Question 1

According to the rule of 70, if a country grows at 7 percent per year, it will double its real GDP per capita in:

Accepted Answer

A)   2 years.
B)   20 years.
C)   35 years.
D)   10 years.E) A) and B)
F) All of the above

Question 2

Which of the following is an example of U.S. foreign direct investment?

Accepted Answer

A)   A factory in Canada is owned by a U.S. citizen.
B)   A factory in the U.S. is owned by a Canadian citizen.
C)   A factory in New Mexico is owned by a Japanese citizen.
D)   All of these are examples of U.S. foreign direct investment.E) A) and B)
F) All of the above

Question 3

A reduction in current consumption to pay for investment in capital intended to increase future production is known as the:

Accepted Answer

A)   consumption effect.
B)   substitution effect.
C)   investment trade-off.
D)   income effect.E) None of the above
F) A) and C)

Question 4

Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 3 percent, the growth rate of capital is 2 percent, and α = 0.75, then the growth rate of technology can be estimated to be:

Accepted Answer

A)   4.25 percent.
B)   4 percent.
C)   3 percent.
D)   2.75 percent.E) C) and D)
F) A) and B)

Question 5

Which of the following is an example of physical capital?

Accepted Answer

A)   A tractor
B)   A farmer
C)   A high-yield seed variety
D)   All of these are examples of physical capital.E) A) and C)
F) A) and D)

Question 6

What is the premise behind the poverty trap?

Accepted Answer

A)   Poorer countries have a harder time buying the things that will reduce poverty.
B)   Richer countries can easily descend into poverty if they invest in the wrong industries.
C)   Richer countries will spiral into poverty if they fail to invest enough in physical capital.
D)   All of these describe the basic premise of the poverty trap.E) A) and D)
F) B) and D)

Question 7

Which of the following is an example of government investment in physical capital to increase business productivity?

Accepted Answer

A)   Roadways
B)   Bridges
C)   Sewer systems
D)   All of these are examples of government investment in physical capital.E) A) and B)
F) None of the above

Question 8

Industrial policies are:

Accepted Answer

A)   favorable tax policies meant to encourage private domestic investment in certain industries.
B)   favorable trade policies meant to encourage private investment in certain industries.
C)   government investments in certain industries meant to encourage growth in those industries.
D)   All of these are true.E) B) and D)
F) A) and C)

Question 9

National output per person is another way to report:

Accepted Answer

A)   real GDP per capita.
B)   nominal GDP.
C)   productivity.
D)   inflation.E) All of the above
F) A) and D)

Question 10

According to the rule of 70, we can estimate how long it will take a country to double its real GDP per capita by:

Accepted Answer

A)   dividing the average growth rate by 70.
B)   dividing 70 by the average growth rate.
C)   dividing the current real GDP per capita by 70.
D)   multiplying the average growth rate by 70 percent.E) B) and D)
F) B) and C)

Question 11

Protecting property rights:

Accepted Answer

A)   helps only wealthier members of society.
B)   encourages people to invest in capital.
C)   has no effect on investment.
D)   increases human capital.E) B) and D)
F) A) and D)

Question 12

Increases in productivity per person lead to increases in:

Accepted Answer

A)   economic growth.
B)   imports.
C)   the GDP deflator.
D)   new businesses.E) C) and D)
F) B) and C)

Question 13

Using the growth accounting equation, if the growth rate of technology is 3 percent, the growth rate of labor is 2 percent, the growth of capital is 1 percent, and α = 0.75, then the growth rate of output can be estimated to be:

Accepted Answer

A)   4.25 percent.
B)   4 percent.
C)   6 percent.
D)   4.75 percent.E) B) and C)
F) None of the above

Question 14

Which of the following is not an example of human capital investment?

Accepted Answer

A)   A leadership training course
B)   A bachelor's degree
C)   Word processing software
D)   All of these are examples of human capital investment.E) B) and C)
F) B) and D)

Question 15

Natural resources are:

Accepted Answer

A)   production inputs that come from the earth.
B)   natural talents people are born with that make them productive.
C)   physical structures that sit on the earth, improving it and making it more productive.
D)   None of these are true.E) A) and B)
F) None of the above

Question 16

_______ accounting describes how growth in inputs of production relates to growth in output.

Accepted Answer

A)   Input to output
B)   National income
C)   Production
D)   GrowthE) A) and B)
F) All of the above

Question 17

Which of the following would not be considered physical capital?

Accepted Answer

A)   A combine harvester
B)   Fertile soil
C)   A factory
D)   A forkliftE) All of the above
F) B) and D)

Question 18

According to the rule of 70, if a country grows at an average rate of 2 percent per year, what would happen after 35 years?

Accepted Answer

A)   The country's real GDP per capita would double.
B)   The country's nominal GDP would double.
C)   The country's real GDP would double.
D)   The country's nominal GDP per capita would double.E) None of the above
F) A) and D)

Question 19

According to convergence theory, countries that start out poor should initially grow _______ than countries that start out rich and will eventually _______.

Accepted Answer

A)   faster; slow to the same growth rate
B)   slower; grow to the same growth rate
C)   faster; surpass their level of income
D)   slower; surpass their level of incomeE) A) and D)
F) A) and C)

Question 20

Finding the right balance between investing in physical capital funding current consumption:

Accepted Answer

A)   is harder for poorer countries than rich ones.
B)   is easier for poorer countries than rich ones.
C)   requires poor countries to give up very little current consumption.
D)   requires rich countries to give up large amounts of current consumption.E) None of the above
F) All of the above

Exam 10: Economicgrowth

National output per person is another way to report:

Correct AnswerverifiedShow Answer

According to convergence theory, countries that start out poor should initially grow _______ than countries that start out rich and will eventually _______.

Correct AnswerverifiedShow Answer

Which of the following would not be considered physical capital?

Correct AnswerverifiedShow Answer

Using the growth accounting equation, if the growth rate of technology is 3 percent, the growth rate of labor is 2 percent, the growth of capital is 1 percent, and α = 0.75, then the growth rate of output can be estimated to be:

Correct AnswerverifiedShow Answer

Which of the following is an example of physical capital?

Correct AnswerverifiedShow Answer

Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 3 percent, the growth rate of capital is 2 percent, and α = 0.75, then the growth rate of technology can be estimated to be:

Correct AnswerverifiedShow Answer

Increases in productivity per person lead to increases in:

Correct AnswerverifiedShow Answer

According to the rule of 70, we can estimate how long it will take a country to double its real GDP per capita by:

Correct AnswerverifiedShow Answer

Which of the following is an example of government investment in physical capital to increase business productivity?

Correct AnswerverifiedShow Answer

What is the premise behind the poverty trap?

Correct AnswerverifiedShow Answer

According to the rule of 70, if a country grows at an average rate of 2 percent per year, what would happen after 35 years?

Correct AnswerverifiedShow Answer

Which of the following is not an example of human capital investment?

Correct AnswerverifiedShow Answer

According to the rule of 70, if a country grows at 7 percent per year, it will double its real GDP per capita in:

Correct AnswerverifiedShow Answer

_______ accounting describes how growth in inputs of production relates to growth in output.

Correct AnswerverifiedShow Answer

Which of the following is an example of U.S. foreign direct investment?

Correct AnswerverifiedShow Answer

A reduction in current consumption to pay for investment in capital intended to increase future production is known as the:

Correct AnswerverifiedShow Answer

Industrial policies are:

Correct AnswerverifiedShow Answer

Finding the right balance between investing in physical capital funding current consumption:

Correct AnswerverifiedShow Answer

Protecting property rights:

Correct AnswerverifiedShow Answer

Natural resources are:

Correct AnswerverifiedShow Answer

Correct Answer
verified

According to convergence theory, countries that start out poor should initially grow _ than countries that start out rich and will eventually _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified