Question 1

Why did Malthus's predictions NOT come to fruition for most of the developed world?

Accepted Answer

A) Death due to natural disasters slowed the population growth. 
B) The law of diminishing returns only applies in theory, not in practice. 
C) He implicitly neglected the potential effect of technological advancement. 
D) His predictions were only intended to apply to African nations.

Question 2

If real GDP is increasing more rapidly than the population,what can we conclude?

Accepted Answer

A) The economy must be experiencing inflation 
B) Per capital real GDP will be decreasing. 
C) Interest rates must be falling 
D) Per capita real GDP will be increasing.

Question 3

Which of the following factors contributes to economic growth?

Accepted Answer

A) an increase in the minimum wage 
B) a decrease in the productivity of labour while holding the productivity of capital fixed 
C) the discovery of new oil reserves 
D) a decrease in the quantity of labour due to emigration

Question 4

Which of the following factors contributes to economic growth?

Accepted Answer

A) an increase in the proportion of the population that is college educated 
B) a decrease in the productivity of labour 
C) an increase in the average wage rate paid to workers 
D) an increase in the standard of living

Question 5

How is economic growth illustrated on a production possibilities diagram?

Accepted Answer

A) an inward shift of an economy's production possibilities curve 
B) a movement from a point on an economy's production possibilities curve to a point inside the curve 
C) an outward shift of an economy's production possibilities curve 
D) an upward slope on an economy's production possibilities curve

Question 6

During the Klondike gold rush,the first prospectors created "miners' laws," which described how gold claims could be staked and how these claims would be enforced.What factor that affects economic growth was recognized by the prospectors who created the "miners' laws"?

Accepted Answer

A) the importance of natural resources 
B) the need for government intervention 
C) well-defined and enforced property rights 
D) technological advance

Question 7

Which of the following countries has a relative abundance of natural resources?

Accepted Answer

A) Somalia 
B) Canada 
C) Hong Kong 
D) Japan

Question 8

Which of the following best describes the relationship between economic growth and literacy?

Accepted Answer

A) Increased literacy initially stimulates economic growth by raising labour productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. 
B) Economic growth and literacy are independent variables and tend not to move together. 
C) Increased literacy stimulates economic growth by raising labour productivity, and as the economy grows, people consume more education. 
D) As the economy grows, the literacy rate declines because of the low opportunity cost.

Question 9

Which of the following factors will NOT contribute to economic growth?

Accepted Answer

A) technological advances 
B) an increase in minimum wage 
C) growth in physical capital 
D) an increase in the productivity of labour

Question 10

Sergei has developed a new fat substitute that has no calories and produces no side effects.What kind of support from the government is he most likely to want,in order to bring this innovation to the marketplace?

Accepted Answer

A) a trademark 
B) a patent 
C) an education subsidy 
D) a marketing subsidy

Question 11

In developing countries,the opportunity cost of an education is relatively low compared to the cost in a highly developed country.

Accepted Answer

A) True 
 B)False

Question 12

In a country that has an unstable government or judiciary,what impact would you expect to see on the amount of entrepreneurial activity?

Accepted Answer

A) There would be less entrepreneurial activity, because there would be an unreliable infrastructure for protecting property rights. 
B) There would be more entrepreneurial activity, because in general there would be less taxation of commercial and research activities. 
C) There would be less entrepreneurial activity, because in an unstable economy there are fewer entrepreneurs. 
D) There would be more entrepreneurial activity, because there would be fewer governmental restrictions.

Question 13

Which of the following will NOT directly affect the size of a nation's capital stock?

Accepted Answer

A) resources reallocated to the production of food 
B) a new machine installed in a company's plant 
C) a newly constructed factory 
D) an eighteen-year-old student enrolled in university as a full-time student

Question 14

Which of the following is a measure of economic growth?

Accepted Answer

A) the marginal change in nominal output divided by total output from the previous year 
B) the advancement in the quality of a nation's technology 
C) the annual percentage change in per capita real output of goods and services 
D) the rate of business investment and capital formation

Question 15

Which economist is given credit for stating that "in the long run,we are all dead"?

Accepted Answer

A) Adam Smith 
B) David Ricardo 
C) John Maynard Keynes 
D) Milton Friedman

Question 16

In the long run,what is the most important determinant of a nation's standard of living?

Accepted Answer

A) its ability to export cheap labour 
B) its rate of productivity growth 
C) its ability to control the nation's money supply 
D) its endowment of natural resources

Question 17

What did Malthus base his predictions regarding the decline in per capita economic growth on?

Accepted Answer

A) the law of diminishing marginal returns 
B) scarce resources 
C) the law of demand 
D) decreasing returns to scale

Question 18

Which of the following is NOT considered to be an improvement in human capital?

Accepted Answer

A) an increase in education 
B) more creativity and innovation 
C) an increase in the amount of labour 
D) higher literacy rates

Question 19

According to the rule of 70,if a nation grows at a rate of 7 percent per year,in roughly how many years will national income double?

Accepted Answer

A) 5 years 
B) 7 years 
C) 10 years 
D) 70 years

Question 20

Country A and Country B initially have the same real GDP per capita.Country A experiences no economic growth,while Country B grows at a sustained rate of 7 percent.In 12 years,how will Country B's GDP compare to that of Country A's?

Accepted Answer

A) It will be approximately one-fourth of Country A's. 
B) It will be approximately one-half of Country A's. 
C) It will be approximately double of Country A's. 
D) It will be approximately triple of Country A's.

Exam 7: Economic Growth in the Global Economy

Why did Malthus's predictions NOT come to fruition for most of the developed world?

If real GDP is increasing more rapidly than the population,what can we conclude?

Which of the following factors contributes to economic growth?

Which of the following factors contributes to economic growth?

How is economic growth illustrated on a production possibilities diagram?

During the Klondike gold rush,the first prospectors created "miners' laws," which described how gold claims could be staked and how these claims would be enforced.What factor that affects economic growth was recognized by the prospectors who created the "miners' laws"?

Which of the following countries has a relative abundance of natural resources?

Which of the following best describes the relationship between economic growth and literacy?

Which of the following factors will NOT contribute to economic growth?

Sergei has developed a new fat substitute that has no calories and produces no side effects.What kind of support from the government is he most likely to want,in order to bring this innovation to the marketplace?

In developing countries,the opportunity cost of an education is relatively low compared to the cost in a highly developed country.

In a country that has an unstable government or judiciary,what impact would you expect to see on the amount of entrepreneurial activity?

Which of the following will NOT directly affect the size of a nation's capital stock?

Which of the following is a measure of economic growth?

Which economist is given credit for stating that "in the long run,we are all dead"?

In the long run,what is the most important determinant of a nation's standard of living?

What did Malthus base his predictions regarding the decline in per capita economic growth on?

Which of the following is NOT considered to be an improvement in human capital?

According to the rule of 70,if a nation grows at a rate of 7 percent per year,in roughly how many years will national income double?

Country A and Country B initially have the same real GDP per capita.Country A experiences no economic growth,while Country B grows at a sustained rate of 7 percent.In 12 years,how will Country B's GDP compare to that of Country A's?