with

Accepted Answer

A)  finding a good way to measure economic growth. 
B)  increasing the savings rate in the U.S. 
C)  understanding the forces that increase productivity. 
D)  understanding how compounding works. 
A)  finding a good way to measure economic growth. 
B)  increasing the savings rate in the U.S. 
C)  understanding the forces that increase productivity. 
D)  understanding how compounding works.

Question 17

Innovation is

Accepted Answer

A)  another term for something new. 
B)  the transformation of an invention into something that is useful to humans. 
C)  the term for invention when a firm obtains a patent. 
D)  the term for inventions in the electronic and computer industries. 
A)  another term for something new. 
B)  the transformation of an invention into something that is useful to humans. 
C)  the term for invention when a firm obtains a patent. 
D)  the term for inventions in the electronic and computer industries.

Question 18

Which of the following statements is NOT consistent with new growth theorists' beliefs?

Accepted Answer

A)  Innovation can lead to lower productivity costs. 
B)  Inventions are much more important than innovation. 
C)  Technology must be understood in terms of what drives it. 
D)  Rewards lead to technological advances. 
A)  Innovation can lead to lower productivity costs. 
B)  Inventions are much more important than innovation. 
C)  Technology must be understood in terms of what drives it. 
D)  Rewards lead to technological advances.

Question 19

Firms are more likely to devote resources to research and development when

Accepted Answer

A)  the country is in recession. 
B)  they expect to earn rewards from successful research and development. 
C)  it is easy to copy new techniques of other firms. 
D)  the country has been experiencing slow economic growth in order to spur economic growth. 
A)  the country is in recession. 
B)  they expect to earn rewards from successful research and development. 
C)  it is easy to copy new techniques of other firms. 
D)  the country has been experiencing slow economic growth in order to spur economic growth.

Question 20

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.

Exam 9: Global Economic Growth and Development

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of

The three stages of economic development include

According to economist Julian Simon

Secular stagnation refers to

Explain the relationship between economic growth and labor productivity.

Which of the following is a TRUE statement?

Recently economists have added what factor as a major explanation of economic growth?

Which of the following has most likely occurred across advanced countries since 2000?

Which one of the following is TRUE?

The new growth theory examines the role of

Which one of the following is TRUE?

A reasonable estimate of the world's population that lives on less than $1.5 per day is

New growth theorists conclude that

Economic growth is defined as

The development of human capital

New growth theory is concerned with

Innovation is

Which of the following statements is NOT consistent with new growth theorists' beliefs?

Firms are more likely to devote resources to research and development when

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

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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