Question 1

When competition is present and property rights secure, people will be encouraged to

Accepted Answer

A)  plunder the resources of others. 
B)  pay the lowest possible wages. 
C)  provide others with things that they value in exchange for income. 
D)  Invest in other countries where markets are less competitive and property rights less secure. 
A)  plunder the resources of others. 
B)  pay the lowest possible wages. 
C)  provide others with things that they value in exchange for income. 
D)  Invest in other countries where markets are less competitive and property rights less secure.

Question 2

Which of the following is most important if a country is going to grow rapidly and achieve a high level of per capita income?

Accepted Answer

A)  An abundance of natural resources. 
B)  A warm moist climate. 
C)  A small population relative to the geographic size of the country. 
D)  Institutions and policies that encourage people to engage in productive activities. 
A)  An abundance of natural resources. 
B)  A warm moist climate. 
C)  A small population relative to the geographic size of the country. 
D)  Institutions and policies that encourage people to engage in productive activities.

Question 3

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)  Aa 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)  Aa stable monetary system.

Question 4

When a nation's institutional environment is more favorable, it will

Accepted Answer

A)  attract more physical investment. 
B)  encourage individuals to invest more heavily in human capital. 
C)  encourage the development and efficient use of natural resources. 
D)  all of the above. 
A)  attract more physical investment. 
B)  encourage individuals to invest more heavily in human capital. 
C)  encourage the development and efficient use of natural resources. 
D)  all of the above.

Question 5

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 6

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 7

(I)  Governments that respect property rights and freedom of exchange while following monetary (and fiscal) policies consistent with relative price stability, establish the foundation for economic growth.
(II)  Governments have often diminished the economic prospects of a nation by levying high taxes, instituting price controls, and following inflationary monetary policies.

Accepted Answer

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

Question 8

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 9

If the per capita income of a country is growing at 3.5 percent per year, approximately how long will it take for that income to double?

Accepted Answer

A)  20 years 
B)  25 years 
C)  35 years 
D)  70 years 
A)  20 years 
B)  25 years 
C)  35 years 
D)  70 years

Question 10

Regarding economic growth and income levels, which of the following is true?

Accepted Answer

A)  Poor countries are unable to ignite the growth process unless they receive financial aid from richer countries. 
B)  Countries that fail to adopt institutions and policies supportive of trade, entrepreneurial discovery, and private investment will remain poor in the foreseeable future. 
C)  Countries that lack an abundance of natural resources have been unable to grow and achieve high income levels. 
D)  Countries with a large population relative to their land area are destined to remain poor. 
A)  Poor countries are unable to ignite the growth process unless they receive financial aid from richer countries. 
B)  Countries that fail to adopt institutions and policies supportive of trade, entrepreneurial discovery, and private investment will remain poor in the foreseeable future. 
C)  Countries that lack an abundance of natural resources have been unable to grow and achieve high income levels. 
D)  Countries with a large population relative to their land area are destined to remain poor.

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

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 13

Which of the following is true about economic growth?

Accepted Answer

A)  The United States is rich because it has democratic political institutions. 
B)  Economic growth is primarily the result of gains from trade, discovery of better ways of doing things, and capital investment. 
C)  Without foreign aid, poor countries are unable to break the cycle of poverty, low savings and investment, and economic stagnation. 
D)  Most all countries with an abundance of natural resources have been able to achieve rapid growth and high levels of per capita income. 
A)  The United States is rich because it has democratic political institutions. 
B)  Economic growth is primarily the result of gains from trade, discovery of better ways of doing things, and capital investment. 
C)  Without foreign aid, poor countries are unable to break the cycle of poverty, low savings and investment, and economic stagnation. 
D)  Most all countries with an abundance of natural resources have been able to achieve rapid growth and high levels of per capita income.

Question 14

Some low-income countries generally remain poor because

Accepted Answer

A)  their institutional arrangements and policies often discourage productive activity and reduce the potential gains from specialization and exchange. 
B)  they are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. 
C)  they are poorly endowed with natural resources, which are essential for long-term growth. 
D)  when the average income level is low, workers have little incentive to earn higher incomes. 
A)  their institutional arrangements and policies often discourage productive activity and reduce the potential gains from specialization and exchange. 
B)  they are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. 
C)  they are poorly endowed with natural resources, which are essential for long-term growth. 
D)  when the average income level is low, workers have little incentive to earn higher incomes.

Question 15

During the past 1000 years, the income per person of the world has

Accepted Answer

A)  increased each century, and it is now five times greater than the level of 1000 years ago. 
B)  risen rapidly in Western Europe, North America, Japan, and  Australia, but there has been little change in income per person in other parts of the world. 
C)  increased by approximately tenfold during the past 200 years, but there was only a small increase during the 800 years prior to 1800. 
D)  persistently increased, but the largest increases occurred during the 1200 to 1800 era. 
A)  increased each century, and it is now five times greater than the level of 1000 years ago. 
B)  risen rapidly in Western Europe, North America, Japan, and  Australia, but there has been little change in income per person in other parts of the world. 
C)  increased by approximately tenfold during the past 200 years, but there was only a small increase during the 800 years prior to 1800. 
D)  persistently increased, but the largest increases occurred during the 1200 to 1800 era.

Question 16

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

Accepted Answer

A)  High and variable rates of inflation. 
B)  Tariffs and quotas that restrict international trade. 
C)  A legal system that provides for secure property rights and even-handed enforcement of contracts. 
D)  High marginal tax rates. 
A)  High and variable rates of inflation. 
B)  Tariffs and quotas that restrict international trade. 
C)  A legal system that provides for secure property rights and even-handed enforcement of contracts. 
D)  High marginal tax rates.

Question 17

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 18

Increases in per capita GDP are

Accepted Answer

A)  important, because it means governments have more resources. 
B)  important, because they generally improve our living standards. 
C)  not important, as governments take the increased output and waste it. 
D)  not important, because increases in per capita GDP do not affect our living standards. 
A)  important, because it means governments have more resources. 
B)  important, because they generally improve our living standards. 
C)  not important, as governments take the increased output and waste it. 
D)  not important, because increases in per capita GDP do not affect our living standards.

Question 19

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 20

Concerning tax rates and growth, which of the following is true?

Accepted Answer

A)  Tax rates do not influence economic growth. 
B)  Countries with high marginal tax rates have generally had higher rates of economic growth than those with low tax rates. 
C)  Countries with low marginal tax rates have generally had higher rates of economic growth than those with high tax rates. 
D)  Countries that impose high marginal tax rates at low-income thresholds generally have high rates of economic growth. 
A)  Tax rates do not influence economic growth. 
B)  Countries with high marginal tax rates have generally had higher rates of economic growth than those with low tax rates. 
C)  Countries with low marginal tax rates have generally had higher rates of economic growth than those with high tax rates. 
D)  Countries that impose high marginal tax rates at low-income thresholds generally have high rates of economic growth.

When competition is present and property rights secure, people will be encouraged to

Which of the following is most important if a country is going to grow rapidly and achieve a high level of per capita income?

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

When a nation's institutional environment is more favorable, it will

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

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

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

If the per capita income of a country is growing at 3.5 percent per year, approximately how long will it take for that income to double?

Regarding economic growth and income levels, which of the following is true?

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

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

Which of the following is true about economic growth?

Some low-income countries generally remain poor because

During the past 1000 years, the income per person of the world has

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

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

Increases in per capita GDP are

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

Concerning tax rates and growth, which of the following is true?

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

When competition is present and property rights secure, people will be encouraged to

Which of the following is most important if a country is going to grow rapidly and achieve a high level of per capita income?

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

When a nation's institutional environment is more favorable, it will

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

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

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

If the per capita income of a country is growing at 3.5 percent per year, approximately how long will it take for that income to double?

Regarding economic growth and income levels, which of the following is true?

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

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

Which of the following is true about economic growth?

Some low-income countries generally remain poor because

During the past 1000 years, the income per person of the world has

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

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

Increases in per capita GDP are

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

Concerning tax rates and growth, which of the following is true?

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