Exam 7: Production and Growth

How does the political environment affect economic growth?

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has less capital, and so less real GDP per person. Suppose that both increase their saving rate from 3 percent to 4 percent. What will happen in the long run?

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has less capital, and so less real GDP per person, than the other. Suppose that the saving rate in both countries increases from 5 percent to 6 percent. What would we expect over the next 10 years?

Why is productivity related to the standard of living. In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labour productivity.

Changes in the prices of most natural resources compared to other goods indicate that natural resources are generally becoming scarcer.

According to an economist, what kind of goods are national defence and knowledge?

In a market economy, what is scarcity of resources most clearly reflected in?

Which of the following would be considered physical capital?

What would increase productivity, everything else being the same?

Which organization tries to encourage the flow of investment to poor countries?

When a country removes trade barriers and exports pork chops and imports stereos, what will most likely happen?

What do economists call the equipment and structures available to produce goods and services?

Some civil society groups and activists propose a zero-economic-growth policy in order to preserve the environment. Write an essay to discuss the pros and cons of this proposal. You may wish to refer, among other ideas, to the following: Economic growth needs to compensate for the increase in population. If population becomes older, the number of active persons decreases; therefore, productivity must increase to sustain a high standard of living. An increase in standard of living is only possible if an economy becomes more productive. (Income per person is closely related to labour productivity.) It is hoped that economic growth will eventually eradicate poverty. Economic measures of well-being, such as GDP per capita, are imperfect mainly because they disregard external costs of economic activity, as well as other aspects of life that people value, such as leisure, fairness, and income equality.

If the productivity slowdown had not occurred in 1973, the income of the average Canadian today would be about 70 percent higher.

What is an effect of outward-oriented policies?

Economists generally believe that outward-oriented policies are more likely to foster growth than inward-oriented policies.

Once one person discovers an idea, the idea generally enters society's pool of knowledge. Therefore, knowledge is generally what kind of good?

Which statement best describe the relationship between productivity and standard of living?

Which of the following best describes natural resources?

Which nation experienced average rates of economic growth of more than 2.0 percent between 1900 and 2010?