Question 1

Suppose two countries have per capita real GDP of $20,000 in 2010.Country A has a growth rate of 4 percent and Country B has a growth rate of 5 percent.By 2013,the per capita real GDPs for the two countries,respectively,are (rounded)

Accepted Answer

A)  $21,630 and $22,050.
B)  $22,400 and $23,000.
C)  $22,500 and $23,150.
D)  $25,000 and $26,500. C

Question 2

Labor productivity measures

Accepted Answer

A)  the growth of per capita real GDP.
B)  the growth of real output.
C)  real output per labor hour.
D)  the growth in the quantity of labor. C

Question 3

Which of the following is a true statement?

Accepted Answer

A)  The most important sources of economic growth are the quantity and quality of the land and other natural resources a country controls.
B)  The most important source of economic growth is the rate of population growth since a growing population stimulates demand for goods and services,and provides the labor to produce the goods and services.
C)  The most important sources of economic growth are the new ideas generated by entrepreneurs in an economic system that permits them to capture the rewards of their entrepreneurial activities.
D)  The most important source of economic growth is the extent to which the government directly enters into decisions where research and development activities should be directed and who should be involved in research and development activity. C

Question 4

For developing countries,one of the more effective ways to become more developed is

Accepted Answer

A)  to invest in secondary schools.
B)  to invest more in the military.
C)  to increase trade barriers.
D)  to reduce direct foreign investment.

Question 5

The reason that the government offers inventors exclusive rights to their product for a period of time is to

Accepted Answer

A)  reduce market concentration.
B)  increase profits of certain companies.
C)  maximize consumer utility.
D)  promote innovation.

Question 6

Countries are concerned about small changes in their average annual growth rates in per capita income because

Accepted Answer

A)  growth rates tend to decline over time.
B)  the power of compounding means small changes have large effects over time.
C)  the faster a country grows today,the less it will be able to consume in the future.
D)  growth rates are a factor in U.N.participation.

Question 7

Economic growth will

Accepted Answer

A)  shift the production possibilities curve inward.
B)  shift the production possibilities curve outward.
C)  shift along the production possibilities curve toward the X-axis.
D)  be a movement from inside the productions possibilities curve to the curve itself.

Question 8

Which of the following is a benefit of economic growth?

Accepted Answer

A)  reduction in illiteracy
B)  reduction in poverty
C)  improved health
D)  all of the above

Question 9

-Refer to the above table.Suppose one country has a per capita real GDP of $1000 and another has a per capita real GDP of $10,000,or ten times larger.If both countries have a growth rate of 5 percent,how much larger will per capita real GDP be in the second country be than the first after 50 years?

Accepted Answer

A)  4 times larger
B)  5 times larger
C)  8 times larger
D)  10 times larger

Question 10

The modification of manufacturing processes so as to reduce the resulting environmental damage is an endeavor that requires capital investment,labor inputs,and technology.What then follows from this statement?

Accepted Answer

A)  Economic growth can benefit the environment.
B)  Environmental damage is a regrettable but necessary side effect of economic growth.
C)  The condition of the environment will be better in slower-growing countries.
D)  The way to reduce pollution is to educate people about its effects.

Question 11

Which of the following is an important factor affecting economic growth?

Accepted Answer

A)  the rate of saving
B)  exchange rates
C)  the rate of interest
D)  the level of prices

Question 12

An important factor in determining a country's rate of economic growth is

Accepted Answer

A)  the diversity of its population.
B)  its rate of saving.
C)  the size of its labor force.
D)  the proportion of the adult population that is working.

Question 13

Economists have found that as a nation's per capita real Gross Domestic Product (GDP)increases,

Accepted Answer

A)  the rate of population growth declines.
B)  the rate of population growth experiences dramatic increases.
C)  there is no effect on population growth.
D)  the rate of population growth increases at the same rate as economic growth.

Question 14

A government grant that gives an inventor the exclusive right or privilege to make,use,or sell his or her invention is known as

Accepted Answer

A)  a positive externality.
B)  a negative externality.
C)  a protectionism clause.
D)  a patent.

Question 15

Suppose per capita real GDP grows by 7% per year.Based on the Rule of 70,approximately how many years will it take for the level of per capita real GDP to double?

Accepted Answer

A)  4.9 years
B)  7 years
C)  10 years
D)  none of the above

Question 16

-Refer to the above table.Which country has the lowest increase in per capita real GDP between 2012 and 2013?

Accepted Answer

A)  A
B)  B
C)  C
D)  D

Question 17

What occurs in the second stage of economic development?

Accepted Answer

A)  Most of the labor force works in agriculture.
B)  The service sector comes to the forefront.
C)  The manufacturing sector declines in importance.
D)  Manufacturing gains in importance and employs a large portion of the labor force.

Question 18

Which of the following is NOT associated with the new growth theory?

Accepted Answer

A)  Natural resources
B)  Research
C)  Technology
D)  Innovation

Question 19

Economic growth can be depicted as

Accepted Answer

A)  a movement up on the production possibilities curve.
B)  a movement down on the production possibilities curve.
C)  an outward shift on the production possibilities curve.
D)  an inward shift on the production possibilities curve.

Question 20

Which of the following factors would economists consider "key" to economic development?

Accepted Answer

A)  expansionary monetary policy
B)  establishing a system of property rights
C)  policies that promote consumption expenditures by households
D)  All of the above are correct

Exam 9: Global Economic Growth and Development