Question 1

What is the Economic Freedom of the World index designed to measure? What will determine whether the rating of a country will be high or low on this index?

Accepted Answer

The answer of What is the Economic Freedom of the...

Question 2

How do growth rates vary across countries? Are the rich countries getting richer while the poor are getting poorer?

Accepted Answer

The answer of How do growth rates vary across countries?...

Question 3

Political institutions are more likely to allow and encourage the emergence of good economic institutions and policies when

Accepted Answer

A) the top government executives have enough power to impose good economic arrangements on the nation. 
B) constitutional constraints prevent laws and regulations that weaken the rights of property owners, curtail voluntary exchange, and provide for decentralization of government. 
C) the elected executive and legislative branches have fewer constraints on what they can do, leaving them free to innovate and improve economic institutions. 
D) well organized interest groups exert a powerful influence on the political process.

Question 4

Which of the following about economic freedom is true?

Accepted Answer

A) Low income countries that have adopted institutions and policies consistent with economic freedom have grown rapidly. 
B) Low-income countries that have adopted institutions and policies consistent with economic freedom have failed to grow more rapidly than economies that are relatively unfree. 
C) Economic freedom appears to improve the performance of developed economies, but not those that are less developed. 
D) Economic freedom appears to improve the performance of less developed economies, but not those that already have a high degree of development.

Question 5

During the 2000-2009 decade,

Accepted Answer

A) the economic freedom rating of the United States fell, but the growth rate of real GDP was more rapid than in recent decades. 
B) the economic freedom rating of the United States increased and the growth of real GDP was more rapid than that of recent decades. 
C) the economic freedom rating of the United States fell and the growth of real GDP was less rapid than that of recent decades. 
D) the economic freedom rating of the United States increased but the growth of real GDP was less rapid than that of recent decades.

Question 6

Which of the following will be required for a country to move up the income ladder and achieve high-income status?

Accepted Answer

A) rapid growth of the money supply. 
B) restrictions limiting the import of goods from other nations, particularly low-wage countries. 
C) tax incentives that encourage consumption rather than investment 
D) sustained economic growth

Question 7

In order to achieve a high rating on the Economic Freedom of the World index, a country must

Accepted Answer

A) provide for the even-handed protection of private property and rely primarily on open markets and voluntary exchange to coordinate economic activity. 
B) use central planning to direct investment and resolve the three basic economic problems of what, how, and for whom goods will be produced. 
C) protect domestic businesses from foreign rivals who generally provide shoddy products. 
D) protect domestic workers from businesses that are unwilling to pay high wages and provide quality working conditions.

Question 8

Countries with more economic freedom during 1980-2010 tended to

Accepted Answer

A) grow more rapidly, but the 2010 income levels of the freer economies were still lower than those that were less free. 
B) achieve higher levels of income but the growth rates of the less free economies have been more rapid in recent years. 
C) achieve both more rapid growth and higher income levels than those that were less free. 
D) grow less rapidly and the 2010 income levels of the freer economies were lower than those that were less free.

Question 9

Which of the following about economic freedom is true?

Accepted Answer

A) In 1960, the per capita income levels of Hong Kong and Singapore were greater than those of the United States and Canada. 
B) The economies of Hong Kong and Singapore have grown slowly in recent decades. 
C) Economic freedom ratings indicate that both Hong Kong and Singapore rank among the world's freest economies. 
D) Economic freedom ratings indicate that Nigeria and Venezuela rank among the world's freest economies.

Question 10

Which of the following countries began economic liberalization in the 1970s and have achieved an impressive record of economic growth since that time?

Accepted Answer

A) Venezuela and Zimbabwe 
B) China and Chile 
C) Mexico and Canada 
D) United States and Norway

Question 11

Nations will attract investment and its citizens will engage in productive activities when the institutions and policies of that country

Accepted Answer

A) encourage market exchange. 
B) reward innovation. 
C) protect people and their property. 
D) all of the above.

Question 12

For most less-developed countries, the proven technologies of the high-income countries are readily available. Why hasn't this always led to economic growth for these low-income countries?

Accepted Answer

The answer of For most less-developed countries, the proven technologies...

Question 13

Realization of gains from trade, entrepreneurial discovery, and investment are largely dependent on

Accepted Answer

A) competitive elections and political democracy. 
B) the presence of institutions and policies consistent with economic freedom. 
C) the use of tariffs and quotas to protect domestic businesses from competition with foreigners. 
D) the use of government planning to direct investments into worthwhile projects.

Question 14

The Economic Freedom of the World measure indicates that the United States

Accepted Answer

A) was the freest economy in the world in 2010. 
B) has experienced a decline in economic freedom since 2000. 
C) has experienced an increase in economic freedom since 2000. 
D) continues to be substantially more free than Australia, Canada, and Chile.

Question 15

(I) Historically, countries with colonial settlers who planned on staying for long periods of time set up sound economic institutions. (II) Countries with harsh environments not suitable for permanent settlements resulted in colonial settlers adopting weaker and less productive economic institutions before leaving.

Accepted Answer

A) I is true; II is false. 
B) I is false; II is true. 
C) Both I and II are true. 
D) Both I and II are false.

Question 16

Which of the following calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency so they may be more accurately compared?

Accepted Answer

A) the consumer price parity (CPP) method 
B) the purchasing power parity (PPP) method 
C) the GDP deflator exchange (GDPD
E)  method 
D) the inflation conversion factor (ICF) method

Question 17

Which of the following has contributed to China's economic growth since 1980?

Accepted Answer

A) the rapid growth of foreign aid from European countries 
B) nationalization of many private industries 
C) increased restrictions on international trade 
D) increased privatization of the agricultural and small-business sectors

Question 18

Nations will attract investment and its citizens will engage in productive activities when the institutions and policies of that country

Accepted Answer

A) discourage market exchange. 
B) protect people and their property and enforce contracts even-handedly. 
C) abolish private property rights. 
D) all of the above.

Question 19

Which of the following countries have the highest per person income levels?

Accepted Answer

A) Argentina, Brazil, and Mexico 
B) China and India 
C) France and Germany 
D) Ireland, Norway, and the United States

Question 20

Which of the following is true?

Accepted Answer

A) Economic freedom is present if a country is a political democracy. 
B) Economic freedom ratings indicate the consistency of a nation's institutions and policies with personal choice, freedom of exchange, and protection of private property. 
C) Economies that are highly free tend to grow less rapidly than those with less economic freedom. 
D) All of the above are correct.

Exam 17: Institutions, Policies, and Cross-Country Differences in Income and Growth

What is the Economic Freedom of the World index designed to measure? What will determine whether the rating of a country will be high or low on this index?

How do growth rates vary across countries? Are the rich countries getting richer while the poor are getting poorer?

Political institutions are more likely to allow and encourage the emergence of good economic institutions and policies when

Which of the following about economic freedom is true?

During the 2000-2009 decade,

Which of the following will be required for a country to move up the income ladder and achieve high-income status?

In order to achieve a high rating on the Economic Freedom of the World index, a country must

Countries with more economic freedom during 1980-2010 tended to

Which of the following about economic freedom is true?

Which of the following countries began economic liberalization in the 1970s and have achieved an impressive record of economic growth since that time?

Nations will attract investment and its citizens will engage in productive activities when the institutions and policies of that country

For most less-developed countries, the proven technologies of the high-income countries are readily available. Why hasn't this always led to economic growth for these low-income countries?

Realization of gains from trade, entrepreneurial discovery, and investment are largely dependent on

The Economic Freedom of the World measure indicates that the United States

Which of the following calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency so they may be more accurately compared?

Which of the following has contributed to China's economic growth since 1980?

Nations will attract investment and its citizens will engage in productive activities when the institutions and policies of that country

Which of the following countries have the highest per person income levels?

Which of the following is true?