Question 1

If real GDP is increasing more rapidly than population,

Accepted Answer

A)  population must be declining. 
B)  the country will have to export more than it imports. 
C)  the general level of prices must be increasing. 
D)  per capita real GDP will be increasing. 
A)  population must be declining. 
B)  the country will have to export more than it imports. 
C)  the general level of prices must be increasing. 
D)  per capita real GDP will be increasing.

Question 2

Which of the following is most likely to help promote the efficient use of resources and rapid economic growth?

Accepted Answer

A)  high tariffs and imposition of other trade restrictions 
B)  high marginal tax rates 
C)  an open and competitive capital market 
D)  high rates of inflation 
A)  high tariffs and imposition of other trade restrictions 
B)  high marginal tax rates 
C)  an open and competitive capital market 
D)  high rates of inflation

Question 3

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Accepted Answer

A)  They increase employment and thereby promote the growth of real GDP. 
B)  They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition. 
C)  They protect domestic producers and thereby promote economic growth. 
D)  Both a and c are correct. 
A)  They increase employment and thereby promote the growth of real GDP. 
B)  They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition. 
C)  They protect domestic producers and thereby promote economic growth. 
D)  Both a and c are correct.

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

Which of the following goods are available at highly economical prices because the use of mass production techniques substantially reduces their per unit production costs?

Accepted Answer

A)  automobiles 
B)  DVD players 
C)  microwave ovens 
D)  all of the above 
A)  automobiles 
B)  DVD players 
C)  microwave ovens 
D)  all of the above

Question 6

When competition is present and private ownership rights are clearly defined and securely enforced by the legal system, business firms will have a strong incentive to

Accepted Answer

A)  innovate and develop better products and lower cost production methods. 
B)  spend time attempting to plunder (take) the resources of others. 
C)  engage in wasteful activities that increase the cost of producing goods and services. 
D)  use resources during the current period rather than conserving them for the future. 
A)  innovate and develop better products and lower cost production methods. 
B)  spend time attempting to plunder (take) the resources of others. 
C)  engage in wasteful activities that increase the cost of producing goods and services. 
D)  use resources during the current period rather than conserving them for the future.

Question 7

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.

Question 8

The per capita income level of the world grew very slowly prior to

Accepted Answer

A)  around 1800, when per capita GDP began to increase rapidly in some Western countries. 
B)  around 400, when the collapse of the Roman empire resulted in a substantial increase in the growth of real GDP. 
C)  around 2000, when mobile phones became commonly available. 
D)  the 14th century, when the Italian Renaissance began. 
A)  around 1800, when per capita GDP began to increase rapidly in some Western countries. 
B)  around 400, when the collapse of the Roman empire resulted in a substantial increase in the growth of real GDP. 
C)  around 2000, when mobile phones became commonly available. 
D)  the 14th century, when the Italian Renaissance began.

Question 9

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 10

The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of

Accepted Answer

A)  rapid growth of capital formation if population increased above the subsistence level. 
B)  rapid growth of population if income increased above the subsistence level. 
C)  rapid growth of government if income increased above the subsistence level. 
D)  political democracy if income increased above the subsistence level. 
A)  rapid growth of capital formation if population increased above the subsistence level. 
B)  rapid growth of population if income increased above the subsistence level. 
C)  rapid growth of government if income increased above the subsistence level. 
D)  political democracy if income increased above the subsistence level.

Question 11

(I)  A monetary policy that results in price stability will encourage the realization of gains from trade and thereby help promote economic growth.
(II)  High tariffs and restrictive quotas will encourage rapid economic growth.

Accepted Answer

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

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

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

Accepted Answer

A)  High marginal tax rates. 
B)  Competitive markets. 
C)  Rapid increases in the money supply. 
D)  Imposition of high tariffs that will protect domestic producers from the ravages of foreign competition. 
A)  High marginal tax rates. 
B)  Competitive markets. 
C)  Rapid increases in the money supply. 
D)  Imposition of high tariffs that will protect domestic producers from the ravages of foreign competition.

Question 14

Which of the following is true about tax rates and economic growth?

Accepted Answer

A)  Marginal tax rates that take a large share of income will enhance the incentive of individuals to invest and engage in productive activities. 
B)  High tax rates will tend to drive investment funds and highly productive citizens to other countries where tax rates are lower. 
C)  As marginal tax rates increase, individuals get to keep a larger share of their earnings. 
D)  Countries can gain by imposing higher tariffs and other barriers that will restrain international trade. 
A)  Marginal tax rates that take a large share of income will enhance the incentive of individuals to invest and engage in productive activities. 
B)  High tax rates will tend to drive investment funds and highly productive citizens to other countries where tax rates are lower. 
C)  As marginal tax rates increase, individuals get to keep a larger share of their earnings. 
D)  Countries can gain by imposing higher tariffs and other barriers that will restrain international trade.

Question 15

The replacement of older products by newer improved ones is called

Accepted Answer

A)  trickle-down economic growth. 
B)  creative destruction. 
C)  economies of scale. 
D)  planned obsolescence. 
A)  trickle-down economic growth. 
B)  creative destruction. 
C)  economies of scale. 
D)  planned obsolescence.

Question 16

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 17

The replacement of the phonograph by the cassette tape player and the eventual replacement of the latter by CD and MP3 players is an example of

Accepted Answer

A)  economies of scale. 
B)  planned obsolescence. 
C)  diseconomies of scale. 
D)  creative destruction. 
A)  economies of scale. 
B)  planned obsolescence. 
C)  diseconomies of scale. 
D)  creative destruction.

Question 18

A legal system that protects private property and enforces contracts in an even-handed manner helps promote economic growth because it

Accepted Answer

A)  makes it possible for individuals to generate large incomes and get ahead without cooperating with others. 
B)  provides people with a strong incentive to supply others with things that they value at an economical price. 
C)  encourages people to use resources now rather than conserving them for the future. 
D)  keeps the real wages of workers low and thereby makes it possible for business firms to supply goods and services economically. 
A)  makes it possible for individuals to generate large incomes and get ahead without cooperating with others. 
B)  provides people with a strong incentive to supply others with things that they value at an economical price. 
C)  encourages people to use resources now rather than conserving them for the future. 
D)  keeps the real wages of workers low and thereby makes it possible for business firms to supply goods and services economically.

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

Economic growth is likely to be faster when

Accepted Answer

A)  higher tax rates are imposed on high income individuals in order to provide greater cash payments to the poor. 
B)  domestic markets are opened to foreign sellers and foreign investors. 
C)  the supply of money is increased rapidly so individuals have more money to spend. 
D)  dramatic changes in political and legal institutions occur often. 
A)  higher tax rates are imposed on high income individuals in order to provide greater cash payments to the poor. 
B)  domestic markets are opened to foreign sellers and foreign investors. 
C)  the supply of money is increased rapidly so individuals have more money to spend. 
D)  dramatic changes in political and legal institutions occur often.

If real GDP is increasing more rapidly than population,

Which of the following is most likely to help promote the efficient use of resources and rapid economic growth?

How do high tariffs and other restraints on international trade affect a nation's prosperity?

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

Which of the following goods are available at highly economical prices because the use of mass production techniques substantially reduces their per unit production costs?

When competition is present and private ownership rights are clearly defined and securely enforced by the legal system, business firms will have a strong incentive to

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

The per capita income level of the world grew very slowly prior to

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

The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of

(I) A monetary policy that results in price stability will encourage the realization of gains from trade and thereby help promote economic growth. (II) High tariffs and restrictive quotas will encourage rapid economic growth.

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

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

Which of the following is true about tax rates and economic growth?

The replacement of older products by newer improved ones is called

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

The replacement of the phonograph by the cassette tape player and the eventual replacement of the latter by CD and MP3 players is an example of

A legal system that protects private property and enforces contracts in an even-handed manner helps promote economic growth because it

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?

Economic growth is likely to be faster when

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

If real GDP is increasing more rapidly than population,

Which of the following is most likely to help promote the efficient use of resources and rapid economic growth?

How do high tariffs and other restraints on international trade affect a nation's prosperity?

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

Which of the following goods are available at highly economical prices because the use of mass production techniques substantially reduces their per unit production costs?

When competition is present and private ownership rights are clearly defined and securely enforced by the legal system, business firms will have a strong incentive to

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

The per capita income level of the world grew very slowly prior to

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

The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of

(I) A monetary policy that results in price stability will encourage the realization of gains from trade and thereby help promote economic growth. (II) High tariffs and restrictive quotas will encourage rapid economic growth.

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

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

Which of the following is true about tax rates and economic growth?

The replacement of older products by newer improved ones is called

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

The replacement of the phonograph by the cassette tape player and the eventual replacement of the latter by CD and MP3 players is an example of

A legal system that protects private property and enforces contracts in an even-handed manner helps promote economic growth because it

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?

Economic growth is likely to be faster when

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