Question 1

Which of the following statements is true of foreign aid?

Accepted Answer

A)  Foreign aid is only provided to sub-Saharan Africa. 
B)  Foreign aid is always efficient in eradicating poverty. 
C)  In some instances, foreign aid can be beneficial for dictators. 
D)  The concept of foreign aid was introduced in the twenty-first century. 
A)  Foreign aid is only provided to sub-Saharan Africa. 
B)  Foreign aid is always efficient in eradicating poverty. 
C)  In some instances, foreign aid can be beneficial for dictators. 
D)  The concept of foreign aid was introduced in the twenty-first century.

Question 2

Differences in the stock of physical capital between nations are an example of a(n)________.

Accepted Answer

A)  implicit cause of prosperity 
B)  explicit cause of prosperity 
C)  proximate cause of prosperity 
D)  fundamental cause of prosperity 
A)  implicit cause of prosperity 
B)  explicit cause of prosperity 
C)  proximate cause of prosperity 
D)  fundamental cause of prosperity

Question 3

Which of the following statements is true of creative destruction?

Accepted Answer

A)  Creative destruction is generally bad for an economy. 
B)  Creative destruction is encouraged in economies with extractive institutions. 
C)  Creative destruction creates losses for some economic agents and benefits for others. 
D)  Creative destruction is a phenomenon that was prevalent before 1800. 
A)  Creative destruction is generally bad for an economy. 
B)  Creative destruction is encouraged in economies with extractive institutions. 
C)  Creative destruction creates losses for some economic agents and benefits for others. 
D)  Creative destruction is a phenomenon that was prevalent before 1800.

Question 4

Those factors that lead to differences in the proximate causes of prosperity between nations are referred to as ________.

Accepted Answer

A)  fundamental causes of prosperity 
B)  endogenous causes of prosperity 
C)  explicit causes of prosperity 
D)  implicit causes of prosperity 
A)  fundamental causes of prosperity 
B)  endogenous causes of prosperity 
C)  explicit causes of prosperity 
D)  implicit causes of prosperity

Question 5

What will happen if the institutions in an economy transform from inclusive to extractive?

Accepted Answer

A)  The return-to-entrepreneurship schedule will shift rightward, and the opportunity cost to entrepreneurship will decrease. 
B)  The return-to-entrepreneurship schedule will shift leftward, and the opportunity cost to entrepreneurship will decrease. 
C)  The return-to-entrepreneurship schedule will shift rightward, and the opportunity cost to entrepreneurship will increase. 
D)  The return-to-entrepreneurship schedule will shift leftward, and the opportunity cost to entrepreneurship will increase. 
A)  The return-to-entrepreneurship schedule will shift rightward, and the opportunity cost to entrepreneurship will decrease. 
B)  The return-to-entrepreneurship schedule will shift leftward, and the opportunity cost to entrepreneurship will decrease. 
C)  The return-to-entrepreneurship schedule will shift rightward, and the opportunity cost to entrepreneurship will increase. 
D)  The return-to-entrepreneurship schedule will shift leftward, and the opportunity cost to entrepreneurship will increase.

Question 6

Consider two countries: Country A and Country B.Country A is characterized by a command economy,the absence of property rights,high entry barriers for new businesses,and forced child labor.In contrast,Country B is characterized by well-defined private property rights,a developed market system,and no entry barriers for new businesses.Which of the two countries is likely to oppose creative destruction more? Why?

Accepted Answer

Since Country A is characterized by the

Question 7

Which of the following statements is true of economic growth?

Accepted Answer

A)  Compared to countries with extractive institutions, economic growth in countries with inclusive institutions is more likely to stagnate in the long run. 
B)  Countries with extractive institutions are likely to grow at the same rate as countries with inclusive institutions. 
C)  Countries with extractive institutions are likely to grow faster than countries with inclusive institutions. 
D)  Countries with inclusive institutions are likely to grow faster than countries with extractive institutions. 
A)  Compared to countries with extractive institutions, economic growth in countries with inclusive institutions is more likely to stagnate in the long run. 
B)  Countries with extractive institutions are likely to grow at the same rate as countries with inclusive institutions. 
C)  Countries with extractive institutions are likely to grow faster than countries with inclusive institutions. 
D)  Countries with inclusive institutions are likely to grow faster than countries with extractive institutions.

Question 8

If urbanization in a nation keeps increasing,GDP per capita in the nation is likely to ________.

Accepted Answer

A)  keep decreasing 
B)  keep increasing 
C)  initially increase, then decrease after urbanization reaches a certain threshold 
D)  initially decrease, then increase after urbanization reaches a certain threshold 
A)  keep decreasing 
B)  keep increasing 
C)  initially increase, then decrease after urbanization reaches a certain threshold 
D)  initially decrease, then increase after urbanization reaches a certain threshold

Question 9

Which of the following statements is true?

Accepted Answer

A)  Extractive institutions are congenial to entrepreneurship. 
B)  Inclusive institutions are likely to support inefficient firms. 
C)  Inclusive institutions are more commonly found in command economies than in market economies. 
D)  Extractive institutions may prevent workers from working in occupations to which their skills are best suited. 
A)  Extractive institutions are congenial to entrepreneurship. 
B)  Inclusive institutions are likely to support inefficient firms. 
C)  Inclusive institutions are more commonly found in command economies than in market economies. 
D)  Extractive institutions may prevent workers from working in occupations to which their skills are best suited.

Question 10

The ________ claims that the way societies have organized themselves and shaped the incentives of individuals and businesses are at the root of the differences in prosperity across the world.

Accepted Answer

A)  institutions hypothesis 
B)  culture hypothesis 
C)  geography hypothesis 
D)  location hypothesis 
A)  institutions hypothesis 
B)  culture hypothesis 
C)  geography hypothesis 
D)  location hypothesis

Question 11

If institutions in an economy change from being extractive to inclusive,the return-to-entrepreneurship schedule in the economy will ________.

Accepted Answer

A)  become vertical 
B)  become horizontal 
C)  shift leftward 
D)  shift rightward 
A)  become vertical 
B)  become horizontal 
C)  shift leftward 
D)  shift rightward

Question 12

The availability of vast stocks of natural resources is an example of a(n)________.

Accepted Answer

A)  implicit cause of prosperity 
B)  explicit cause of prosperity 
C)  proximate cause of prosperity 
D)  fundamental cause of prosperity 
A)  implicit cause of prosperity 
B)  explicit cause of prosperity 
C)  proximate cause of prosperity 
D)  fundamental cause of prosperity

Question 13

How do entry barriers hamper economic prosperity?

Accepted Answer

Entry barriers discourage the entry of n

Question 14

What is meant by the geography hypothesis? How does it differ from the culture hypothesis?

Accepted Answer

The geography hypothesis claims that dif

Question 15

What are private property rights? Does enforcement of property rights promote economic growth and prosperity?

Accepted Answer

Private property rights mean that indivi

Question 16

Consider two countries: Country A and Country B.In Country A,there are well-defined private property rights,and in Country B,there are no private property rights.
a)If the institutions hypothesis holds,which of the two countries is likely to grow faster?
b)Is the slower growing economy permanently disadvantaged?

Accepted Answer

The institution hypothesis claims that d

Question 17

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.There are well-defined property rights in Country A,while there are no property rights in Country B.Given this information,which of the following statements is likely to be true?

Accepted Answer

A)  Country A is likely to grow faster than Country B. 
B)  Country B is likely to grow faster than Country A. 
C)  Both countries are likely to grow at the same rate. 
D)  Neither of the countries is likely to experience any growth in GDP. 
A)  Country A is likely to grow faster than Country B. 
B)  Country B is likely to grow faster than Country A. 
C)  Both countries are likely to grow at the same rate. 
D)  Neither of the countries is likely to experience any growth in GDP.

Question 18

Political creative destruction ________.

Accepted Answer

A)  is detrimental to all economic agents 
B)  is beneficial to all economic agents 
C)  is likely to hamper the ruling government in an economy with inclusive institutions 
D)  is likely to adversely affect the ruling government in an economy with extractive institutions 
A)  is detrimental to all economic agents 
B)  is beneficial to all economic agents 
C)  is likely to hamper the ruling government in an economy with inclusive institutions 
D)  is likely to adversely affect the ruling government in an economy with extractive institutions

Question 19

Extractive institutions ________.

Accepted Answer

A)  are restricted to command economies 
B)  are restricted to market economies 
C)  privilege many at the expense of a few 
D)  privilege a few at the expense of many 
A)  are restricted to command economies 
B)  are restricted to market economies 
C)  privilege many at the expense of a few 
D)  privilege a few at the expense of many

Question 20

Barylia is an economy with extractive institutions,such as the absence of private property rights and high tax rates.Is it guaranteed that Barylia will always experience no growth or negative growth? Why or why not?

Accepted Answer

No,the objective of an extractive instit

Which of the following statements is true of foreign aid?

Differences in the stock of physical capital between nations are an example of a(n)________.

Which of the following statements is true of creative destruction?

Those factors that lead to differences in the proximate causes of prosperity between nations are referred to as ________.

What will happen if the institutions in an economy transform from inclusive to extractive?

Which of the following statements is true of economic growth?

If urbanization in a nation keeps increasing,GDP per capita in the nation is likely to ________.

Which of the following statements is true?

The ________ claims that the way societies have organized themselves and shaped the incentives of individuals and businesses are at the root of the differences in prosperity across the world.

If institutions in an economy change from being extractive to inclusive,the return-to-entrepreneurship schedule in the economy will ________.

The availability of vast stocks of natural resources is an example of a(n)________.

How do entry barriers hamper economic prosperity?

What is meant by the geography hypothesis? How does it differ from the culture hypothesis?

What are private property rights? Does enforcement of property rights promote economic growth and prosperity?

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.There are well-defined property rights in Country A,while there are no property rights in Country B.Given this information,which of the following statements is likely to be true?

Political creative destruction ________.

Extractive institutions ________.

Barylia is an economy with extractive institutions,such as the absence of private property rights and high tax rates.Is it guaranteed that Barylia will always experience no growth or negative growth? Why or why not?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

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Exam 8: Why Isn't the Whole World Developed?

Which of the following statements is true of foreign aid?

Differences in the stock of physical capital between nations are an example of a(n)________.

Which of the following statements is true of creative destruction?

Those factors that lead to differences in the proximate causes of prosperity between nations are referred to as ________.

What will happen if the institutions in an economy transform from inclusive to extractive?

Which of the following statements is true of economic growth?

If urbanization in a nation keeps increasing,GDP per capita in the nation is likely to ________.

Which of the following statements is true?

The ________ claims that the way societies have organized themselves and shaped the incentives of individuals and businesses are at the root of the differences in prosperity across the world.

If institutions in an economy change from being extractive to inclusive,the return-to-entrepreneurship schedule in the economy will ________.

The availability of vast stocks of natural resources is an example of a(n)________.

How do entry barriers hamper economic prosperity?

What is meant by the geography hypothesis? How does it differ from the culture hypothesis?

What are private property rights? Does enforcement of property rights promote economic growth and prosperity?

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.There are well-defined property rights in Country A,while there are no property rights in Country B.Given this information,which of the following statements is likely to be true?

Political creative destruction ________.

Extractive institutions ________.

Barylia is an economy with extractive institutions,such as the absence of private property rights and high tax rates.Is it guaranteed that Barylia will always experience no growth or negative growth? Why or why not?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters