Exam 17: Long-Run Growth

Identify and discuss two factors from which economies of scale arise.

It is well known that as countries develop, they typically generate air and water pollutants. China's recent rapid growth provides a strong example of this trend. However, what conclusions did Grossman and Krueger make concerning such cases?

In order for economic growth to increase the standard of living what must be the relationship between the economic growth rate and the population growth rate?

-Use the above graph to answer the following question. If the economy is operating at point C what would be an illustration of a decrease in labor productivity?

Related to the Economics in Practice on p. 329 [641]: How are U.S. firms looking to cut health care costs?

Explain how each of the following is related to the rates of productivity and economic growth in an economy: (a) The level of investment spending (b) The extent of government regulation (c) The level of spending on research and development (d) The saving rate

You have just been appointed to a special Presidential Task Force on Economic Growth. You are responsible for proposing three policies that the government can enact to increase the growth rate. What policies would you recommend and why?

Identify and explain the two basic forms of capital?

The output per worker at the XYZ Manufacturing Company has increased. What factors could have caused this increase?

Define consumer sovereignty.

Explain the three different ways an increase in GDP can come about.

Some critics argue that the income tax system and Social Security reduce saving. What suggestion do they offer to correct for the income tax system? What law was passed to allow earnings to accumulate without paying taxes? What were its provisions?

In Vidalia, real GDP increased by 6% and the population increased by 9% in 2008. What can we say about economic growth and the standard of living in this country?

Compare and contrast an invention and an innovation.

Discuss some of the controversy over immigration into the United States. From an economic growth standpoint, why is this so controversial?

If the capital stock remains fixed but the labor forces increases what is likely to be true about the productivity of this new labor?

Answer the following questions by analyzing the following production possibilities frontier. (a) Explain what is happening in the economy at Point A. How can the economy move to a point on ppf1? (b) Why will producing investment goods today cause different results for the future of the economy than focusing more on consumer goods today? (c) How would any nation move to higher and higher production possibilities frontiers? For example, moving from ppf1 to ppf2.

-Using the table above, compute the measured labor productivity and fill in the empty cells. Comment on whether the figures that you computed are what one would normally expect.

If environmental pollution eventually declines as growth brings rising per-capita incomes, why should we be worried?

With the use of at least two examples show how disembodied technological change may actually have a negative consequence regarding the usual method of measuring output but a positive impact on total social welfare.