Question 1

Which of the following is an example of foreign direct investment?

Accepted Answer

A) You purchase a plane ticket to China on American Airlines. 
B) American Airlines builds a hub in China. 
C) You buy a plane that was made in China. 
D) A stock broker from China sells you a Chinese government savings bond. 
A) You purchase a plane ticket to China on American Airlines. 
B) American Airlines builds a hub in China. 
C) You buy a plane that was made in China. 
D) A stock broker from China sells you a Chinese government savings bond.

Question 2

Which of the following is a normative statement about economic growth?

Accepted Answer

A) Economic growth is associated with higher labor productivity growth. 
B) Economic growth increases GDP per capita. 
C) Economic growth hurts developing countries. 
D) Foreign direct investment stimulates economic growth. 
A) Economic growth is associated with higher labor productivity growth. 
B) Economic growth increases GDP per capita. 
C) Economic growth hurts developing countries. 
D) Foreign direct investment stimulates economic 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

Figure 22-1  
-Refer to Figure 22-1.Many countries in Africa strongly discouraged and prohibited foreign direct investment in the 1950s and 1960s.By doing so,these countries were essentially preventing a moment from

Accepted Answer

A) A to B. 
B) B to C. 
C) B to A. 
D) D to C. 
A) A to B. 
B) B to C. 
C) B to A. 
D) D to C.

Question 5

What is "brain drain"?

Accepted Answer

A) the tendency for highly educated workers in high-income countries to move to low-income countries to volunteer their services 
B) increased recruiting efforts that attempt to raise the average level of education in developed nations 
C) foreign direct investment that flows from a developed country to a developing country 
D) the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries 
A) the tendency for highly educated workers in high-income countries to move to low-income countries to volunteer their services 
B) increased recruiting efforts that attempt to raise the average level of education in developed nations 
C) foreign direct investment that flows from a developed country to a developing country 
D) the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries

Question 6

________ save a ________ of their income.This ________ capital in their economy and raises economic growth.

Accepted Answer

A) Developing countries;large proportion;decreases 
B) Developing countries;small proportion;increases 
C) High-income countries;large proportion;increases 
D) High-income countries;small proportion;increases 
A) Developing countries;large proportion;decreases 
B) Developing countries;small proportion;increases 
C) High-income countries;large proportion;increases 
D) High-income countries;small proportion;increases

Question 7

One drawback of the patent system is that firms must disclose to the public information about the product or process.

Accepted Answer

A) True 
 B)False

Question 8

According to Joseph Schumpeter,the theory of creative destruction describes a process by which

Accepted Answer

A) some new products unleash a gale of destruction that drive other new products out of the market. 
B) new products unleash a gale of destruction that drives old products out of the market. 
C) new products are created by the destruction of capital. 
D) the creation of new products never involves the destruction of old products. 
A) some new products unleash a gale of destruction that drive other new products out of the market. 
B) new products unleash a gale of destruction that drives old products out of the market. 
C) new products are created by the destruction of capital. 
D) the creation of new products never involves the destruction of old products.

Question 9

You are an economic advisor to the president.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?

Accepted Answer

A) a reduction in sales taxes 
B) an investment tax credit 
C) a reduction in taxes on luxury yachts 
D) all of the above 
A) a reduction in sales taxes 
B) an investment tax credit 
C) a reduction in taxes on luxury yachts 
D) all of the above

Question 10

Figure 22-1  
-Refer to Figure 22-1.Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from

Accepted Answer

A) A to C. 
B) B to C. 
C) C to D. 
D) D to C. 
A) A to C. 
B) B to C. 
C) C to D. 
D) D to C.

Question 11

New growth theory

Accepted Answer

A) states that the rate of technological change is determined outside the working of the market system. 
B) does not adequately explain the factors that determine productivity. 
C) states that the rate of technological change is caused by economic incentives. 
D) states that the rate of technological change is unaffected by economic incentives. 
A) states that the rate of technological change is determined outside the working of the market system. 
B) does not adequately explain the factors that determine productivity. 
C) states that the rate of technological change is caused by economic incentives. 
D) states that the rate of technological change is unaffected by economic incentives.

Question 12

The period of time from 1,000,000 B.C.to 1300 A.D.was a period of

Accepted Answer

A) no sustained economic growth. 
B) slow and steady economic growth. 
C) moderate economic growth. 
D) rapid and sustained economic growth. 
A) no sustained economic growth. 
B) slow and steady economic growth. 
C) moderate economic growth. 
D) rapid and sustained economic growth.

Question 13

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.

Accepted Answer

A) decrease;increase 
B) increase;decrease 
C) decrease;decrease 
D) increase;increase 
A) decrease;increase 
B) increase;decrease 
C) decrease;decrease 
D) increase;increase

Question 14

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 15

If there is a change in the ability of a firm to produce a given level of output with a given level of inputs,we say there is

Accepted Answer

A) human capital investment. 
B) technological change. 
C) an increase in labor productivity. 
D) a movement along a given per-worker production function. 
A) human capital investment. 
B) technological change. 
C) an increase in labor productivity. 
D) a movement along a given per-worker production function.

Question 16

New growth theory states that increases in ________ capital will result in ________ at the ________ level.

Accepted Answer

A) knowledge;increasing returns to scale;firm 
B) physical;decreasing returns to scale;firm 
C) knowledge;decreasing returns to scale;economy 
D) knowledge;increasing returns to scale;economy 
A) knowledge;increasing returns to scale;firm 
B) physical;decreasing returns to scale;firm 
C) knowledge;decreasing returns to scale;economy 
D) knowledge;increasing returns to scale;economy

Question 17

If the slope of the per-worker production function is 1/2 in a given range,how will a $10,000 increase in capital per hour worked affect real GDP per hour worked in the same given range?

Accepted Answer

A) Real GDP per hour worked will increase by $5,000. 
B) Real GDP per hour worked will increase by $20,000. 
C) Real GDP per hour worked will increase by $10,000. 
D) Real GDP per hour worked will decrease by $20,000. 
A) Real GDP per hour worked will increase by $5,000. 
B) Real GDP per hour worked will increase by $20,000. 
C) Real GDP per hour worked will increase by $10,000. 
D) Real GDP per hour worked will decrease by $20,000.

Question 18

One of the primary reasons that Mexico has had trouble attracting foreign investment and has therefore experienced relatively low rates of economic growth is

Accepted Answer

A) the failure to enforce the rule of law. 
B) persistent wars between Mexico and its neighboring countries. 
C) poor public education and health. 
D) low rates of saving and investment. 
A) the failure to enforce the rule of law. 
B) persistent wars between Mexico and its neighboring countries. 
C) poor public education and health. 
D) low rates of saving and investment.

Question 19

Knowledge capital is

Accepted Answer

A) rival. 
B) nonrival. 
C) nonexcludable. 
D) both B and C 
A) rival. 
B) nonrival. 
C) nonexcludable. 
D) both B and C

Question 20

Because of diminishing returns,an economy can continue to increase real GDP per hour worked only if

Accepted Answer

A) there are decreases in human capital. 
B) the per-worker production function shifts downward. 
C) there continue to be decreases in capital per hour worked. 
D) there is technological change. 
A) there are decreases in human capital. 
B) the per-worker production function shifts downward. 
C) there continue to be decreases in capital per hour worked. 
D) there is technological change.

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

Which of the following is an example of foreign direct investment?

Which of the following is a normative statement about economic growth?

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

Figure 22-1 -Refer to Figure 22-1.Many countries in Africa strongly discouraged and prohibited foreign direct investment in the 1950s and 1960s.By doing so,these countries were essentially preventing a moment from

What is "brain drain"?

________ save a ________ of their income.This ________ capital in their economy and raises economic growth.

One drawback of the patent system is that firms must disclose to the public information about the product or process.

According to Joseph Schumpeter,the theory of creative destruction describes a process by which

You are an economic advisor to the president.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?

Figure 22-1 -Refer to Figure 22-1.Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from

New growth theory

The period of time from 1,000,000 B.C.to 1300 A.D.was a period of

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.

The United States

If there is a change in the ability of a firm to produce a given level of output with a given level of inputs,we say there is

New growth theory states that increases in ________ capital will result in ________ at the ________ level.

If the slope of the per-worker production function is 1/2 in a given range,how will a $10,000 increase in capital per hour worked affect real GDP per hour worked in the same given range?

One of the primary reasons that Mexico has had trouble attracting foreign investment and has therefore experienced relatively low rates of economic growth is

Knowledge capital is

Because of diminishing returns,an economy can continue to increase real GDP per hour worked only if

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

Filters

save a of their income.This capital in their economy and raises economic growth.

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should the equilibrium level of loanable funds and the rate of long-term growth.

New growth theory states that increases in capital will result in at the level.