Question 1

Strong property rights are important for modern economic growth because

Accepted Answer

A)  they allow governments to extract the gains from private citizens' investments.
B)  people are more likely to invest if they don't fear that others can take their returns on investment without compensation.
C)  they ensure an equitable distribution of income.
D)  business cycle fluctuations will be smaller and less likely to disrupt investment patterns.E) B) and C)
F) B) and D)

Question 2

Global competition has tended to slow down the rate of productivity growth in the United States.

Accepted Answer

A) True 
 B)False

Question 3

Assume that an economy has 1,500 workers, each working 2,000 hours per year.If the average real output per worker-hour is $20, then total output, or real GDP, will be

Accepted Answer

A)  $3 million.
B)  $30 million.
C)  $45 million.
D)  $60 million.E) B) and C)
F) None of the above

Question 4

A nation's real GDP was $250 billion in 2015 and $265 billion in 2016.Its population was 120 million in 2015 and 125 million in 2016.What is its real GDP growth rate in 2016?

Accepted Answer

A)  15.0 percent
B)  6.0 percent
C)  5.7 percent
D)  1.1 percentE) None of the above
F) All of the above

Question 5

The achievement of full employment through time will

Accepted Answer

A)  diminish labor productivity.
B)  reduce the level of investment as a percentage of GDP.
C)  increase the realized rate of economic growth.
D)  have no impact on the rate of economic growth.E) A) and B)
F) B) and C)

Question 6

A competitive market system

Accepted Answer

A)  encourages growth by allowing producers to make profitable investment decisions based on market signals.
B)  encourages growth by ensuring that everyone in society will receive a decent standard of living.
C)  discourages growth because firms busy competing have no time to innovate or invest.
D)  discourages growth unless government protects domestic firms from foreign competition.E) A) and C)
F) All of the above

Question 7

If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately

Accepted Answer

A)  22 years.
B)  20 years.
C)  14 years.
D)  8 years.E) All of the above
F) B) and C)

Question 8

The number of worker-hours available in an economy is determined by the following, except

Accepted Answer

A)  size of the labor force.
B)  length of the average workweek.
C)  unemployment rate of the workforce.
D)  labor force participation rate.E) A) and C)
F) B) and C)

Question 9

The dramatic slowdown in productivity growth experienced after the Great Recession

Accepted Answer

A)  is believed by most economists to be a permanent shift in the economy.
B)  is still debated among many economists as to whether it represents a permanent shift in the economy.
C)  suggests that prospects for lasting increases in productivity growth are rather poor.
D)  suggests that productivity growth can occur without raising the nation's standard of living.E) A) and D)
F) A) and C)

Question 10

Strong patent laws encourage innovation and promote economic growth.

Accepted Answer

A) True 
 B)False

Question 11

Real GDP = worker-hours × labor productivity.

Accepted Answer

A) True 
 B)False

Question 12

"Show me a pastoral society with an untouched environment, an abundance of leisure, and nonsecular values, and I will show you an underdeveloped, poverty-ridden country." This statement is most likely to be made by a(n)

Accepted Answer

A)  advocate of learning by doing.
B)  advocate of network effects.
C)  proponent of economic growth.
D)  critic of economic growth.E) B) and C)
F) A) and C)

Question 13

The problematic trend in the "inverse dependency ratio" in the U.S.is likely to show up first in

Accepted Answer

A)  the manufacturing sector.
B)  agriculture.
C)  Social Security.
D)  national defense.E) B) and C)
F) A) and B)

Question 14

Proponents of economic growth claim that growth leads to greater equality of income in an economy.

Accepted Answer

A) True 
 B)False

Question 15

Economic growth rates in follower countries

Accepted Answer

A)  tend to be lower than in leader countries because labor forces in follower countries are too small.
B)  tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs.
C)  will never bring real GDP per capita up to the same levels as in leader countries, even if follower growth rates are greater than those in leader countries.
D)  typically average about 2 percent per year.E) B) and C)
F) All of the above

Question 16

Real per capita GDP

Accepted Answer

A)  grows at approximately the same rate for all countries.
B)  was much more equal across nations in 1820 than it is today.
C)  has been about 20 times higher in the richer nations than the poorer nations for about 2,000 years.
D)  grows much faster in "leader countries" than in "follower countries."E) A) and C)
F) B) and C)

Question 17

Factors that contributed to the higher U.S.labor productivity growth in 1995-2010 relative to the earlier period include the following, except

Accepted Answer

A)  microchip and information technologies.
B)  new start-up firms and increasing returns.
C)  global competition.
D)  population growth.E) All of the above
F) B) and C)

Question 18

Which of the following institutional arrangements is most likely to promote growth?

Accepted Answer

A)  patents and copyrights that expire quickly and are loosely enforced
B)  strong government control over resource allocation decisions
C)  unrestricted trade between nations
D)  all of theseE) All of the above
F) B) and C)

Question 19

Before the Industrial Revolution, living standards in the world

Accepted Answer

A)  were relatively stagnant for long periods of time.
B)  were already rising significantly for many decades.
C)  are not known, for lack of reliable records from that period.
D)  were declining because of rapid increases in population.E) A) and B)
F) All of the above

Question 20

At an annual growth rate of 7 percent, real GDP will double in about

Accepted Answer

A)  11½ years.
B)  10 years.
C)  13½ years.
D)  9 years.E) A) and B)
F) C) and D)

Exam 28: Economic Growth

Economic growth rates in follower countries

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Real GDP = worker-hours × labor productivity.

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Factors that contributed to the higher U.S.labor productivity growth in 1995-2010 relative to the earlier period include the following, except

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The dramatic slowdown in productivity growth experienced after the Great Recession

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Strong property rights are important for modern economic growth because

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The achievement of full employment through time will

Correct AnswerverifiedShow Answer

Global competition has tended to slow down the rate of productivity growth in the United States.

Correct AnswerverifiedShow Answer

"Show me a pastoral society with an untouched environment, an abundance of leisure, and nonsecular values, and I will show you an underdeveloped, poverty-ridden country." This statement is most likely to be made by a(n)

Correct AnswerverifiedShow Answer

If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately

Correct AnswerverifiedShow Answer

The number of worker-hours available in an economy is determined by the following, except

Correct AnswerverifiedShow Answer

Assume that an economy has 1,500 workers, each working 2,000 hours per year.If the average real output per worker-hour is $20, then total output, or real GDP, will be

Correct AnswerverifiedShow Answer

The problematic trend in the "inverse dependency ratio" in the U.S.is likely to show up first in

Correct AnswerverifiedShow Answer

Which of the following institutional arrangements is most likely to promote growth?

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At an annual growth rate of 7 percent, real GDP will double in about

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Real per capita GDP

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Proponents of economic growth claim that growth leads to greater equality of income in an economy.

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Before the Industrial Revolution, living standards in the world

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Strong patent laws encourage innovation and promote economic growth.

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A nation's real GDP was $250 billion in 2015 and $265 billion in 2016.Its population was 120 million in 2015 and 125 million in 2016.What is its real GDP growth rate in 2016?

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A competitive market system

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