Question 1

Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but  by 2010, life expectancy had risen to

Accepted Answer

A)  36 years. 
B)  44 years. 
C)  52 years. 
D)  70 years. 
A)  36 years. 
B)  44 years. 
C)  52 years. 
D)  70 years.

Question 2

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 3

Stable money and prices are a key source of economic growth because

Accepted Answer

A)  they allow activist policymakers to fine tune the economy. 
B)  uncertainty and instability in prices will attract investors and business decision makers. 
C)  price instability increases capital formation. 
D)  price stability reduces the risks that accompany investment and other long-term commitments. 
A)  they allow activist policymakers to fine tune the economy. 
B)  uncertainty and instability in prices will attract investors and business decision makers. 
C)  price instability increases capital formation. 
D)  price stability reduces the risks that accompany investment and other long-term commitments.

Question 4

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 5

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 6

When the markets of an economy are more competitive, economic growth

Accepted Answer

A)  is harmed by the resulting low rates of profit for industry. 
B)  is enhanced because producers have a stronger incentive to provide goods efficiently. 
C)  will be slower because prices do not rise as rapidly. 
D)  is unaffected. 
A)  is harmed by the resulting low rates of profit for industry. 
B)  is enhanced because producers have a stronger incentive to provide goods efficiently. 
C)  will be slower because prices do not rise as rapidly. 
D)  is unaffected.

Question 7

Which of the following will discourage investment?

Accepted Answer

A)  Well-defined property rights. 
B)  Monetary instability. 
C)  A low and steady rate of inflation. 
D)  Low tax rates. 
A)  Well-defined property rights. 
B)  Monetary instability. 
C)  A low and steady rate of inflation. 
D)  Low tax rates.

Question 8

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 9

Which of the following did Thomas Malthus believe would make sustained economic growth and the achievement of high income levels impossible?

Accepted Answer

A)  Rapid growth of government spending. 
B)  The expansion of political democracy. 
C)  The expansion of communism to the developed world. 
D)  Growth of population. 
A)  Rapid growth of government spending. 
B)  The expansion of political democracy. 
C)  The expansion of communism to the developed world. 
D)  Growth of population.

Question 10

Which of the following is true of the per person income of the West (Western Europe and its offshoots of the United States, Canada, Australia, and New Zealand)

Accepted Answer

A)  It has increased each century and grown steadily since 1500. 
B)  It is now approximately 20 times greater than the figure of 200 years ago. 
C)  It rose steadily between 1000 and 1800, but income growth has slowed during the past 200 years. 
D)  While income per person has increased since 1800, there has been little change in life expectancy and other indicators of quality of life during this time period. 
A)  It has increased each century and grown steadily since 1500. 
B)  It is now approximately 20 times greater than the figure of 200 years ago. 
C)  It rose steadily between 1000 and 1800, but income growth has slowed during the past 200 years. 
D)  While income per person has increased since 1800, there has been little change in life expectancy and other indicators of quality of life during this time period.

Question 11

If the legal and regulatory environment fails to protect property rights and is often used to favor some at the expense of others, which of the following is most likely to be encouraged?

Accepted Answer

A)  Productive activities. 
B)  A high rate of investment. 
C)  Rent-seeking and unproductive activities. 
D)  Competitive markets. 
A)  Productive activities. 
B)  A high rate of investment. 
C)  Rent-seeking and unproductive activities. 
D)  Competitive markets.

Question 12

When a country's inflation rate varies substantially from year-to-year and is therefore difficult to predict, this will

Accepted Answer

A)  reduce the volume of trade and the gains derived from it. 
B)  reduce the risk accompanying investment. 
C)  encourage entrepreneurs to innovate and develop better products. 
D)  increase the level of foreign investment in the country. 
A)  reduce the volume of trade and the gains derived from it. 
B)  reduce the risk accompanying investment. 
C)  encourage entrepreneurs to innovate and develop better products. 
D)  increase the level of foreign investment in the country.

Question 13

Which of the following is true about growth rates?

Accepted Answer

A)  in recent decades, the rich countries of the world have consistently grown more rapidly than poor countries. 
B)  no less developed country (LD
C)  was able to achieve a more rapid growth rate than the United States during the 1980 through 2005 period. 
C)  during recent decades, most LDCs have stagnated economically. 
D)  during 1980 through 2005, the fastest growing countries in the world were mostly LDCs. 
A)  in recent decades, the rich countries of the world have consistently grown more rapidly than poor countries. 
B)  no less developed country (LD
C)  was able to achieve a more rapid growth rate than the United States during the 1980 through 2005 period. 
C)  during recent decades, most LDCs have stagnated economically. 
D)  during 1980 through 2005, the fastest growing countries in the world were mostly LDCs.

Question 14

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 15

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 16

Monetary and price instability will

Accepted Answer

A)  make it easier for both individuals and businesses to plan wisely for the future. 
B)  generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment. 
C)  encourage businesses to invest and expand their future output. 
D)  encourage domestic citizens to increase their rate of saving. 
A)  make it easier for both individuals and businesses to plan wisely for the future. 
B)  generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment. 
C)  encourage businesses to invest and expand their future output. 
D)  encourage domestic citizens to increase their rate of saving.

Question 17

Country A and country B initially have the same per capita income. Suppose that A sustains an annual growth rate of 3.5 percent, while the annual growth rate of country B is 1.75 percent. The "rule of 70" indicates that after forty years, the per capita income of country A will be approximately ____ that of country B.

Accepted Answer

A)  one-half 
B)  70 percent greater than 
C)  twice 
D)  four times 
A)  one-half 
B)  70 percent greater than 
C)  twice 
D)  four times

Question 18

If the political leaders of a country want to promote economic growth, which of the following policy alternatives would be most effective?

Accepted Answer

A)  Imposition of price controls on agricultural products in an effort to keep food cheap. 
B)  A public-sector investment program financed by highly progressive taxation. 
C)  Low taxes, a monetary policy consistent with long-run price stability, and the abolition of price controls and trade restrictions. 
D)  Expansionary monetary policy designed to keep interest rates low. 
A)  Imposition of price controls on agricultural products in an effort to keep food cheap. 
B)  A public-sector investment program financed by highly progressive taxation. 
C)  Low taxes, a monetary policy consistent with long-run price stability, and the abolition of price controls and trade restrictions. 
D)  Expansionary monetary policy designed to keep interest rates low.

Question 19

How does private ownership and a competitive market affect the efficiency of economic organization?

Accepted Answer

Private ownership of resources, includin

Question 20

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.

Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but by 2010, life expectancy had risen to

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

Stable money and prices are a key source of economic growth because

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

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

When the markets of an economy are more competitive, economic growth

Which of the following will discourage investment?

An increase in real per capita income will generally lead to

Which of the following did Thomas Malthus believe would make sustained economic growth and the achievement of high income levels impossible?

Which of the following is true of the per person income of the West (Western Europe and its offshoots of the United States, Canada, Australia, and New Zealand)

If the legal and regulatory environment fails to protect property rights and is often used to favor some at the expense of others, which of the following is most likely to be encouraged?

When a country's inflation rate varies substantially from year-to-year and is therefore difficult to predict, this will

Which of the following is true about growth rates?

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

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

Monetary and price instability will

If the political leaders of a country want to promote economic growth, which of the following policy alternatives would be most effective?

How does private ownership and a competitive market affect the efficiency of economic organization?

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

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

Life expectancy at birth for the world rose from 24 years to 26 years between 1000 and 1820, but by 2010, life expectancy had risen to

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

Stable money and prices are a key source of economic growth because

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

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

When the markets of an economy are more competitive, economic growth

Which of the following will discourage investment?

An increase in real per capita income will generally lead to

Which of the following did Thomas Malthus believe would make sustained economic growth and the achievement of high income levels impossible?

Which of the following is true of the per person income of the West (Western Europe and its offshoots of the United States, Canada, Australia, and New Zealand)

If the legal and regulatory environment fails to protect property rights and is often used to favor some at the expense of others, which of the following is most likely to be encouraged?

When a country's inflation rate varies substantially from year-to-year and is therefore difficult to predict, this will

Which of the following is true about growth rates?

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

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

Monetary and price instability will

If the political leaders of a country want to promote economic growth, which of the following policy alternatives would be most effective?

How does private ownership and a competitive market affect the efficiency of economic organization?

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

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