Question 1

Investment in both physical and human capital tends to enhance economic growth because it generally

Accepted Answer

A) increases consumption during the current period. 
B) makes it possible for individuals to produce more goods and services per hour worked. 
C) encourages firms to expand output by employing more low productivity workers. 
D) encourages workers to unionize and thereby fight for higher wages. 
A) increases consumption during the current period. 
B) makes it possible for individuals to produce more goods and services per hour worked. 
C) encourages firms to expand output by employing more low productivity workers. 
D) encourages workers to unionize and thereby fight for higher wages.

Question 2

Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?

Accepted Answer

Competition is important because it prov

Question 3

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

Accepted Answer

A) The poverty rate in the region is low. 
B) The region has received more foreign aid than any other area of the world. 
C) Most of the countries in the region rank among the freest economies in the world. 
D) The poverty rate in the region 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) The region has received more foreign aid than any other area of the world. 
C) Most of the countries in the region rank among the freest economies in the world. 
D) The poverty rate in the region is the lowest of any region in the world, and the rate has declined sharply during the past quarter of a century.

Question 4

In recent years, wireless cellular telephones have been replacing land-line phone service. This is an example of

Accepted Answer

A) economies of scale. 
B) division of labor. 
C) creative destruction. 
D) entry barriers into a market. 
A) economies of scale. 
B) division of labor. 
C) creative destruction. 
D) entry barriers into a market.

Question 5

When competition is present and private ownership rights are clearly defined and securely enforced,

Accepted Answer

A) production and trade are encouraged and plunder (taking from others) is discouraged. 
B) people get ahead by helping others in exchange for income. 
C) employers will have to provide prospective employees with at least as good a deal as they could get elsewhere. 
D) all of the above are correct. 
A) production and trade are encouraged and plunder (taking from others) is discouraged. 
B) people get ahead by helping others in exchange for income. 
C) employers will have to provide prospective employees with at least as good a deal as they could get elsewhere. 
D) all of the above are correct.

Question 6

Which of the following is most important if a country wants to move from a low-income to a high-income status?

Accepted Answer

A) high rates of monetary growth. 
B) sustained economic growth. 
C) high real interest rates. 
D) high nominal interest rates. 
A) high rates of monetary growth. 
B) sustained economic growth. 
C) high real interest rates. 
D) high nominal interest rates.

Question 7

When the residents of a nation are free to trade with foreigners, domestic producers will be able to

Accepted Answer

A) export more goods for which they are a high-cost supplier. 
B) supply a larger quantity of goods they can produce at a relatively low cost. 
C) charge higher prices then would otherwise be the case. 
D) survive in the marketplace even if they do not produce efficiently. 
A) export more goods for which they are a high-cost supplier. 
B) supply a larger quantity of goods they can produce at a relatively low cost. 
C) charge higher prices then would otherwise be the case. 
D) survive in the marketplace even if they do not produce efficiently.

Question 8

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

Accepted Answer

A) large government expenditures as a share of GDP 
B) institutions and policies that are supportive of competition (open markets) and freedom of exchange. 
C) free elections and political democracy 
D) monetary policy makers who are willing to expand the supply of money rapidly 
A) large government expenditures as a share of GDP 
B) institutions and policies that are supportive of competition (open markets) and freedom of exchange. 
C) free elections and political democracy 
D) monetary policy makers who are willing to expand the supply of money rapidly

Question 9

In 1960 the per capita GDP of Hong Kong was substantially less than that of Argentina and Venezuela. By 2005, the per capita income of Hong Kong was more than three times the figures for Venezuela and Argentina. This dramatic change occurred because

Accepted Answer

A) Venezuela and Argentina lacked the natural resources of Hong Kong. 
B) the United States provided aid to Hong Kong but not to Argentina and Venezuela. 
C) Hong Kong was able to achieve and sustain a high rate of economic growth while the growth rates of Argentina and Venezuela were exceedingly low. 
D) Hong Kong was a developed country in 1960, but Argentina and Venezuela were not. 
A) Venezuela and Argentina lacked the natural resources of Hong Kong. 
B) the United States provided aid to Hong Kong but not to Argentina and Venezuela. 
C) Hong Kong was able to achieve and sustain a high rate of economic growth while the growth rates of Argentina and Venezuela were exceedingly low. 
D) Hong Kong was a developed country in 1960, but Argentina and Venezuela were not.

Question 10

Which of the following would be most likely to improve the standard of living of a less-developed country?

Accepted Answer

A) development of strong labor unions 
B) more foreign investment, attracted by the expectation of economic and political stability 
C) adoption of trade barriers (higher tariffs and quotas) 
D) widespread use of price controls to allocate goods and resources 
A) development of strong labor unions 
B) more foreign investment, attracted by the expectation of economic and political stability 
C) adoption of trade barriers (higher tariffs and quotas) 
D) widespread use of price controls to allocate goods and resources

Question 11

Frequently, politicians enact restrictive trade policies to protect domestic industries. How does economic theory predict this will affect the efficiency of economic organization?

Accepted Answer

When an economy is protected from intern

Question 12

If a nation is going to achieve and sustain a high rate of economic growth, it must

Accepted Answer

A) prohibit low-wage foreign producers from supplying goods to the domestic market. 
B) have an abundant domestic supply of low cost energy resources. 
C) have a mechanism capable of attracting savings and channeling them into wealth-creating projects. 
D) impose regulations that will limit the intensity of competition among domestic firms. 
A) prohibit low-wage foreign producers from supplying goods to the domestic market. 
B) have an abundant domestic supply of low cost energy resources. 
C) have a mechanism capable of attracting savings and channeling them into wealth-creating projects. 
D) impose regulations that will limit the intensity of competition among domestic firms.

Question 13

The recent growth records of Japan and Hong Kong during the last fifty years indicate that a nation can grow rapidly without

Accepted Answer

A) securely defined property rights. 
B) adopting modern technology. 
C) significant capital formation. 
D) abundant domestic natural resources. 
A) securely defined property rights. 
B) adopting modern technology. 
C) significant capital formation. 
D) abundant domestic natural resources.

Question 14

If a nation is going to achieve and sustain a high rate of economic growth, it must

Accepted Answer

A) prohibit low-wage foreign producers from supplying goods to the domestic market. 
B) have an abundant domestic supply of low cost energy resources. 
C) have a mechanism capable of attracting savings and channeling them into wealth-creating projects. 
D) impose regulations that will limit the intensity of competition among domestic firms. 
A) prohibit low-wage foreign producers from supplying goods to the domestic market. 
B) have an abundant domestic supply of low cost energy resources. 
C) have a mechanism capable of attracting savings and channeling them into wealth-creating projects. 
D) impose regulations that will limit the intensity of competition among domestic firms.

Question 15

When individuals and businesses are permitted to trade freely over a larger market area,

Accepted Answer

A) wages will decline to the level of the poorest country in the region. 
B) the monopoly power of business firms will increase. 
C) they will be able to produce a larger output and consume a more diverse bundle of goods. 
D) businesses will be able to earn higher profits, but the income levels of individuals will decline. 
A) wages will decline to the level of the poorest country in the region. 
B) the monopoly power of business firms will increase. 
C) they will be able to produce a larger output and consume a more diverse bundle of goods. 
D) businesses will be able to earn higher profits, but the income levels of individuals will decline.

Question 16

How do high marginal tax rates affect the economic prosperity of a nation?

Accepted Answer

A) They reduce the incentive of individuals to earn reported income. 
B) They encourage the nation's most productive citizens to emigrate to countries where taxes are lower. 
C) They discourage foreigners from investing in the country. 
D) All of the above are correct. 
A) They reduce the incentive of individuals to earn reported income. 
B) They encourage the nation's most productive citizens to emigrate to countries where taxes are lower. 
C) They discourage foreigners from investing in the country. 
D) All of the above are correct.

Question 17

Which of the following policies would be most likely to reduce the efficiency of a country's economic organization?

Accepted Answer

A) a legal structure that establishes secure property rights 
B) imposition of tariffs and other barriers limiting international trade 
C) competitive markets 
D) a stable monetary system 
A) a legal structure that establishes secure property rights 
B) imposition of tariffs and other barriers limiting international trade 
C) competitive markets 
D) a stable monetary system

Question 18

Which of the following is most likely to be a serious obstacle retarding the growth of less-developed nations?

Accepted Answer

A) a lack of knowledge about modern technology 
B) a lack of natural resources 
C) slow population growth 
D) low capital formation as the result of a weak legal system 
A) a lack of knowledge about modern technology 
B) a lack of natural resources 
C) slow population growth 
D) low capital formation as the result of a weak legal system

Question 19

What are the primary sources of economic growth? Why are our real incomes and living standards today so much higher than those of our great grandparents 50 or 100 years ago? Why is the income per person so much higher in some countries than others?

Accepted Answer

The major sources of economic growth are

Question 20

In a country that is experiencing economic growth at 7 percent per year, per capita income will double in approximately

Accepted Answer

A) seven years. 
B) ten years. 
C) fourteen years. 
D) twenty-one years. 
A) seven years. 
B) ten years. 
C) fourteen years. 
D) twenty-one years.

Investment in both physical and human capital tends to enhance economic growth because it generally

Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?

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

In recent years, wireless cellular telephones have been replacing land-line phone service. This is an example of

When competition is present and private ownership rights are clearly defined and securely enforced,

Which of the following is most important if a country wants to move from a low-income to a high-income status?

When the residents of a nation are free to trade with foreigners, domestic producers will be able to

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

In 1960 the per capita GDP of Hong Kong was substantially less than that of Argentina and Venezuela. By 2005, the per capita income of Hong Kong was more than three times the figures for Venezuela and Argentina. This dramatic change occurred because

Which of the following would be most likely to improve the standard of living of a less-developed country?

Frequently, politicians enact restrictive trade policies to protect domestic industries. How does economic theory predict this will affect the efficiency of economic organization?

If a nation is going to achieve and sustain a high rate of economic growth, it must

The recent growth records of Japan and Hong Kong during the last fifty years indicate that a nation can grow rapidly without

If a nation is going to achieve and sustain a high rate of economic growth, it must

When individuals and businesses are permitted to trade freely over a larger market area,

How do high marginal tax rates affect the economic prosperity of a nation?

Which of the following policies would be most likely to reduce the efficiency of a country's economic organization?

Which of the following is most likely to be a serious obstacle retarding the growth of less-developed nations?

What are the primary sources of economic growth? Why are our real incomes and living standards today so much higher than those of our great grandparents 50 or 100 years ago? Why is the income per person so much higher in some countries than others?

In a country that is experiencing economic growth at 7 percent per year, per capita income will double in approximately

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

Investment in both physical and human capital tends to enhance economic growth because it generally

Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?

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

In recent years, wireless cellular telephones have been replacing land-line phone service. This is an example of

When competition is present and private ownership rights are clearly defined and securely enforced,

Which of the following is most important if a country wants to move from a low-income to a high-income status?

When the residents of a nation are free to trade with foreigners, domestic producers will be able to

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

In 1960 the per capita GDP of Hong Kong was substantially less than that of Argentina and Venezuela. By 2005, the per capita income of Hong Kong was more than three times the figures for Venezuela and Argentina. This dramatic change occurred because

Which of the following would be most likely to improve the standard of living of a less-developed country?

Frequently, politicians enact restrictive trade policies to protect domestic industries. How does economic theory predict this will affect the efficiency of economic organization?

If a nation is going to achieve and sustain a high rate of economic growth, it must

The recent growth records of Japan and Hong Kong during the last fifty years indicate that a nation can grow rapidly without

If a nation is going to achieve and sustain a high rate of economic growth, it must

When individuals and businesses are permitted to trade freely over a larger market area,

How do high marginal tax rates affect the economic prosperity of a nation?

Which of the following policies would be most likely to reduce the efficiency of a country's economic organization?

Which of the following is most likely to be a serious obstacle retarding the growth of less-developed nations?

What are the primary sources of economic growth? Why are our real incomes and living standards today so much higher than those of our great grandparents 50 or 100 years ago? Why is the income per person so much higher in some countries than others?

In a country that is experiencing economic growth at 7 percent per year, per capita income will double in approximately

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