Question 1

Institutions that encourage productive activities and discourage counterproductive ones, will tend to promote

Accepted Answer

A)  economic growth. 
B)  rent-seeking 
C)  economic fluctuations 
D)  high rates of unemployment. 
A)  economic growth. 
B)  rent-seeking 
C)  economic fluctuations 
D)  high rates of unemployment.

Question 2

To move up the income ladder and achieve high-income status, countries must

Accepted Answer

A)  have sustained economic growth. 
B)  restrict international trade. 
C)  encourage the production of consumption goods rather than investment goods. 
D)  maintain high inflation. 
A)  have sustained economic growth. 
B)  restrict international trade. 
C)  encourage the production of consumption goods rather than investment goods. 
D)  maintain high inflation.

Question 3

During the past 200 years, income per person  has

Accepted Answer

A)  increased in the developed countries of Western Europe and North America,  but declined in the rest of the world. 
B)  declined in the developed countries of Western Europe and North America, but increased in the rest of the world. 
C)  increased far more rapidly in both developed and less developed  countries than during the centuries prior to 1800. 
D)  Increased far less rapidly in both developed and less developed countries than during the centuries prior to 1800. 
A)  increased in the developed countries of Western Europe and North America,  but declined in the rest of the world. 
B)  declined in the developed countries of Western Europe and North America, but increased in the rest of the world. 
C)  increased far more rapidly in both developed and less developed  countries than during the centuries prior to 1800. 
D)  Increased far less rapidly in both developed and less developed countries than during the centuries prior to 1800.

Question 4

When per capita real GDP is increasing, real output is growing

Accepted Answer

A)  more rapidly than prices. 
B)  more rapidly than population. 
C)  less rapidly than prices. 
D)  less rapidly than population. 
A)  more rapidly than prices. 
B)  more rapidly than population. 
C)  less rapidly than prices. 
D)  less rapidly than population.

Question 5

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 6

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 7

Most economists believe that the poor economic performance of countries located in tropical areas is primarily the result of

Accepted Answer

A)  the hot climate that saps the energy of people in tropical countries. 
B)  the poor institutional quality in most tropical countries. 
C)  the lack of natural resources in most tropical countries. 
D)  the failure of rich countries to provide foreign aid to tropical countries. 
A)  the hot climate that saps the energy of people in tropical countries. 
B)  the poor institutional quality in most tropical countries. 
C)  the lack of natural resources in most tropical countries. 
D)  the failure of rich countries to provide foreign aid to tropical countries.

Question 8

Which of the following is true regarding the per person income of the world during the past 1000 years?

Accepted Answer

A)  The world's income per person has approximately doubled during the past 1000 years and most of that growth has occurred since 1900. 
B)  The world's income per person changed very little during the 800 years prior to 1813, but it has increased by nearly tenfold during the past 200 years. 
C)  The world's income per person has grown steadily during the past 1000 years. 
D)  The world's per person income grew at an annual rate of more than 2 percent during 1000-1813, but the annual growth rate has declined as the population increased during the past 200 years. 
A)  The world's income per person has approximately doubled during the past 1000 years and most of that growth has occurred since 1900. 
B)  The world's income per person changed very little during the 800 years prior to 1813, but it has increased by nearly tenfold during the past 200 years. 
C)  The world's income per person has grown steadily during the past 1000 years. 
D)  The world's per person income grew at an annual rate of more than 2 percent during 1000-1813, but the annual growth rate has declined as the population increased during the past 200 years.

Question 9

An open capital market affects a nation's economic growth by

Accepted Answer

A)  channeling capital into productive projects and away from wasteful projects. 
B)  rewarding investors who find the most productive projects and invest in them. 
C)  making the lowest-cost capital available from around the world. 
D)  all of the above. 
A)  channeling capital into productive projects and away from wasteful projects. 
B)  rewarding investors who find the most productive projects and invest in them. 
C)  making the lowest-cost capital available from around the world. 
D)  all of the above.

Question 10

When the money supply is expanding and prices rise rapidly, economic growth

Accepted Answer

A)  is slowed by the resulting unpredictability of the future level of prices. 
B)  is enhanced as economic activity grows more rapidly. 
C)  is enhanced because profits are higher so that capital investment is greater. 
D)  is enhanced because existing debt is reduced in value, so people are willing to buy more goods. 
A)  is slowed by the resulting unpredictability of the future level of prices. 
B)  is enhanced as economic activity grows more rapidly. 
C)  is enhanced because profits are higher so that capital investment is greater. 
D)  is enhanced because existing debt is reduced in value, so people are willing to buy more goods.

Question 11

Why do political instability and insecure property rights retard economic growth?

Accepted Answer

A)  Fear that private property will be confiscated substantially reduces the incentive to invest and create wealth. 
B)  When property rights are insecure, foreign investors will be reluctant to invest in the country. 
C)  Savings will tend to flow out of a country if individuals fear their property is insecure. 
D)  All of the above are correct. 
A)  Fear that private property will be confiscated substantially reduces the incentive to invest and create wealth. 
B)  When property rights are insecure, foreign investors will be reluctant to invest in the country. 
C)  Savings will tend to flow out of a country if individuals fear their property is insecure. 
D)  All of the above are correct.

Question 12

Which of the following is true?

Accepted Answer

A)  Real GDP is a measure of income, but not output. 
B)  Real GDP is a measure of output, but not income. 
C)  Real GDP is a measure of inflation. 
D)  Growth of output is necessary for the growth of income. 
A)  Real GDP is a measure of income, but not output. 
B)  Real GDP is a measure of output, but not income. 
C)  Real GDP is a measure of inflation. 
D)  Growth of output is necessary for the growth of income.

Question 13

The historical record indicates that foreign aid has

Accepted Answer

A)  played a major role in helping formerly poor countries grow rapidly and achieve high income levels. 
B)  re-enforced corrupt governments and policies that stifle productive activities. 
C)  helped poor countries escape counterproductive policies imposed by authoritarian political leaders. 
D)  promoted economic growth, but slowed the movement toward political democracy. 
A)  played a major role in helping formerly poor countries grow rapidly and achieve high income levels. 
B)  re-enforced corrupt governments and policies that stifle productive activities. 
C)  helped poor countries escape counterproductive policies imposed by authoritarian political leaders. 
D)  promoted economic growth, but slowed the movement toward political democracy.

Question 14

Which of the following would be most likely to improve the standard of living of people in less-developed nations?

Accepted Answer

A)  The development of strong labor unions. 
B)  An increase in foreign investment. 
C)  An increase in the share of the population under fifteen years of age. 
D)  Higher tariffs and the imposition of other restraints designed to restrict international trade. 
A)  The development of strong labor unions. 
B)  An increase in foreign investment. 
C)  An increase in the share of the population under fifteen years of age. 
D)  Higher tariffs and the imposition of other restraints designed to restrict international trade.

Question 15

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 16

Which of the following would be most likely to help the residents of a nation produce a larger output and consume a wide variety of products at economical prices?

Accepted Answer

A)  Imposition of tariffs on imported goods. 
B)  Quotas that protect domestic businesses against foreign producers that pay workers low wages. 
C)  Free trade. 
D)  Exchange rate controls. 
A)  Imposition of tariffs on imported goods. 
B)  Quotas that protect domestic businesses against foreign producers that pay workers low wages. 
C)  Free trade. 
D)  Exchange rate controls.

Question 17

Which of the following is a driving force underlying economic growth?

Accepted Answer

A)  trade restrictions that protect domestic businesses from competition with foreign producers 
B)  regulations that require businesses to obtain permission from the government before starting a new business 
C)  tax increases that expand the revenues of the government 
D)  entrepreneurial discovery and production of improved products 
A)  trade restrictions that protect domestic businesses from competition with foreign producers 
B)  regulations that require businesses to obtain permission from the government before starting a new business 
C)  tax increases that expand the revenues of the government 
D)  entrepreneurial discovery and production of improved products

Question 18

What has happened to the world's economy over the past 200 years?

Accepted Answer

A)  People have become malnourished because they no longer grow most of their own food. 
B)  Rich countries have become richer and poor countries have become poorer. 
C)  People have more consumer goods but health and happiness has decreased. 
D)  There has been economic growth, less poverty, and longer life spans. 
A)  People have become malnourished because they no longer grow most of their own food. 
B)  Rich countries have become richer and poor countries have become poorer. 
C)  People have more consumer goods but health and happiness has decreased. 
D)  There has been economic growth, less poverty, and longer life spans.

Question 19

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

Accepted Answer

A)  help a country achieve more rapid economic growth. 
B)  promote more efficient use of investment capital by entrepreneurs. 
C)  retard economic progress. 
D)  increase the profits of business firms. 
A)  help a country achieve more rapid economic growth. 
B)  promote more efficient use of investment capital by entrepreneurs. 
C)  retard economic progress. 
D)  increase the profits of business firms.

Question 20

An increase in per capita income will generally lead to

Accepted Answer

A)  more material goods, but a decline in the quality of the environment. 
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 the living standards of most people. 
A)  more material goods, but a decline in the quality of the environment. 
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 the living standards of most people.

Institutions that encourage productive activities and discourage counterproductive ones, will tend to promote

To move up the income ladder and achieve high-income status, countries must

During the past 200 years, income per person has

When per capita real GDP is increasing, real output is growing

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

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

Most economists believe that the poor economic performance of countries located in tropical areas is primarily the result of

Which of the following is true regarding the per person income of the world during the past 1000 years?

An open capital market affects a nation's economic growth by

When the money supply is expanding and prices rise rapidly, economic growth

Why do political instability and insecure property rights retard economic growth?

Which of the following is true?

The historical record indicates that foreign aid has

Which of the following would be most likely to improve the standard of living of people in less-developed nations?

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 would be most likely to help the residents of a nation produce a larger output and consume a wide variety of products at economical prices?

Which of the following is a driving force underlying economic growth?

What has happened to the world's economy over the past 200 years?

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

An increase in per capita income will generally lead 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

Special Topics

Filters

Exam 16: Creating an Environment for Growth and Prosperity

Institutions that encourage productive activities and discourage counterproductive ones, will tend to promote

To move up the income ladder and achieve high-income status, countries must

During the past 200 years, income per person has

When per capita real GDP is increasing, real output is growing

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

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

Most economists believe that the poor economic performance of countries located in tropical areas is primarily the result of

Which of the following is true regarding the per person income of the world during the past 1000 years?

An open capital market affects a nation's economic growth by

When the money supply is expanding and prices rise rapidly, economic growth

Why do political instability and insecure property rights retard economic growth?

Which of the following is true?

The historical record indicates that foreign aid has

Which of the following would be most likely to improve the standard of living of people in less-developed nations?

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 would be most likely to help the residents of a nation produce a larger output and consume a wide variety of products at economical prices?

Which of the following is a driving force underlying economic growth?

What has happened to the world's economy over the past 200 years?

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

An increase in per capita income will generally lead 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

Special Topics

Filters