Question 1

If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?

Accepted Answer

A)  abundant natural resources 
B)  substantial aid from rich countries 
C)  central planning and a high level of government expenditures 
D)  institutions and policies that encourage productive activities 
A)  abundant natural resources 
B)  substantial aid from rich countries 
C)  central planning and a high level of government expenditures 
D)  institutions and policies that encourage productive activities

Question 2

Which of the following will be required for a country to move up the income ladder and achieve high-income status?

Accepted Answer

A)  rapid growth of the money supply. 
B)  restrictions limiting the import of goods from other nations, particularly low-wage countries. 
C)  tax incentives that encourage consumption rather than investment 
D)  sustained economic growth 
A)  rapid growth of the money supply. 
B)  restrictions limiting the import of goods from other nations, particularly low-wage countries. 
C)  tax incentives that encourage consumption rather than investment 
D)  sustained economic growth

Question 3

The historical record indicates that foreign aid has

Accepted Answer

A)  played a major role in helping formerly poor countries grow rapidly and achieve high income levels. 
B)  re-enforced corrupt governments and policies that stifle productive activities. 
C)  helped poor countries escape counterproductive policies imposed by authoritarian political leaders. 
D)  promoted economic growth, but slowed the movement toward political democracy. 
A)  played a major role in helping formerly poor countries grow rapidly and achieve high income levels. 
B)  re-enforced corrupt governments and policies that stifle productive activities. 
C)  helped poor countries escape counterproductive policies imposed by authoritarian political leaders. 
D)  promoted economic growth, but slowed the movement toward political democracy.

Question 4

When institutions and policies provide secure property rights, a fair and balanced judicial system, monetary stability, and effective limits on the power of government, which of the following is most likely to be encouraged?

Accepted Answer

A)  rent-seeking 
B)  actions that reduce the value of resources 
C)  productive activities 
D)  destructive activities 
A)  rent-seeking 
B)  actions that reduce the value of resources 
C)  productive activities 
D)  destructive activities

Question 5

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 6

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 7

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

Accepted Answer

A)  help a country achieve more rapid economic growth. 
B)  promote more efficient use of investment capital by entrepreneurs. 
C)  retard economic progress. 
D)  increase the profits of business firms. 
A)  help a country achieve more rapid economic growth. 
B)  promote more efficient use of investment capital by entrepreneurs. 
C)  retard economic progress. 
D)  increase the profits of business firms.

Question 8

Which of the following will be most likely to contribute to the growth of a less-developed country?

Accepted Answer

A)  price controls that keep the cost of agricultural products low 
B)  rapid population growth 
C)  exchange rate controls and export restrictions 
D)  secure property rights and low marginal tax rates 
A)  price controls that keep the cost of agricultural products low 
B)  rapid population growth 
C)  exchange rate controls and export restrictions 
D)  secure property rights and low marginal tax rates

Question 9

Which of the following is most important if a country wants to move from a low-income to a high-income status?

Accepted Answer

A)  high rates of monetary growth. 
B)  sustained economic growth. 
C)  high real interest rates. 
D)  high nominal interest rates. 
A)  high rates of monetary growth. 
B)  sustained economic growth. 
C)  high real interest rates. 
D)  high nominal interest rates.

Question 10

Which of the following is most likely to be a serious obstacle retarding the growth of less-developed nations?

Accepted Answer

A)  a lack of knowledge about modern technology 
B)  a lack of natural resources 
C)  slow population growth 
D)  low capital formation as the result of a weak legal system 
A)  a lack of knowledge about modern technology 
B)  a lack of natural resources 
C)  slow population growth 
D)  low capital formation as the result of a weak legal system

Question 11

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 12

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 13

The historical record indicates that foreign aid has

Accepted Answer

A)  played a major role in helping formerly poor countries grow rapidly and achieve high income levels. 
B)  re-enforced corrupt governments and policies that stifle productive activities. 
C)  helped poor countries escape counterproductive policies imposed by authoritarian political leaders. 
D)  promoted economic growth, but slowed the movement toward political democracy. 
A)  played a major role in helping formerly poor countries grow rapidly and achieve high income levels. 
B)  re-enforced corrupt governments and policies that stifle productive activities. 
C)  helped poor countries escape counterproductive policies imposed by authoritarian political leaders. 
D)  promoted economic growth, but slowed the movement toward political democracy.

Question 14

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 15

A 7 percent growth rate will bring about a doubling of real GDP in about how many years?

Accepted Answer

A)  1 
B)  7 
C)  10 
D)  70 
A)  1 
B)  7 
C)  10 
D)  70

Question 16

Are abundant natural resources good or bad for economic growth?

Accepted Answer

The Answer to this question is debatable

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

How do high marginal tax rates affect the economic prosperity of a nation?

Accepted Answer

A)  They reduce the incentive of individuals to earn reported income. 
B)  They encourage the nation's most productive citizens to emigrate to countries where taxes are lower. 
C)  They discourage foreigners from investing in the country. 
D)  All of the above are correct. 
A)  They reduce the incentive of individuals to earn reported income. 
B)  They encourage the nation's most productive citizens to emigrate to countries where taxes are lower. 
C)  They discourage foreigners from investing in the country. 
D)  All of the above are correct.

Question 19

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

Accepted Answer

A)  the expectation of sustained high inflation 
B)  the expectation that property rights will be highly secure in the years ahead 
C)  the imposition of high tariffs and other restraints limiting imports 
D)  higher personal and corporate tax rates 
A)  the expectation of sustained high inflation 
B)  the expectation that property rights will be highly secure in the years ahead 
C)  the imposition of high tariffs and other restraints limiting imports 
D)  higher personal and corporate tax rates

Question 20

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.

Exam 16: Creating an Environment for Growth and Prosperity

If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?

Which of the following will be required for a country to move up the income ladder and achieve high-income status?

The historical record indicates that foreign aid has

When institutions and policies provide secure property rights, a fair and balanced judicial system, monetary stability, and effective limits on the power of government, which of the following is most likely to be encouraged?

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

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

When regulations interfere with exchange and limit entry into various businesses and occupations, they will

Which of the following will be most likely to contribute to the growth of a less-developed country?

Which of the following is most important if a country wants to move from a low-income to a high-income status?

Which of the following is most likely to be a serious obstacle retarding the growth of less-developed nations?

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

Which of the following is true?

The historical record indicates that foreign aid has

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

A 7 percent growth rate will bring about a doubling of real GDP in about how many years?

Are abundant natural resources good or bad for economic growth?

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

How do high marginal tax rates affect the economic prosperity of a nation?

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

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

The Economic Approach

A : Some Tools of the Economist

B : Some Tools of the Economist

A : Supply, Demand, and the Market Process

B : Supply, Demand, and the Market Process

A : Supply and Demand: Applications and Extensions

B : Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

A : Taking the Nations Economic Pulse

B : Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

A : an Introduction to Basic Macroeconomic Markets

B : an 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

A : Money and the Banking System

B : 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

Consumer Choice and Elasticity

A : Costs and the Supply of Goods

B : Costs and the Supply of Goods

A : Price Takers and the Competitive Process

B : Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A : Price-Searcher Markets With High Entry Barriers

B : Price-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

Special Topic 1 : Government Spending and Taxation

Special Topic 2 : The Economics of Social Security

Special Topic 3 : The Stock Market: Its Function, Performance, and Potential as an Investment Opportunity

Special Topic 4 : Great Debates in Economics: Keynes Versus Hayek

Special Topic 5 : The Crisis of 2008: Causes and Lessons for the Future

Special Topic 6 : Lessons from the Great Depression

Special Topic 7 : Lessons from Japan and Canada

Special Topic 8 : The Federal Budget and the National Debt

Special Topic 9 : The Economics of Healthcare

Special Topic 10 : Education: Problems and Performance

Special Topic 11 : Earnings Differences Between Men and Women

Special Topic 12 : Do Labor Unions Increase the Wages of Workers?

Special Topic 13 : The Question of Resource Exhaustion

Special Topic 14 : Difficult Environmental Cases and the Role of Government

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