Question 1

What does the fact that U.S. students are falling behind other nations' students in math and science have to do with economic growth?

Accepted Answer

A)  Nothing. People in the United States just don't like to fall behind in anything as a matter of pride. 
B)  If U.S. students don't excel in math and science, the nation will see fewer plays written and fewer pieces of music composed. 
C)  Better technology, a key to economic growth, depends largely on math and science skills. 
D)  Math and science skills don't foster economic growth, but it takes math skills to calculate a nation's rate of economic growth. 
A)  Nothing. People in the United States just don't like to fall behind in anything as a matter of pride. 
B)  If U.S. students don't excel in math and science, the nation will see fewer plays written and fewer pieces of music composed. 
C)  Better technology, a key to economic growth, depends largely on math and science skills. 
D)  Math and science skills don't foster economic growth, but it takes math skills to calculate a nation's rate of economic growth.

Question 2

Paul Romer's theory on the importance of knowledge differs from traditional theory in that Romer

Accepted Answer

A)  argues that an investment-knowledge cycle allows a once-and-for-all increase in investment to permanently raise a country's growth rate, while traditional theory argues that a once-and-for-all increase in investment leads to a higher standard of living but not to a higher growth rate. 
B)  argues, that investment is not important in promoting growth, but that the acquisition of knowledge is the sole determinant of economic growth. 
C)  argues, that an investment-knowledge cycle exists which requires that investment rates keep increasing or else growth rates will fall, while traditional theory argues that growth rates will not fall, although they will not increase either. 
D)  emphasizes investment rates while traditional theory emphasizes the importance of knowledge as a factor of production. 
A)  argues that an investment-knowledge cycle allows a once-and-for-all increase in investment to permanently raise a country's growth rate, while traditional theory argues that a once-and-for-all increase in investment leads to a higher standard of living but not to a higher growth rate. 
B)  argues, that investment is not important in promoting growth, but that the acquisition of knowledge is the sole determinant of economic growth. 
C)  argues, that an investment-knowledge cycle exists which requires that investment rates keep increasing or else growth rates will fall, while traditional theory argues that growth rates will not fall, although they will not increase either. 
D)  emphasizes investment rates while traditional theory emphasizes the importance of knowledge as a factor of production.

Question 3

Giving up consumption today for consumption tomorrow accelerates economic growth by

Accepted Answer

A)  having the economy produce no consumer goods. 
B)  increasing saving out of disposable income. 
C)  increasing the expected rate of inflation. 
D)  rapid expansion of the money supply. 
A)  having the economy produce no consumer goods. 
B)  increasing saving out of disposable income. 
C)  increasing the expected rate of inflation. 
D)  rapid expansion of the money supply.

Question 4

-Refer to the above table. How long would it take for a country to triple its GDP if the GDP grew at a 20 percent rate?

Accepted Answer

A)  2 years 
B)  4 years 
C)  6 years 
D)  10 years 
A)  2 years 
B)  4 years 
C)  6 years 
D)  10 years

Question 5

The study of factors that contribute to the economic development of a country is

Accepted Answer

A)  population growth economics. 
B)  development economics. 
C)  the theory of technological advancements. 
D)  the new technology theory. 
A)  population growth economics. 
B)  development economics. 
C)  the theory of technological advancements. 
D)  the new technology theory.

Question 6

Which of the following is NOT a stage of development that modern rich nations have gone through?

Accepted Answer

A)  service stage 
B)  agricultural stage 
C)  manufacturing stage 
D)  inflation stage 
A)  service stage 
B)  agricultural stage 
C)  manufacturing stage 
D)  inflation stage

Question 7

What can be expected to happen in a country that enacts trade barriers?

Accepted Answer

A)  The rate of immigration will increase. 
B)  The rate of technological innovation will increase. 
C)  The rate of economic growth will decrease. 
D)  The rate of population growth will decrease. 
A)  The rate of immigration will increase. 
B)  The rate of technological innovation will increase. 
C)  The rate of economic growth will decrease. 
D)  The rate of population growth will decrease.

Question 8

Which of the following is an important factor affecting economic growth?

Accepted Answer

A)  the rate of saving 
B)  exchange rates 
C)  the rate of interest 
D)  the level of prices 
A)  the rate of saving 
B)  exchange rates 
C)  the rate of interest 
D)  the level of prices

Question 9

The faster economic growth is, the

Accepted Answer

A)  steeper the slope of the production possibilities curve. 
B)  farther the production possibilities curve shifts out. 
C)  closer to the origin the production possibilities curve becomes. 
D)  more bowed the production possibilities curve becomes. 
A)  steeper the slope of the production possibilities curve. 
B)  farther the production possibilities curve shifts out. 
C)  closer to the origin the production possibilities curve becomes. 
D)  more bowed the production possibilities curve becomes.

Question 10

Economic growth is measured by

Accepted Answer

A)  increases in GDP. 
B)  increases in per capita real GDP. 
C)  increases in the population. 
D)  increases in the value of the total output of society. 
A)  increases in GDP. 
B)  increases in per capita real GDP. 
C)  increases in the population. 
D)  increases in the value of the total output of society.

Question 11

One of the implications of new growth theory is that economic growth arises from

Accepted Answer

A)  more government spending, such as military spending. 
B)  investments in knowledge. 
C)  financial safety nets for the poor, such as Medicaid. 
D)  reductions in the birth rate. 
A)  more government spending, such as military spending. 
B)  investments in knowledge. 
C)  financial safety nets for the poor, such as Medicaid. 
D)  reductions in the birth rate.

Question 12

Costs associated with economic growth include all of the following EXCEPT

Accepted Answer

A)  environmental pollution. 
B)  psychological problems such as depression. 
C)  urban congestion. 
D)  improved health care. 
A)  environmental pollution. 
B)  psychological problems such as depression. 
C)  urban congestion. 
D)  improved health care.

Question 13

Suppose per capita real GDP grows by 2% per year. Based on the Rule of 70, approximately how many years will it take for the level of per capita real GDP to double (i.e., increase by 100%)?

Accepted Answer

A)  3.5 years 
B)  20 years 
C)  35 years 
D)  70 years 
A)  3.5 years 
B)  20 years 
C)  35 years 
D)  70 years

Question 14

The concept of an open economy means that

Accepted Answer

A)  imports should be limited while exports should be expanded. 
B)  a nation's borders are open to flows of imports and exports. 
C)  exports should be controlled but imports should be allowed in without restriction. 
D)  imports and exports should be restricted. 
A)  imports should be limited while exports should be expanded. 
B)  a nation's borders are open to flows of imports and exports. 
C)  exports should be controlled but imports should be allowed in without restriction. 
D)  imports and exports should be restricted.

Question 15

Which one of the following is TRUE?

Accepted Answer

A)  Investments in secondary education produce gains in the form of economic growth. 
B)  Secondary education does not boost economic growth in developing nations, because so much of the workforce remains in agriculture. 
C)  New growth theory suggests that there is no connection between the level of education in a country and its rate of economic growth. 
D)  New growth theory suggests that education benefits only those people who receive it, and not the population as a whole. 
A)  Investments in secondary education produce gains in the form of economic growth. 
B)  Secondary education does not boost economic growth in developing nations, because so much of the workforce remains in agriculture. 
C)  New growth theory suggests that there is no connection between the level of education in a country and its rate of economic growth. 
D)  New growth theory suggests that education benefits only those people who receive it, and not the population as a whole.

Question 16

Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?

Accepted Answer

A)  because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain 
B)  because the annual growth rate is compounded over time 
C)  because the slower-growing countries save too much 
D)  because the slower-growing countries don't export enough 
A)  because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain 
B)  because the annual growth rate is compounded over time 
C)  because the slower-growing countries save too much 
D)  because the slower-growing countries don't export enough

Question 17

Economic growth is usually defined as

Accepted Answer

A)  the rate of increase in output divided by the increase in labor. 
B)  the increase in output over time, as measured by real per capita Gross Domestic Product (GDP). 
C)  the increase in input availability. 
D)  the reduction in the real cost of necessities. 
A)  the rate of increase in output divided by the increase in labor. 
B)  the increase in output over time, as measured by real per capita Gross Domestic Product (GDP). 
C)  the increase in input availability. 
D)  the reduction in the real cost of necessities.

Question 18

It is likely that a small increase in a country's saving rate will have

Accepted Answer

A)  a large effect on per capita real GDP many years later because the increase in saving leads to a slightly higher rate of economic growth which has large effects over time. 
B)  a large effect on per capita real GDP immediately because the increase in saving leads to a much larger rate of economic growth. 
C)  a small effect on per capita real GDP many years later because the increase in saving will have very little effect on the growth rate. 
D)  a small effect on per capita real GDP many years later because the increase in saving will be offset in later years by a decrease in the saving rate. 
A)  a large effect on per capita real GDP many years later because the increase in saving leads to a slightly higher rate of economic growth which has large effects over time. 
B)  a large effect on per capita real GDP immediately because the increase in saving leads to a much larger rate of economic growth. 
C)  a small effect on per capita real GDP many years later because the increase in saving will have very little effect on the growth rate. 
D)  a small effect on per capita real GDP many years later because the increase in saving will be offset in later years by a decrease in the saving rate.

Question 19

The term "creative destruction" refers to

Accepted Answer

A)  the process by which immigrants build a new life in their country of destination. 
B)  the process by which new jobs are created and old ones destroyed. 
C)  the effects of population growth on the environment. 
D)  All of the above are correct. 
A)  the process by which immigrants build a new life in their country of destination. 
B)  the process by which new jobs are created and old ones destroyed. 
C)  the effects of population growth on the environment. 
D)  All of the above are correct.

Question 20

The rate of economic growth will be faster if

Accepted Answer

A)  the rate of growth of the money supply is higher. 
B)  the rate of saving is higher. 
C)  the rate of growth of the population is higher. 
D)  consumption spending is greater. 
A)  the rate of growth of the money supply is higher. 
B)  the rate of saving is higher. 
C)  the rate of growth of the population is higher. 
D)  consumption spending is greater.

Exam 9: Global Economic Growth and Development

What does the fact that U.S. students are falling behind other nations' students in math and science have to do with economic growth?

Paul Romer's theory on the importance of knowledge differs from traditional theory in that Romer

Giving up consumption today for consumption tomorrow accelerates economic growth by

-Refer to the above table. How long would it take for a country to triple its GDP if the GDP grew at a 20 percent rate?

The study of factors that contribute to the economic development of a country is

Which of the following is NOT a stage of development that modern rich nations have gone through?

What can be expected to happen in a country that enacts trade barriers?

Which of the following is an important factor affecting economic growth?

The faster economic growth is, the

Economic growth is measured by

One of the implications of new growth theory is that economic growth arises from

Costs associated with economic growth include all of the following EXCEPT

Suppose per capita real GDP grows by 2% per year. Based on the Rule of 70, approximately how many years will it take for the level of per capita real GDP to double (i.e., increase by 100%)?

The concept of an open economy means that

Which one of the following is TRUE?

Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?

Economic growth is usually defined as

It is likely that a small increase in a country's saving rate will have

The term "creative destruction" refers to

The rate of economic growth will be faster if

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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