Question 1

Because firms can free ride on the research and development of other firms,

Accepted Answer

A)  firms choose a level of research and development where the marginal cost of research is equal to the economy's marginal return of research. 
B)  firms choose a level of research and development where the marginal cost of research is above the economy's marginal return of research. 
C)  firms choose a level of research and development where the marginal cost of research is below the economy's marginal return of research. 
D)  firms choose a level of research and development where the marginal cost of research is below the individual firm's marginal return of research. 
A)  firms choose a level of research and development where the marginal cost of research is equal to the economy's marginal return of research. 
B)  firms choose a level of research and development where the marginal cost of research is above the economy's marginal return of research. 
C)  firms choose a level of research and development where the marginal cost of research is below the economy's marginal return of research. 
D)  firms choose a level of research and development where the marginal cost of research is below the individual firm's marginal return of research. C

Question 2

An economic growth model

Accepted Answer

A)  explains changes in nominal GDP per capita in the long run. 
B)  explains changes in real GDP per capita in the long run. 
C)  explains changes in nominal GDP per capita in the short run. 
D)  explains changes in real GDP per capita in the short run. 
A)  explains changes in nominal GDP per capita in the long run. 
B)  explains changes in real GDP per capita in the long run. 
C)  explains changes in nominal GDP per capita in the short run. 
D)  explains changes in real GDP per capita in the short run. B

Question 3

Growth in real GDP per hour worked in the United States was slowest during what period of time?

Accepted Answer

A)  1900-1949 
B)  1950-1973 
C)  1974-1995 
D)  1996-2012 
A)  1900-1949 
B)  1950-1973 
C)  1974-1995 
D)  1996-2012 C

Question 4

Recent rapid economic growth in India and China has reduced the amount of "brain drain" in those countries.

Accepted Answer

A) True 
 B)False

Question 5

Figure 22-4  
-Refer to Figure 22-4. The movement from E to B to D in the figure above illustrates

Accepted Answer

A)  an improvement in technology. 
B)  a decline in capital per worker. 
C)  diminishing returns to capital. 
D)  diminishing returns to labor. 
A)  an improvement in technology. 
B)  a decline in capital per worker. 
C)  diminishing returns to capital. 
D)  diminishing returns to labor.

Question 6

Figure 22-2  
-Refer to Figure 22-2. Based on the per-worker production function above, if the economy raises capital per hour worked from $35,000 to $40,000, by how much will real GDP per hour worked increase?

Accepted Answer

A)  $150 
B)  $1,850 
C)  $2,000 
D)  $5,000 
A)  $150 
B)  $1,850 
C)  $2,000 
D)  $5,000

Question 7

Under the Soviet system of communism,

Accepted Answer

A)  managerial pay was determined by the extent to which managers could lower the per-unit costs of production. 
B)  technological progress was slow because managers had little incentive to develop new technologies. 
C)  competitive pressures in the Soviet Union allowed the country's technological progress to keep pace with the rest of the world. 
D)  the per-worker production function in the Soviet Union shifted up more rapidly than production functions in other countries. 
A)  managerial pay was determined by the extent to which managers could lower the per-unit costs of production. 
B)  technological progress was slow because managers had little incentive to develop new technologies. 
C)  competitive pressures in the Soviet Union allowed the country's technological progress to keep pace with the rest of the world. 
D)  the per-worker production function in the Soviet Union shifted up more rapidly than production functions in other countries.

Question 8

What features made England in the eighteenth century the place where the Industrial Revolution occurred?

Accepted Answer

The British Parliament had just gained c

Question 9

An economy that grows too slowly fails to raise living standards.

Accepted Answer

A) True 
 B)False

Question 10

Political stability is not a prerequisite to economic growth.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true regarding the productivity slowdown in the United States during the mid-1970s?

Accepted Answer

A)  The productivity slowdown occurred despite a rising quality of labor. 
B)  The productivity slowdown was unique to the United States, as foreign countries experienced unprecedented rates of growth during that time. 
C)  High oil prices raised the costs of doing business for markets worldwide, and reduced output worldwide as well. 
D)  The move toward a "new economy" ended in the early 1970s, resulting in less technological progress in the United States during the mid-1970s. 
A)  The productivity slowdown occurred despite a rising quality of labor. 
B)  The productivity slowdown was unique to the United States, as foreign countries experienced unprecedented rates of growth during that time. 
C)  High oil prices raised the costs of doing business for markets worldwide, and reduced output worldwide as well. 
D)  The move toward a "new economy" ended in the early 1970s, resulting in less technological progress in the United States during the mid-1970s.

Question 12

Table 22-2
  
-Refer to Table 22-2. Calculate the GDP per capita for each country in the table. Which country has the highest standard of living? Why?

Accepted Answer

GDP per capita = GDP / Population.
GDP p

Question 13

Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita?

Accepted Answer

A)  Many of these developing countries do not have a functioning court system that can enforce laws. 
B)  Countries that are relatively poor are more likely to experience wars and revolutions. 
C)  Countries that are relatively poor are likely to have a lower quality of health care. 
D)  all of the above 
A)  Many of these developing countries do not have a functioning court system that can enforce laws. 
B)  Countries that are relatively poor are more likely to experience wars and revolutions. 
C)  Countries that are relatively poor are likely to have a lower quality of health care. 
D)  all of the above

Question 14

Your friend does not understand the benefits of globalization. Outline for your friend the positive economic aspects of globalization.

Accepted Answer

Globalization is the process of countrie

Question 15

The Soviet Union's economic growth rate slowed despite rapid increases in capital per hour worked.

Accepted Answer

A) True 
 B)False

Question 16

Figure 22-4  
-Refer to Figure 22-4. Many countries in Africa strongly discouraged and prohibited foreign direct investment in the 1950s and 1960s. By doing so, these countries were essentially preventing a moment from

Accepted Answer

A)  B to A. 
B)  E to B. 
C)  A to E. 
D)  D to B. 
A)  B to A. 
B)  E to B. 
C)  A to E. 
D)  D to B.

Question 17

Human capital refers to the percentage of the working-age population in the labor force.

Accepted Answer

A) True 
 B)False

Question 18

One reason why many low-income countries experience low rates of growth is because of low rates of saving and investment in those countries.

Accepted Answer

A) True 
 B)False

Question 19

The term "brain drain" refers to

Accepted Answer

A)  highly educated individuals who leave developing countries for high-income countries. 
B)  the diminishing returns to studying for an exam. 
C)  the negative impact on brain function of an individual's overinvestment in human capital. 
D)  the decreased quality of the college-educated workforce. 
A)  highly educated individuals who leave developing countries for high-income countries. 
B)  the diminishing returns to studying for an exam. 
C)  the negative impact on brain function of an individual's overinvestment in human capital. 
D)  the decreased quality of the college-educated workforce.

Question 20

According to new growth theory, firms accumulate the efficient level of both physical and knowledge capital.

Accepted Answer

A) True 
 B)False

Exam 22: Long-Run Economic Growth: Sources and Policies

Because firms can free ride on the research and development of other firms,

An economic growth model

Growth in real GDP per hour worked in the United States was slowest during what period of time?

Recent rapid economic growth in India and China has reduced the amount of "brain drain" in those countries.

Figure 22-4 -Refer to Figure 22-4. The movement from E to B to D in the figure above illustrates

Figure 22-2 -Refer to Figure 22-2. Based on the per-worker production function above, if the economy raises capital per hour worked from $35,000 to $40,000, by how much will real GDP per hour worked increase?

Under the Soviet system of communism,

What features made England in the eighteenth century the place where the Industrial Revolution occurred?

An economy that grows too slowly fails to raise living standards.

Political stability is not a prerequisite to economic growth.

Which of the following is true regarding the productivity slowdown in the United States during the mid-1970s?

Table 22-2 -Refer to Table 22-2. Calculate the GDP per capita for each country in the table. Which country has the highest standard of living? Why?

Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita?

Your friend does not understand the benefits of globalization. Outline for your friend the positive economic aspects of globalization.

The Soviet Union's economic growth rate slowed despite rapid increases in capital per hour worked.

Figure 22-4 -Refer to Figure 22-4. Many countries in Africa strongly discouraged and prohibited foreign direct investment in the 1950s and 1960s. By doing so, these countries were essentially preventing a moment from

Human capital refers to the percentage of the working-age population in the labor force.

One reason why many low-income countries experience low rates of growth is because of low rates of saving and investment in those countries.

The term "brain drain" refers to

According to new growth theory, firms accumulate the efficient level of both physical and knowledge capital.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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