Question 1

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

Accepted Answer

A) highly restrictive exchange rate controls 
B) secure property rights and political stability 
C) high and variable rates of inflation 
D) high marginal tax rates 
A) highly restrictive exchange rate controls 
B) secure property rights and political stability 
C) high and variable rates of inflation 
D) high marginal tax rates

Question 2

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 3

Which of the following is true for the world as a whole?

Accepted Answer

A) During the past 200 years,the income per person of the world has increased sharply,but there has been little change in the years of life expectancy at birth. 
B) During the past 200 years,the years of life expectancy at birth has increased sharply,but there has been little change in the world's income per person. 
C) During the 800 years between 1000 and 1800,the increases in both world income per person and life expectancy at birth were small,but both of these indicators have increased sharply during the past 200 years. 
D) Both income per person and life expectancy rose steadily during 1000-1800,but neither of these indicators have increased much during the past 200 years as the population of the world has become larger and larger. 
A) During the past 200 years,the income per person of the world has increased sharply,but there has been little change in the years of life expectancy at birth. 
B) During the past 200 years,the years of life expectancy at birth has increased sharply,but there has been little change in the world's income per person. 
C) During the 800 years between 1000 and 1800,the increases in both world income per person and life expectancy at birth were small,but both of these indicators have increased sharply during the past 200 years. 
D) Both income per person and life expectancy rose steadily during 1000-1800,but neither of these indicators have increased much during the past 200 years as the population of the world has become larger and larger.

Question 4

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 5

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 6

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 7

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 8

In a market economy,what must an entrepreneur do in order to be successful?

Accepted Answer

A) purchase resources at lower prices than rivals 
B) produce a good that can be sold for more than its production cost 
C) obtain large subsidies from the government 
D) hire workers at low wage rates 
A) purchase resources at lower prices than rivals 
B) produce a good that can be sold for more than its production cost 
C) obtain large subsidies from the government 
D) hire workers at low wage rates

Question 9

When a country's real GDP is increasing at a faster rate than its population,

Accepted Answer

A) per capita GDP will be rising. 
B) per capita GDP will be falling. 
C) per capita GDP will remain constant. 
D) none of the above. 
A) per capita GDP will be rising. 
B) per capita GDP will be falling. 
C) per capita GDP will remain constant. 
D) none of the above.

Question 10

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

Accepted Answer

A) price controls in order to keep the price of food low 
B) expansionary monetary policies designed to increase the rate of inflation 
C) increasing marginal tax rates in order to increase government subsidies and transfers 
D) elimination of price controls and trade restraints and establishment of a monetary policy consistent with long-run price stability (a low rate of inflation) 
A) price controls in order to keep the price of food low 
B) expansionary monetary policies designed to increase the rate of inflation 
C) increasing marginal tax rates in order to increase government subsidies and transfers 
D) elimination of price controls and trade restraints and establishment of a monetary policy consistent with long-run price stability (a low rate of inflation)

Question 11

Which of the following is true?

Accepted Answer

A) in recent decades,the rich countries of the world have consistently grown more rapidly than poor countries. 
B) no LDC 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 LDC 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 12

Trade is a source of economic growth and prosperity because it

Accepted Answer

A) moves goods,services,and resources from people who value them less to people who value them more. 
B) helps trading partners achieve larger outputs through division of labor,specialization,and adoption of methods of mass production. 
C) serves as a zero-sum game in which the gains to one trading partner are offset by losses to the other trading partner. 
D) both a and b,but not c. 
A) moves goods,services,and resources from people who value them less to people who value them more. 
B) helps trading partners achieve larger outputs through division of labor,specialization,and adoption of methods of mass production. 
C) serves as a zero-sum game in which the gains to one trading partner are offset by losses to the other trading partner. 
D) both a and b,but not c.

Question 13

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 14

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

Accepted Answer

A) Sub-Saharan Africa has received very little foreign aid and as a result,the poverty rate in the region is high. 
B) Sub-Saharan Africa has received more foreign aid than any other region and nonetheless the poverty rate in the region remains high. 
C) The economic freedom rating of sub-Saharan African countries is high,but the poverty rate in the region is still the highest in the world. 
D) the reduction in the poverty rate in sub-Saharan Africa has been faster than for other regions of the world during the past quarter of a century. 
A) Sub-Saharan Africa has received very little foreign aid and as a result,the poverty rate in the region is high. 
B) Sub-Saharan Africa has received more foreign aid than any other region and nonetheless the poverty rate in the region remains high. 
C) The economic freedom rating of sub-Saharan African countries is high,but the poverty rate in the region is still the highest in the world. 
D) the reduction in the poverty rate in sub-Saharan Africa has been faster than for other regions of the world during the past quarter of a century.

Question 15

Which of the following is true of foreign aid to sub-Saharan Africa?

Accepted Answer

A) foreign aid has funded valuable medical resources for the treatment of Malaria and the human immunodeficiency virus. 
B) Counterproductive institutions and policies have been a major contributing factor to the poor economic performance of the region. 
C) During 1980-2005,foreign aid covered between 60 and 70 percent of government expenditures in many sub-Saharan African countries. 
D) All of the above. 
A) foreign aid has funded valuable medical resources for the treatment of Malaria and the human immunodeficiency virus. 
B) Counterproductive institutions and policies have been a major contributing factor to the poor economic performance of the region. 
C) During 1980-2005,foreign aid covered between 60 and 70 percent of government expenditures in many sub-Saharan African countries. 
D) All of the above.

Question 16

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

Accepted Answer

Private ownership of resources,including

Question 17

When per capita real GDP is increasing,real output is growing

Accepted Answer

A) more rapidly than prices. 
B) more rapidly than population. 
C) less rapidly than prices. 
D) less rapidly than population. 
A) more rapidly than prices. 
B) more rapidly than population. 
C) less rapidly than prices. 
D) less rapidly than population.

Question 18

The major sources of economic growth are

Accepted Answer

A) gains from trade,entrepreneurial discovery,and investment in physical and human capital. 
B) price controls,heavy regulations,and high inflation. 
C) tariffs to protect domestic industries from foreign competition and budget deficits. 
D) a good climate,high levels of foreign aid,and abundant natural resources. 
A) gains from trade,entrepreneurial discovery,and investment in physical and human capital. 
B) price controls,heavy regulations,and high inflation. 
C) tariffs to protect domestic industries from foreign competition and budget deficits. 
D) a good climate,high levels of foreign aid,and abundant natural resources.

Question 19

Which of the following is not one of the major sources of economic growth?

Accepted Answer

A) a large government sector 
B) investment in physical and human capital 
C) advancements in technology 
D) institutions and policies that improve economic efficiency 
A) a large government sector 
B) investment in physical and human capital 
C) advancements in technology 
D) institutions and policies that improve economic efficiency

Question 20

Which of the following is not a government policy that can enhance economic growth?

Accepted Answer

A) having free international trade 
B) keeping marginal tax rates low 
C) adopting regulations fixing interest rates at low levels 
D) protecting and enforcing private property rights and contracts 
A) having free international trade 
B) keeping marginal tax rates low 
C) adopting regulations fixing interest rates at low levels 
D) protecting and enforcing private property rights and contracts

Exam 16: Creating an Environment for Growth and Prosperity

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

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

Which of the following is true for the world as a whole?

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?

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

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

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

In a market economy,what must an entrepreneur do in order to be successful?

When a country's real GDP is increasing at a faster rate than its population,

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

Which of the following is true?

Trade is a source of economic growth and prosperity because it

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

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

Which of the following is true of foreign aid to sub-Saharan Africa?

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

When per capita real GDP is increasing,real output is growing

The major sources of economic growth are

Which of the following is not one of the major sources of economic growth?

Which of the following is not a government policy that can enhance economic growth?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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