Question 1

Which one of the following helps preserve incentives to develop new technologies?

Accepted Answer

A)  patents 
B)  tariffs 
C)  quantity restrictions on imports 
D)  income taxes

Question 2

Productivity relates to

Accepted Answer

A)  working harder over time. 
B)  working longer over time. 
C)  producing the same output with fewer labor hours. 
D)  producing the same output with more labor hours.

Question 3

To encourage economic development a country should do all of the following EXCEPT

Accepted Answer

A)  invest in human capital. 
B)  limit the amount of imports allowed into the country. 
C)  allow creative destruction to run its course. 
D)  establish a system of property rights.

Question 4

Suppose per capita real GDP grows by 7% per year. Based on the Rule of 70, approximately how many years will it take for the level of per capita real GDP to double?

Accepted Answer

A)  4.9 years 
B)  7 years 
C)  10 years 
D)  none of the above

Question 5

The study of factors that contribute to the economic development of a country is

Accepted Answer

A)  population growth economics. 
B)  development economics. 
C)  the theory of technological advancements. 
D)  the new technology theory.

Question 6

A higher rate of saving should lead to

Accepted Answer

A)  higher current consumption. 
B)  less growth. 
C)  more investment, higher capital growth, and more future consumption. 
D)  a higher price level and reduced future consumption.

Question 7

When Country X has high economic growth, this country has

Accepted Answer

A)  a high level of real Gross Domestic Product (GDP). 
B)  a high level of per capita real Gross Domestic Product (GDP). 
C)  a large increase in per capita real Gross Domestic Product (GDP). 
D)  a large increase in personal income.

Question 8

What did Malthus say about population growth?

Accepted Answer

A)  Population growth is the key to a nation's economic growth. 
B)  Population growth is not a problem if food production keeps up, and Malthus predicted that it would. 
C)  Population growth is a huge problem if housing and medical care don't also increase. 
D)  The population would grow faster than food supplies, which would be a recipe for disaster.

Question 9

Would a new growth theorist expect economic growth to be very rapid in one of the Communist nations before the fall of Communism? Why or why not?

Accepted Answer

The answer of Would a new growth theorist expect economic...

Question 10

"There is a direct relationship between economic growth rates and the wealth of a nation." Do you agree or disagree? Why?

Accepted Answer

The answer of "There is a direct relationship between economic...

Question 11

Other things being equal, an increase in consumption spending implies

Accepted Answer

A)  a decline in saving. 
B)  a decline in government spending. 
C)  a higher standard of living in the future. 
D)  that economic growth will soon increase.

Question 12

According to new growth theorists, more technological improvements can be brought about by

Accepted Answer

A)  a government policy that encourages increased consumption. 
B)  government policies that lead to increases in human capital. 
C)  tougher immigration laws. 
D)  the government taking a more active role in regulating industries.

Question 13

Innovation is

Accepted Answer

A)  always financed by the government. 
B)  an invention financed by the sale of bonds. 
C)  the transformation of an invention into something useful. 
D)  an invention financed by the sale of stock certificates.

Question 14

The study of factors that contribute to the economic growth of a country is known as

Accepted Answer

A)  natural resource economics. 
B)  entrepreneurial economics. 
C)  development economics. 
D)  savings economics.

Question 15

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 16

The measurement of economic growth cannot take into account

Accepted Answer

A)  the service sector of an economy. 
B)  productive activity in an economy. 
C)  cultural aspects of life in a country. 
D)  differences in inflation rates across countries.

Question 17

Using a production possibilities curve, economic growth is represented by

Accepted Answer

A)  an outward shift in the curve. 
B)  a movement along the curve. 
C)  an inward shift of the curve. 
D)  a pivot of the curve.

Question 18

Suppose a country experiences an increase in output per worker. Such a development represents which of the following?

Accepted Answer

A)  a decrease in economic growth 
B)  an increase in labor productivity 
C)  a reduction in the saving rate 
D)  an increase in population growth

Question 19

Which of the following best represents economic growth?

Accepted Answer

A)  a movement down a given production possibilities curve. 
B)  a movement up a given production possibilities curve. 
C)  an outward or, equivalently, a rightward shift of the production possibilities curve. 
D)  an inward or, equivalently, leftward shift of the production possibilities curve.

Question 20

One reason that economists encourage free trade is that

Accepted Answer

A)  it encourages a more rapid spread of technology. 
B)  it allows us to exploit the workers of less developed countries. 
C)  we can sell more goods. 
D)  it increases our capital stock.

Exam 9: Global Economic Growth and Development