Question 1

An increase in real per capita income will generally lead to

Accepted Answer

A) a cleaner environment and more time for recreation. 
B) a reduction in life expectancy because working conditions are less desirable. 
C) an increase in the number of hours worked by residents. 
D) an increase in real GDP that is less rapid than the increase in population 
A) a cleaner environment and more time for recreation. 
B) a reduction in life expectancy because working conditions are less desirable. 
C) an increase in the number of hours worked by residents. 
D) an increase in real GDP that is less rapid than the increase in population

Question 2

Economic growth is important because expansion in the output of goods and services

Accepted Answer

A) necessarily creates more jobs (more work for people). 
B) makes it possible for individuals to consume more and achieve higher living standards. 
C) leads to an increase in the general level of prices. 
D) generates additional tax revenues for the government. 
A) necessarily creates more jobs (more work for people). 
B) makes it possible for individuals to consume more and achieve higher living standards. 
C) leads to an increase in the general level of prices. 
D) generates additional tax revenues for the government.

Question 3

If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?

Accepted Answer

A) abundant natural resources 
B) substantial aid from rich countries 
C) central planning and a high level of government expenditures 
D) institutions and policies that encourage productive activities 
A) abundant natural resources 
B) substantial aid from rich countries 
C) central planning and a high level of government expenditures 
D) institutions and policies that encourage productive activities

Question 4

Which of the following is an important ingredient for the achievement of efficient economic organization?

Accepted Answer

A) highly restrictive exchange rate controls 
B) secure property rights and political stability 
C) high and variable rates of inflation 
D) high marginal tax rates 
A) highly restrictive exchange rate controls 
B) secure property rights and political stability 
C) high and variable rates of inflation 
D) high marginal tax rates

Question 5

Which of the following is important if a country is going to achieve and sustain high rates of economic growth?

Accepted Answer

A) investment in physical and human capital 
B) improvements in technology 
C) institutional and policy arrangements consistent with economic efficiency 
D) All of the above. 
A) investment in physical and human capital 
B) improvements in technology 
C) institutional and policy arrangements consistent with economic efficiency 
D) All of the above.

Question 6

Which of the following is an important ingredient of efficient economic organization?

Accepted Answer

A) high marginal tax rates 
B) competitive markets 
C) rapid increases in the money supply 
D) imposition of high tariffs that will protect domestic producers from the ravages of foreign competition 
A) high marginal tax rates 
B) competitive markets 
C) rapid increases in the money supply 
D) imposition of high tariffs that will protect domestic producers from the ravages of foreign competition

Question 7

Obstacles that restrict trade, either domestic or international, will

Accepted Answer

A) reduce output, income, and the general living standard of the populace. 
B) help people achieve higher income levels. 
C) help promote high rates of economic growth. 
D) encourage domestic business firms to expand output so they can achieve larger gains from the adoption of mass production techniques. 
A) reduce output, income, and the general living standard of the populace. 
B) help people achieve higher income levels. 
C) help promote high rates of economic growth. 
D) encourage domestic business firms to expand output so they can achieve larger gains from the adoption of mass production techniques.

Question 8

Which of the following is most important for the achievement of long-term economic growth and a high level of per capita income?

Accepted Answer

A) abundant natural resources 
B) foreign aid 
C) policies and institutions that encourage productive activities 
D) institutions and policies that control the growth of population 
A) abundant natural resources 
B) foreign aid 
C) policies and institutions that encourage productive activities 
D) institutions and policies that control the growth of population

Question 9

When institutions and policies provide secure property rights, a fair and balanced judicial system, monetary stability, and effective limits on the power of government, which of the following is most likely to be encouraged?

Accepted Answer

A) rent-seeking 
B) actions that reduce the value of resources 
C) productive activities 
D) destructive activities 
A) rent-seeking 
B) actions that reduce the value of resources 
C) productive activities 
D) destructive activities

Question 10

Which of the following is true of sub-Saharan Africa?

Accepted Answer

A) The poverty rate in the region is low. 
B) Most of the sub-Saharan African countries rank among the freest economies in the world. 
C) The poverty rate in sub-Saharan Africa is the highest of any region in the world, and the reduction in the rate during the past quarter of a century has been modest. 
D) The poverty rate in sub-Saharan Africa is the lowest of any region in the world, and the rate has declined sharply during the past quarter of a century. 
A) The poverty rate in the region is low. 
B) Most of the sub-Saharan African countries rank among the freest economies in the world. 
C) The poverty rate in sub-Saharan Africa is the highest of any region in the world, and the reduction in the rate during the past quarter of a century has been modest. 
D) The poverty rate in sub-Saharan Africa is the lowest of any region in the world, and the rate has declined sharply during the past quarter of a century.

Question 11

An economy growing at a consistent rate of 5 percent per year will double its income in

Accepted Answer

A) twenty-five years. 
B) twenty-one years. 
C) fourteen years. 
D) twelve years. 
A) twenty-five years. 
B) twenty-one years. 
C) fourteen years. 
D) twelve years.

Question 12

Individuals are more likely to engage in productive activities when institutions and policies

Accepted Answer

A) create a fair and unbiased judicial system. 
B) result in high and variable rates of inflation. 
C) transfer a large share of income through the political process. 
D) are used to centrally plan the economy. 
A) create a fair and unbiased judicial system. 
B) result in high and variable rates of inflation. 
C) transfer a large share of income through the political process. 
D) are used to centrally plan the economy.

Question 13

Which of the following is true?

Accepted Answer

A) Marginal tax rates that take a large share of income will enhance the incentive of individuals to invest and engage in productive activities. 
B) High tax rates will tend to drive investment funds and highly productive citizens to other countries where tax rates are lower. 
C) As marginal tax rates increase, individuals get to keep a larger share of their earnings. 
D) Countries can gain by imposing higher tariffs and other barriers that will restrain international trade. 
A) Marginal tax rates that take a large share of income will enhance the incentive of individuals to invest and engage in productive activities. 
B) High tax rates will tend to drive investment funds and highly productive citizens to other countries where tax rates are lower. 
C) As marginal tax rates increase, individuals get to keep a larger share of their earnings. 
D) Countries can gain by imposing higher tariffs and other barriers that will restrain international trade.

Question 14

Economic growth is likely to be faster when

Accepted Answer

A) higher tax rates are imposed on high income individuals in order to provide greater cash payments to the poor. 
B) domestic markets are opened to foreign sellers and foreign investors. 
C) the supply of money is increased rapidly so individuals have more money to spend. 
D) dramatic changes in political and legal institutions occur often. 
A) higher tax rates are imposed on high income individuals in order to provide greater cash payments to the poor. 
B) domestic markets are opened to foreign sellers and foreign investors. 
C) the supply of money is increased rapidly so individuals have more money to spend. 
D) dramatic changes in political and legal institutions occur often.

Question 15

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Accepted Answer

A) They increase employment and thereby promote the growth of real GDP. 
B) They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition. 
C) They protect domestic producers and thereby promote economic growth. 
D) Both a and c are correct. 
A) They increase employment and thereby promote the growth of real GDP. 
B) They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition. 
C) They protect domestic producers and thereby promote economic growth. 
D) Both a and c are correct.

Question 16

For a country to double its per capita income every twenty years, it would have to sustain an annual economic growth rate equal to

Accepted Answer

A) 1.75 percent. 
B) 2 percent. 
C) 3.5 percent. 
D) 4 percent. 
A) 1.75 percent. 
B) 2 percent. 
C) 3.5 percent. 
D) 4 percent.

Question 17

The major sources of economic growth are

Accepted Answer

A) gains from trade, entrepreneurial discovery, and investment. 
B) high taxes, an expansion in the size of government, and restrictions on investments by foreigners. 
C) rapid expansion in the supply of money, trade restrictions, and government licensing of business activities. 
D) free and open elections and politicians who are willing to place the general welfare of the populace above their political ambitions. 
A) gains from trade, entrepreneurial discovery, and investment. 
B) high taxes, an expansion in the size of government, and restrictions on investments by foreigners. 
C) rapid expansion in the supply of money, trade restrictions, and government licensing of business activities. 
D) free and open elections and politicians who are willing to place the general welfare of the populace above their political ambitions.

Question 18

Which of the following would be most likely to enhance the growth rate of an economy?

Accepted Answer

A) imposition of a quota restricting the quantity of steel imports 
B) gradual elimination of all tariffs over the next 10 years 
C) legislation limiting the number of hours employees can work during a week to 32 
D) legislation requiring employers to provide one year of severance pay to any employee who is dismissed from employment 
A) imposition of a quota restricting the quantity of steel imports 
B) gradual elimination of all tariffs over the next 10 years 
C) legislation limiting the number of hours employees can work during a week to 32 
D) legislation requiring employers to provide one year of severance pay to any employee who is dismissed from employment

Question 19

(I) A monetary policy that results in price stability will encourage the realization of gains from trade and thereby help promote economic growth. (II) High tariffs and restrictive quotas will encourage rapid economic growth.

Accepted Answer

A) I is true; II is false. 
B) II is true; I is false. 
C) Both I and II are true. 
D) Both I and II are false. 
A) I is true; II is false. 
B) II is true; I is false. 
C) Both I and II are true. 
D) Both I and II are false.

Question 20

Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but by 2003, life expectancy had risen to

Accepted Answer

A) 36 years. 
B) 44 years. 
C) 52 years. 
D) 64 years. 
A) 36 years. 
B) 44 years. 
C) 52 years. 
D) 64 years.

An increase in real per capita income will generally lead to

Economic growth is important because expansion in the output of goods and services

If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?

Which of the following is an important ingredient for the achievement of efficient economic organization?

Which of the following is important if a country is going to achieve and sustain high rates of economic growth?

Which of the following is an important ingredient of efficient economic organization?

Obstacles that restrict trade, either domestic or international, will

Which of the following is most important for the achievement of long-term economic growth and a high level of per capita income?

When institutions and policies provide secure property rights, a fair and balanced judicial system, monetary stability, and effective limits on the power of government, which of the following is most likely to be encouraged?

Which of the following is true of sub-Saharan Africa?

An economy growing at a consistent rate of 5 percent per year will double its income in

Individuals are more likely to engage in productive activities when institutions and policies

Which of the following is true?

Economic growth is likely to be faster when

How do high tariffs and other restraints on international trade affect a nation's prosperity?

For a country to double its per capita income every twenty years, it would have to sustain an annual economic growth rate equal to

The major sources of economic growth are

Which of the following would be most likely to enhance the growth rate of an economy?

(I) A monetary policy that results in price stability will encourage the realization of gains from trade and thereby help promote economic growth. (II) High tariffs and restrictive quotas will encourage rapid economic growth.

Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but by 2003, life expectancy had risen to

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 16: Creating an Environment for Growth and Prosperity

An increase in real per capita income will generally lead to

Economic growth is important because expansion in the output of goods and services

If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?

Which of the following is an important ingredient for the achievement of efficient economic organization?

Which of the following is important if a country is going to achieve and sustain high rates of economic growth?

Which of the following is an important ingredient of efficient economic organization?

Obstacles that restrict trade, either domestic or international, will

Which of the following is most important for the achievement of long-term economic growth and a high level of per capita income?

When institutions and policies provide secure property rights, a fair and balanced judicial system, monetary stability, and effective limits on the power of government, which of the following is most likely to be encouraged?

Which of the following is true of sub-Saharan Africa?

An economy growing at a consistent rate of 5 percent per year will double its income in

Individuals are more likely to engage in productive activities when institutions and policies

Which of the following is true?

Economic growth is likely to be faster when

How do high tariffs and other restraints on international trade affect a nation's prosperity?

For a country to double its per capita income every twenty years, it would have to sustain an annual economic growth rate equal to

The major sources of economic growth are

Which of the following would be most likely to enhance the growth rate of an economy?

(I) A monetary policy that results in price stability will encourage the realization of gains from trade and thereby help promote economic growth. (II) High tariffs and restrictive quotas will encourage rapid economic growth.

Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but by 2003, life expectancy had risen to

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters