Question 1

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 2

Economic growth will

Accepted Answer

A) reduce the future real GDP of an economy. 
B) expand the production possibilities of an economy. 
C) increase an economy's nominal income,but not its real income. 
D) increase real output,but the real income level of the country will decline. 
A) reduce the future real GDP of an economy. 
B) expand the production possibilities of an economy. 
C) increase an economy's nominal income,but not its real income. 
D) increase real output,but the real income level of the country will decline.

Question 3

Which of the following would be most likely to improve the standard of living of people in less-developed nations?

Accepted Answer

A) the development of strong labor unions 
B) an increase in foreign investment 
C) an increase in the share of the population under fifteen years of age 
D) higher tariffs and the imposition of other restraints designed to restrict international trade 
A) the development of strong labor unions 
B) an increase in foreign investment 
C) an increase in the share of the population under fifteen years of age 
D) higher tariffs and the imposition of other restraints designed to restrict international trade

Question 4

Which of the following is most likely to be a major source of growth in per capita GDP?

Accepted Answer

A) a high investment/GDP ratio 
B) a high rate of inflation 
C) rapid population growth 
D) rapid growth in the money supply 
A) a high investment/GDP ratio 
B) a high rate of inflation 
C) rapid population growth 
D) rapid growth in the money supply

Question 5

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 6

Are abundant natural resources good or bad for economic growth?

Accepted Answer

The answer to this question is debatable

Question 7

Which of the following would be most likely to improve the standard of living of a less-developed country?

Accepted Answer

A) development of strong labor unions. 
B) more foreign investment,attracted by the expectation of economic and political stability. 
C) adoption of trade barriers (higher tariffs and quotas). 
D) widespread use of price controls to allocate goods and resources. 
A) development of strong labor unions. 
B) more foreign investment,attracted by the expectation of economic and political stability. 
C) adoption of trade barriers (higher tariffs and quotas). 
D) widespread use of price controls to allocate goods and resources.

Question 8

Which of the following is true?

Accepted Answer

A) Real GDP is a measure of income,but not output. 
B) Real GDP is a measure of output,but not income. 
C) Real GDP is a measure of inflation. 
D) Growth of output is necessary for the growth of income. 
A) Real GDP is a measure of income,but not output. 
B) Real GDP is a measure of output,but not income. 
C) Real GDP is a measure of inflation. 
D) Growth of output is necessary for the growth of income.

Question 9

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 10

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 11

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 12

If the per capita income of a country is growing at 3.5 percent per year,approximately how long will it take for that income to double?

Accepted Answer

A) 20 years 
B) 25 years 
C) 35 years 
D) 70 years 
A) 20 years 
B) 25 years 
C) 35 years 
D) 70 years

Question 13

Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?

Accepted Answer

Competition is important because it prov

Question 14

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 15

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

Accepted Answer

A) high and variable rates of inflation 
B) tariffs and quotas that restrict international trade 
C) a legal system that provides for secure property rights and even-handed enforcement of contracts 
D) high marginal tax rates 
A) high and variable rates of inflation 
B) tariffs and quotas that restrict international trade 
C) a legal system that provides for secure property rights and even-handed enforcement of contracts 
D) high marginal tax rates

Question 16

In 1960 the per capita GDP of Hong Kong was substantially less than that of Argentina and Venezuela.By 2005,the per capita income of Hong Kong was more than three times the figures for Venezuela and Argentina.This dramatic change occurred because

Accepted Answer

A) Venezuela and Argentina lacked the natural resources of Hong Kong. 
B) the United States provided aid to Hong Kong but not to Argentina and Venezuela. 
C) Hong Kong was able to achieve and sustain a high rate of economic growth while the growth rates of Argentina and Venezuela were exceedingly low. 
D) Hong Kong was a developed country in 1960,but Argentina and Venezuela were not. 
A) Venezuela and Argentina lacked the natural resources of Hong Kong. 
B) the United States provided aid to Hong Kong but not to Argentina and Venezuela. 
C) Hong Kong was able to achieve and sustain a high rate of economic growth while the growth rates of Argentina and Venezuela were exceedingly low. 
D) Hong Kong was a developed country in 1960,but Argentina and Venezuela were not.

Question 17

A 2 percent growth rate will bring about a doubling of real GDP in about how many years?

Accepted Answer

A) 1 
B) 2 
C) 35 
D) 70 
A) 1 
B) 2 
C) 35 
D) 70

Question 18

According to Angus Madison,a leading authority in the area,world per capita GDP

Accepted Answer

A) increased by about 50 percent during the 800 years following year 1000,but it increased by nearly tenfold during the past 200 years. 
B) increased by nearly tenfold during the 800 years between 1000 and 1813,but it increased by only 50 percent during the past 200 years. 
C) has grown steadily during the past 1000 years. 
D) Grew at an annual rate of more than 2 percent during 1000-1813,but the annual growth rate has declined as the population increased during the past 200 years. 
A) increased by about 50 percent during the 800 years following year 1000,but it increased by nearly tenfold during the past 200 years. 
B) increased by nearly tenfold during the 800 years between 1000 and 1813,but it increased by only 50 percent during the past 200 years. 
C) has grown steadily during the past 1000 years. 
D) Grew at an annual rate of more than 2 percent during 1000-1813,but the annual growth rate has declined as the population increased during the past 200 years.

Question 19

During the past several decades,foreign aid to sub-Saharan Africa

Accepted Answer

A) has been smaller than the aid to other regions,but the reduction in the extreme poverty rate has been larger in Africa than in other areas of the world. 
B) has been larger than the aid to other regions,but the reduction in the extreme poverty rate has been smaller in Africa than in other areas of the world. 
C) has declined and as a result the poverty rate in sub-Saharan Africa has risen sharply. 
D) has risen and,as a result,the poverty rate in sub-Saharan Africa has declined substantially. 
A) has been smaller than the aid to other regions,but the reduction in the extreme poverty rate has been larger in Africa than in other areas of the world. 
B) has been larger than the aid to other regions,but the reduction in the extreme poverty rate has been smaller in Africa than in other areas of the world. 
C) has declined and as a result the poverty rate in sub-Saharan Africa has risen sharply. 
D) has risen and,as a result,the poverty rate in sub-Saharan Africa has declined substantially.

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.

Exam 16: Creating an Environment for Growth and Prosperity

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

Economic growth will

Which of the following would be most likely to improve the standard of living of people in less-developed nations?

Which of the following is most likely to be a major source of growth in per capita GDP?

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

Are abundant natural resources good or bad for economic growth?

Which of the following would be most likely to improve the standard of living of a less-developed country?

Which of the following is true?

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

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

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

If the per capita income of a country is growing at 3.5 percent per year,approximately how long will it take for that income to double?

Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?

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

Which of the following factors would be most likely to encourage capital formation in a less-developed nation?

In 1960 the per capita GDP of Hong Kong was substantially less than that of Argentina and Venezuela.By 2005,the per capita income of Hong Kong was more than three times the figures for Venezuela and Argentina.This dramatic change occurred because

A 2 percent growth rate will bring about a doubling of real GDP in about how many years?

According to Angus Madison,a leading authority in the area,world per capita GDP

During the past several decades,foreign aid to sub-Saharan Africa

Economic growth is likely to be faster when

The Economic Approach

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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

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Price-Searcher Markets With Low Entry Barriers

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The Supply of and Demand for Productive Resources

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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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