Question 1

Growth accounting estimates the contribution to economic growth of each factor in the aggregate production function.

Accepted Answer

A) True 
 B)False

Question 2

In the past 30 years, both China and India have had substantial economic growth:

Accepted Answer

A) and as a result, they are almost as rich as the United States today. 
B) but India is still poorer than the United States was in 1900, and China only now matches the level of income in the U.S. in 1900. 
C) which was fueled by both countries' increases in consumption. 
D) which came about because of their relatively low levels of saving.

Question 3

High rates of savings and investment and a lack of consumption spending have contributed to the recent stagnant economic growth in Latin America.

Accepted Answer

A) True 
 B)False

Question 4

The average level of education, measured by the number of years the average adult has spent in school, is higher in Argentina than it is in China.

Accepted Answer

A) True 
 B)False

Question 5

A negative externality is a cost that individuals or firms impose on others without having to offer compensation.

Accepted Answer

A) True 
 B)False

Question 6

Suppose a panel of economists predicts that a nation's real GDP per capita will have an average annual growth rate of 2%. According to the rule of 70, how many years will it take for this nation's real GDP per capita to double?

Accepted Answer

A) 35 
B) 70 
C) 140 
D) 20

Question 7

The rule of 70 states that a variable's approximate doubling time equals:

Accepted Answer

A) 70 times the growth rate. 
B) the growth rate divided by 70. 
C) 70 divided by the doubling time. 
D) 70 divided by the growth rate.

Question 8

Many impoverished nations struggle with diseases like malaria. How would reduction or elimination of malaria contribute to long-run economic growth?

Accepted Answer

The answer of Many impoverished nations struggle with diseases like...

Question 9

Which of the following countries is NOT characterized by abundant farmland and mineral deposits?

Accepted Answer

A) United States 
B) Canada 
C) Argentina 
D) Japan

Question 10

Diminishing returns to physical capital means that when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to:

Accepted Answer

A) a smaller increase in the marginal product of labor. 
B) a decrease in the total amount of output. 
C) negative marginal product. 
D) a constant amount of total output.

Question 11

Greenhouse gas emissions are an example of:

Accepted Answer

A) a negative externality. 
B) a public good. 
C) a positive externality. 
D) a private good.

Question 12

The formula for the rule of 70, where n is number of years and r is growth rate, is expressed as:

Accepted Answer

A) n × 70 = r. 
B) n / r = 70. 
C) r / n = 70. 
D) n × r = 70.

Question 13

Technological change:

Accepted Answer

A) raises total factor productivity. 
B) is not as important as infrastructure maintenance. 
C) shifts the aggregate production function downward. 
D) relies on consumption increases at the expense of saving.

Question 14

Use the following to answer questions :
Figure: Technological Progress and Productivity Growth 
-(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. If there is an increase in physical capital per worker (all other factors remaining unchanged), it is best indicated by a move from:

Accepted Answer

A) A to B. 
B) B to A. 
C) C to B. 
D) B to C.

Question 15

Which of the following would shift the production function upward?

Accepted Answer

A) an increase in the price of oil 
B) an improvement in technology 
C) a decrease in the supply of labor 
D) a decline in the birth rate

Question 16

In the book The Limits to Growth, The Club of Rome argued that:

Accepted Answer

A) free trade could make world growth sustainable. 
B) the World Bank needed to establish a global currency. 
C) the convergence hypothesis was invalid. 
D) limited supplies of natural resources made long-run growth unsustainable.

Question 17

Roads, telephone lines, power facilities, and schools are examples of a nation's:

Accepted Answer

A) technostructure. 
B) infrastructure. 
C) physiostructure. 
D) sociostructure.

Question 18

The aggregate production function does NOT depend on:

Accepted Answer

A) the quantity of physical capital per worker. 
B) human capital per worker. 
C) the state of technology. 
D) the amount of natural resources.

Question 19

When a country utilizes more physical capital per worker over time, there will be:

Accepted Answer

A) lower and eventually zero growth rate of productivity. 
B) higher growth rates of productivity. 
C) no change in the growth rate of productivity. 
D) lower but always positive growth rates of productivity.

Question 20

Which of the following factors have contributed to the lack of economic growth in Latin America?
I. low rates of savings and investment
II. low value on education
III. political instability

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I, II, and III

Exam 9: Long-Run Economic Growth

Growth accounting estimates the contribution to economic growth of each factor in the aggregate production function.

In the past 30 years, both China and India have had substantial economic growth:

High rates of savings and investment and a lack of consumption spending have contributed to the recent stagnant economic growth in Latin America.

The average level of education, measured by the number of years the average adult has spent in school, is higher in Argentina than it is in China.

A negative externality is a cost that individuals or firms impose on others without having to offer compensation.

Suppose a panel of economists predicts that a nation's real GDP per capita will have an average annual growth rate of 2%. According to the rule of 70, how many years will it take for this nation's real GDP per capita to double?

The rule of 70 states that a variable's approximate doubling time equals:

Many impoverished nations struggle with diseases like malaria. How would reduction or elimination of malaria contribute to long-run economic growth?

Which of the following countries is NOT characterized by abundant farmland and mineral deposits?

Diminishing returns to physical capital means that when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to:

Greenhouse gas emissions are an example of:

The formula for the rule of 70, where n is number of years and r is growth rate, is expressed as:

Technological change:

Which of the following would shift the production function upward?

In the book The Limits to Growth, The Club of Rome argued that:

Roads, telephone lines, power facilities, and schools are examples of a nation's:

The aggregate production function does NOT depend on:

When a country utilizes more physical capital per worker over time, there will be:

Which of the following factors have contributed to the lack of economic growth in Latin America? I. low rates of savings and investment II. low value on education III. political instability