Question 1

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

Accepted Answer

A)  The expectation of sustained high inflation. 
B)  The expectation that property rights will be highly secure in the years ahead. 
C)  The imposition of high tariffs and other restraints limiting imports. 
D)  Higher personal and corporate tax rates. 
A)  The expectation of sustained high inflation. 
B)  The expectation that property rights will be highly secure in the years ahead. 
C)  The imposition of high tariffs and other restraints limiting imports. 
D)  Higher personal and corporate tax rates.

Question 2

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 3

How can increased investment help a country achieve increased economic growth? What costs are involved?

Accepted Answer

Countries can profit from investment in

Question 4

Which of the following is true about investment?

Accepted Answer

A)  In a competitive capital market, private investors have a strong incentive to evaluate projects carefully and allocate their funds toward those projects expected to yield the highest rates of return. 
B)  In a competitive environment, profitable investment projects will tend to increase the wealth of the nation. 
C)  When investment funds are allocated by governments (rather than capital markets), political clout rather than the expected rate of return will generally determine which projects are undertaken. 
D)  All of the above are correct. 
A)  In a competitive capital market, private investors have a strong incentive to evaluate projects carefully and allocate their funds toward those projects expected to yield the highest rates of return. 
B)  In a competitive environment, profitable investment projects will tend to increase the wealth of the nation. 
C)  When investment funds are allocated by governments (rather than capital markets), political clout rather than the expected rate of return will generally determine which projects are undertaken. 
D)  All of the above are correct.

Question 5

According to Angus Maddison, a leading authority in the area, world per capita GDP

Accepted Answer

A)  increased by about 50 percent  during the 800 years following year 1000, but it increased  by nearly tenfold  during the past 200 years. 
B)  increased by nearly tenfold during the 800 years between 1000 and 1813, but it increased by only 50 percent during the past 200 years. 
C)  has grown steadily during the past 1000 years. 
D)  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)  increased by about 50 percent  during the 800 years following year 1000, but it increased  by nearly tenfold  during the past 200 years. 
B)  increased by nearly tenfold during the 800 years between 1000 and 1813, but it increased by only 50 percent during the past 200 years. 
C)  has grown steadily during the past 1000 years. 
D)  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 6

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 7

The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without

Accepted Answer

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

Question 8

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 9

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 10

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 11

Which of the following is most likely to be a major source of growth in per capita GDP?

Accepted Answer

A)  a high investment/GDP ratio 
B)  a high rate of inflation 
C)  rapid population growth 
D)  rapid growth in the money supply 
A)  a high investment/GDP ratio 
B)  a high rate of inflation 
C)  rapid population growth 
D)  rapid growth in the money supply

Question 12

High income countries with larger governments as a share of GDP have generally

Accepted Answer

A)  grown less rapidly than their counterparts with smaller governments. 
B)  experienced less deadweight losses resulting from taxes and/or government borrowing. 
C)  seen the government decrease in size as real GDP rises. 
D)  been able to be more economically efficient. 
A)  grown less rapidly than their counterparts with smaller governments. 
B)  experienced less deadweight losses resulting from taxes and/or government borrowing. 
C)  seen the government decrease in size as real GDP rises. 
D)  been able to be more economically efficient.

Question 13

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 14

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 15

How do high marginal tax rates influence the growth and prosperity of countries? What type of tax policy is needed to foster economic efficiency and growth?

Accepted Answer

Economic theory suggests that marginal t

Question 16

In a market economy, what determines whether an entrepreneur will continue in business or terminate the production of a new product?

Accepted Answer

A)  Government regulations. 
B)  Licensing by industrial development agencies. 
C)  The profit or loss of the business. 
D)  The taxes paid to the government relative to the subsidies received. 
A)  Government regulations. 
B)  Licensing by industrial development agencies. 
C)  The profit or loss of the business. 
D)  The taxes paid to the government relative to the subsidies received.

Question 17

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 18

Measured in 2011 dollars, the GDP per person of the world was $1,122 in 1820.  By 2010, the world's income per person had risen  to

Accepted Answer

A)  nearly $1200, almost twice the level of 1820. 
B)  $2,422, almost four times the level of 1820. 
C)  a little more than $3,600, approximately six times the level of 1820. 
D)  $13,070, nearly twelve times the level of 1820. 
A)  nearly $1200, almost twice the level of 1820. 
B)  $2,422, almost four times the level of 1820. 
C)  a little more than $3,600, approximately six times the level of 1820. 
D)  $13,070, nearly twelve times the level of 1820.

Question 19

Which of the following will tend to retard the growth and prosperity of a country?

Accepted Answer

A)  Imposition of price controls and regulations that restrain domestic and international trade. 
B)  An expansionary monetary policy that leads to high rates of inflation. 
C)  High marginal tax rates. 
D)  All of the above. 
A)  Imposition of price controls and regulations that restrain domestic and international trade. 
B)  An expansionary monetary policy that leads to high rates of inflation. 
C)  High marginal tax rates. 
D)  All of the above.

Question 20

Which of the following is most likely to help the residents of a nation produce more goods and services and achieve higher income levels?

Accepted Answer

A)  higher tax rates 
B)  a higher rate of investment 
C)  a smaller trade sector 
D)  greater use of taxation to transfer income from the rich to the poor 
A)  higher tax rates 
B)  a higher rate of investment 
C)  a smaller trade sector 
D)  greater use of taxation to transfer income from the rich to the poor

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

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

How can increased investment help a country achieve increased economic growth? What costs are involved?

Which of the following is true about investment?

According to Angus Maddison, a leading authority in the area, world per capita GDP

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

The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without

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

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

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 most likely to be a major source of growth in per capita GDP?

High income countries with larger governments as a share of GDP have generally

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

Obstacles that restrict trade, either domestic or international, will

How do high marginal tax rates influence the growth and prosperity of countries? What type of tax policy is needed to foster economic efficiency and growth?

In a market economy, what determines whether an entrepreneur will continue in business or terminate the production of a new product?

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

Measured in 2011 dollars, the GDP per person of the world was $1,122 in 1820. By 2010, the world's income per person had risen to

Which of the following will tend to retard the growth and prosperity of a country?

Which of the following is most likely to help the residents of a nation produce more goods and services and achieve higher income levels?

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

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

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

How can increased investment help a country achieve increased economic growth? What costs are involved?

Which of the following is true about investment?

According to Angus Maddison, a leading authority in the area, world per capita GDP

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

The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without

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

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

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 most likely to be a major source of growth in per capita GDP?

High income countries with larger governments as a share of GDP have generally

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

Obstacles that restrict trade, either domestic or international, will

How do high marginal tax rates influence the growth and prosperity of countries? What type of tax policy is needed to foster economic efficiency and growth?

In a market economy, what determines whether an entrepreneur will continue in business or terminate the production of a new product?

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

Measured in 2011 dollars, the GDP per person of the world was $1,122 in 1820. By 2010, the world's income per person had risen to

Which of the following will tend to retard the growth and prosperity of a country?

Which of the following is most likely to help the residents of a nation produce more goods and services and achieve higher income levels?

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