Question 1

Would one expect economic growth to be higher or lower in a country that had poorly defined property rights?
 Why?

Accepted Answer

The answer of Would one expect economic growth to be...

Question 2

Trade between countries should be

Accepted Answer

A) encouraged for developed countries but not for developing countries. 
B) encouraged for both developed and developing countries. 
C) discouraged for developed countries but encouraged for developing countries. 
D) discouraged for both developed and developing countries.

Question 3

A constant rate of U.S. economic growth over a given period of years would involve

Accepted Answer

A) adding the same amount of nominal dollars to real GDP per capita each year. 
B) adding the same amount of real dollars to real GDP per capita each year. 
C) compounding the percentage increase in real GDP per capita over the years. 
D) None of the above are correct.

Question 4

Which of the following will tend to cause an increase in technology?

Accepted Answer

A) an increase in research and development expenditures 
B) the development of new ideas 
C) increases in human capital 
D) all of the above

Question 5

The protection of property rights leads to

Accepted Answer

A) more poverty. 
B) more illiteracy. 
C) more capital formation. 
D) unemployment.

Question 6

In the absence of well-defined property rights, we would likely find

Accepted Answer

A) people with more incentives to take risks. 
B) people with less incentives to take risks. 
C) higher economic growth rates. 
D) increases in investment activity.

Question 7

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of

Accepted Answer

A) the money supply. 
B) compounding. 
C) regression towards the mean. 
D) averaging.

Question 8

The modification of manufacturing processes so as to reduce the resulting environmental damage is an endeavor that requires capital investment, labor inputs, and technology. What then follows from this statement?

Accepted Answer

A) Economic growth can benefit the environment. 
B) Environmental damage is a regrettable but necessary side effect of economic growth. 
C) The condition of the environment will be better in slower-growing countries. 
D) The way to reduce pollution is to educate people about its effects.

Question 9

As more economic development occurs

Accepted Answer

A) technological progress slows. 
B) capital accumulation decreases. 
C) the population growth rate decreases. 
D) the population growth rate increases.

Question 10

All of the following are keys to economic development EXCEPT

Accepted Answer

A) an educated workforce. 
B) establishment of a system of property rights. 
C) minimizing "creative destruction." 
D) open economies.

Question 11

Economic growth can be defined as

Accepted Answer

A) the rate of growth in the productivity of labor. 
B) the rate of growth in the productivity of capital. 
C) the rate of growth of labor plus the rate of depreciation of capital. 
D) the rate of growth of labor plus the rate of growth of capital plus the rate of growth in the productivity of labor and capital.

Question 12

An economy that is an active participant in international trade is

Accepted Answer

A) an egalitarian economy. 
B) a closed economy. 
C) an economy whose currency value fluctuates widely. 
D) an open economy.

Question 13

Labor productivity increases when

Accepted Answer

A) the average number of hours people work goes up. 
B) the unemployment rate decreases. 
C) the average output produced per worker during a specified time period increases. 
D) the average output produced per worker during a specified time period decreases.

Question 14

An increase in human capital will tend to cause which of the following?

Accepted Answer

A) increase economic growth 
B) increase the standard of living 
C) increase labor productivity 
D) all of the above

Question 15

Which of the following is NOT a benefit of economic growth?

Accepted Answer

A) urban congestion 
B) reduction in illiteracy 
C) improved health 
D) longer lives

Question 16

The development of new products through research and development in new growth theory is important because

Accepted Answer

A) there can be a positive impact on future growth. 
B) society's scarce resources are being used when they could be used for current consumption. 
C) it will lead to a reduction in the savings rate. 
D) new patents are created.

Question 17

Recently economists have added what factor as a major explanation of economic growth?

Accepted Answer

A) the growth rate of labor 
B) the growth rate of capital 
C) the growth rate in labor and capital productivity 
D) technology

Question 18

Suppose that Country A and Country B each had the same per capita real Gross Domestic Product (GDP)of $10,000 in 2008. Country A's per capital real Gross Domestic Product (GDP)had a growth rate of 3 percent per year and Country B's per capital real Gross Domestic Product (GDP)had a growth rate of 4 percent per year. By 2013, the per-capita real Gross Domestic Product (GDP)for the two countries, respectively, were

Accepted Answer

A) $11,941 and $12,653. 
B) $11,593 and $12,167. 
C) $10,300 and $10,400. 
D) $14,000 and $16,000.

Question 19

Higher saving rates mean higher future growth rates because

Accepted Answer

A) the interest earned from savings gives you more wealth. 
B) the banks have more money to distribute to their shareholders. 
C) saving contributes to less investment, which yields a larger capital stock. 
D) saving contributes to more investment, which yields a larger capital stock.

Question 20

According to the late Julian Simon

Accepted Answer

A) legal immigrants have a favorable impact on the welfare of American citizens, but illegal immigrants have a negative impact. However, the positive effect of the legal immigrants is stronger than the negative impact of the illegal immigrants. 
B) legal immigrants have a favorable impact on the welfare of American citizens, but illegal immigrants have a negative impact that almost exactly offsets the positive effect of the legal immigrants. 
C) legal and illegal immigrants have a positive effect on the welfare of American citizens. 
D) legal and illegal immigrants have a negative effect on the welfare of American citizens.

Exam 8: Global Economic Growth and Development

Would one expect economic growth to be higher or lower in a country that had poorly defined property rights? Why?