Question 1

During the past three decades, the economic freedom gap between high and low income countries has _______ and per capita income has grown ______ in high income than low income countries. (Fill in the two blanks)

Accepted Answer

A)  widened; less rapidly 
B)  widened; more rapidly 
C)  narrowed; more rapidly 
D)  narrowed; less rapidly

Question 2

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 3

Compared to those in low-income countries, the residents of countries with high per person incomes nearly always

Accepted Answer

A)  live longer. 
B)  have a lower illiteracy rate. 
C)  have a lower infant mortality rate. 
D)  all of the above.

Question 4

Since 1980, economic freedom has increased  _______  in less developed countries than in high-income developed nations and the per capita income of less developed countries has grown  _____ than in the high-income developed countries. (Fill in the blanks)

Accepted Answer

A)  more; more rapidly 
B)  more; less rapidly 
C)  less; more rapidly 
D)  less; less rapidly

Question 5

Which of the following is true regarding the growth record of less-developed countries (LDC's) during the past quarter of a century?

Accepted Answer

A)  Some are among the fastest growing countries in the world. 
B)  Some are among the slowest growing countries in the world. 
C)  Some countries have experienced declining per capita income levels. 
D)  All of the above are true.

Question 6

On average, countries that have a larger degree of economic freedom tend to have

Accepted Answer

A)  higher per capita income levels, but slower rates of economic growth, than countries with less economic freedom. 
B)  lower per capita income levels, but more rapid rates of economic growth, than countries with less economic freedom. 
C)  both higher per capita income levels and more rapid growth rates than countries with less economic freedom. 
D)  both lower income levels and slower growth rates than countries with less economic freedom.

Question 7

What has happened to income inequality and the poverty rate of the world since 1980?

Accepted Answer

A)  Both income inequality and the poverty rate have increased. 
B)  Both income inequality and the poverty rate have declined. 
C)  Income inequality has increased, but the poverty rate has declined. 
D)  Income inequality has declined, but the poverty rate has increased.

Question 8

Democracy tends to best promote freedom when there is

Accepted Answer

A)  unrestrained executive and legislative majority power. 
B)  constitutional protection of private property rights. 
C)  a large and centralized government sector. 
D)  all of the above.

Question 9

If a country's political leaders wanted to promote economic growth, which of the following policy alternatives would be most effective?

Accepted Answer

A)  imposition of price controls on agricultural products in an effort to keep food cheap. 
B)  imposition of high marginal tax rates designed to reduce income inequality. 
C)  imposition of tariffs and other trade restraints limiting international trade. 
D)  monetary policy consistent with long-run price stability

Question 10

During 1980 through 2014,

Accepted Answer

A)  the per capita income of high-income industrial countries declined. 
B)  the fastest growing economies in the world were LDCs. 
C)  almost all LDCs grew more rapidly than the high-income industrial economies. 
D)  most of the countries with rapid growth rates during the last two decades were located in South America.

Question 11

Which of the following political institutions would be supportive of an economic environment that would promote gains from trade and productive activities, while discouraging counterproductive actions?

Accepted Answer

A)  Checks on the powers of both the executive and simple legislative majorities. 
B)  Constitutional protection of economic rights like ownership of property, freedom to trade and compete, and use of alternative currencies. 
C)  Political decentralization so that citizens can more easily escape from governmental units that fail to provide an attractive economic environment. 
D)  All of the above.

Question 12

The income per person in the quartile of countries with the most economic freedom was approximately ____ times the figure for the least free group of countries.

Accepted Answer

A)  2 
B)  4 
C)  6 
D)  12

Question 13

Economic theory and history indicate that open elections and democratically elected governments

Accepted Answer

A)  are unique in their ability to produce good economic institutions. 
B)  must be accompanied by economic institutions that will allocate resources efficiently, or otherwise democratic institutions will not survive. 
C)  reflect only transactions that are based on mutual agreement and voluntary exchange. 
D)  are unable to guarantee either the emergence or continuation of economic institutions and policies that will encourage productive behavior.

Question 14

During 1980-2014, the per-capita incomes of less-developed countries (LDCs)

Accepted Answer

A)  grew rapidly. 
B)  declined. 
C)  were virtually unchanged. 
D)  registered a mixed growth record; some grew rapidly while others stagnated.

Question 15

The rapid growth rates of less developed countries (LDCs) after adopting institutions and policies more favorable to economic freedom and voluntary exchange is not surprising when one considers that

Accepted Answer

A)  LDCs can emulate and borrow successful practices and technologies from other, more developed nations. 
B)  foreign aid payments to a less developed country are nearly always expanded rapidly when the country begins to increase its income level. 
C)  the governments of LDCs play a larger role in economic planning, when economic freedom rises. 
D)  economic theory indicates that improvements in institutions normally result from economic growth, rather than growth stemming from better institutions.

Question 16

Which of the following will increase economic freedom?

Accepted Answer

A)  Subsidies and regulations that favor business. 
B)  High tariff rates. 
C)  High marginal tax rates. 
D)  Protection of persons and their property from aggression.

Question 17

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 18

The GDP figures fail to count labor services and other household production. Once this omission is taken into account,

Accepted Answer

A)  the income differences between the high and low income countries are small. 
B)  the differences in living standards between the high and low income countries are small. 
C)  the income differences between the high and low income countries are still huge. 
D)  the life expectancy in the high and low income countries is approximately the same.

Question 19

Dividing data into quartiles means that you are dividing data into

Accepted Answer

A)  two groups. 
B)  three groups. 
C)  four groups. 
D)  twenty-five groups.

Question 20

How did the world's per capita income and the degree of income inequality change between 1800 and  1980?

Accepted Answer

A)  Per capita income expanded by approximately tenfold and income inequality increased. 
B)  Per capita income expanded by approximately tenfold and income inequality declined. 
C)  The per capita income of the world was virtually unchanged and income inequality declined. 
D)  The per capita income of the world declined, but the income was distributed more equally.

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

During the past three decades, the economic freedom gap between high and low income countries has _ and per capita income has grown in high income than low income countries. (Fill in the two blanks)