Question 1

Convergence theory is based on the idea of:

Accepted Answer

A)   decreasing marginal returns.
B)   decreasing income per capita.
C)   increasing rates of income per capita.
D)   increasing opportunity costs.E) A) and C)
F) B) and D)

Question 2

The government can encourage economic growth by:

Accepted Answer

A)   protecting property rights.
B)   enforcing contracts.
C)   upholding legal agreements.
D)   All of these actions will encourage economic growth.E) B) and C)
F) A) and D)

Question 3

A country that starts with very little physical capital will receive a _______ return from adding a unit of capital than a country that _______.

Accepted Answer

A)   higher; starts with more physical capital
B)   lower; starts with more physical capital
C)   lower; possesses more natural resources
D)   higher; possesses fewer natural resourcesE) C) and D)
F) All of the above

Question 4

Human capital is generally acquired through: education. job training. job experience.

Accepted Answer

A)   I, II, and III
B)   II and III only
C)   III only
D)   II onlyE) A) and D)
F) B) and C)

Question 5

The _______ captures how inputs of production are related to output.

Accepted Answer

A)   consumption function
B)   GDP deflator
C)   production function
D)   saving functionE) A) and B)
F) A) and C)

Question 6

Which of the following is an example of a renewable resource?

Accepted Answer

A)   A river
B)   Coal
C)   Natural gas
D)   All of these are renewable resources.E) A) and B)
F) A) and C)

Question 7

If a country grows at an average rate of 5 percent per year over a 5 year period, what is its compounded growth rate over that time period?

Accepted Answer

A)   27.6 percent
B)   35 percent
C)   32.7 percent
D)   20.5 percentE) A) and D)
F) None of the above

Question 8

We can roughly estimate how long it will take a country to double its real GDP per capita using the:

Accepted Answer

A)   rule of 70.
B)   rule of 60.
C)   growth estimator.
D)   GDP deflator.E) B) and D)
F) A) and C)

Question 9

Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 4 percent, the growth rate of technology is 3 percent, and α = 0.8, then the growth rate of capital can be estimated to be:

Accepted Answer

A)   4.75 percent.
B)   5 percent.
C)   5.5 percent.
D)   6 percent.E) A) and B)
F) A) and C)

Question 10

Diamonds are:

Accepted Answer

A)   a renewable resource.
B)   a nonrenewable resource.
C)   physical capital.
D)   a nondurable good.E) None of the above
F) All of the above

Question 11

Higher levels of technology:

Accepted Answer

A)   help economies produce more output with the same inputs.
B)   do not support economic growth.
C)   is the main goal of industrial policy.
D)   enhance human capital without changing physical capital.E) A) and C)
F) B) and C)

Question 12

Use the table shown, which displays income and growth rates, to assess convergence.  Which country is converging the quickest?

Accepted Answer

A)   India
B)   Ghana
C)   Germany
D)   ItalyE) A) and B)
F) A) and D)

Question 13

One explanation for the growth in the U.S. economy over the last 100 years is:

Accepted Answer

A)   a large increase in human capital.
B)   a more equal distribution of wealth in the economy.
C)   concentrated industrial policy.
D)   restrained government spending.E) B) and D)
F) B) and C)

Question 14

Which of the following is not an example of a renewable resource?

Accepted Answer

A)   Wind
B)   Sunlight
C)   Oil
D)   All of these are renewable resources.E) A) and C)
F) B) and C)

Question 15

Factories owned by U.S. firms on the Mexican side of the U.S.-Mexico border are:

Accepted Answer

A)   an important source of foreign direct investment in Mexico.
B)   an important source of tax revenue for the United States.
C)   difficult for the Mexican government to manage.
D)   harmful to Mexico's efforts to increase their economic growth.E) C) and D)
F) A) and D)

Question 16

Natural resources:

Accepted Answer

A)   are production inputs that come from the earth.
B)   include lakes, mineral deposits, forests, and so on.
C)   can be split into two categories: renewable or nonrenewable.
D)   All of these are true.E) A) and D)
F) C) and D)

Question 17

Suppose that a country has a nominal GDP of 10.3 trillion dollars in year 1. If the country grows at an average rate of 3 percent per year over a 15-year period, what will its compounded GDP be at the end of that time period?

Accepted Answer

A)   $14.7 trillion
B)   $16 trillion
C)   $16.3 trillion
D)   $15.6 trillionE) All of the above
F) A) and D)

Question 18

Which of the following is a sustainable long-term source of growth?

Accepted Answer

A)   Supporting the tech sector
B)   Mining yttrium, a valuable metal used to make superconductors
C)   Encouraging older workers to postpone retirement
D)   A reliance on oil reservesE) A) and D)
F) None of the above

Question 19

Countries with low levels of GDP per capita usually also have:

Accepted Answer

A)   low levels of education.
B)   a robust financial sector.
C)   mandatory military service.
D)   highly developed infrastructures.E) A) and D)
F) B) and C)

Question 20

Physical capital is:

Accepted Answer

A)   the stock of equipment and structures that support the production of goods and services.
B)   the skills someone acquires to enhance the available stock of capital.
C)   the set of skills, knowledge, experience, and talent that determine the productivity of workers.
D)   The monetary reserves a company has on hand.E) A) and D)
F) A) and C)

Exam 10: Economicgrowth

Higher levels of technology:

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A country that starts with very little physical capital will receive a _______ return from adding a unit of capital than a country that _______.

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We can roughly estimate how long it will take a country to double its real GDP per capita using the:

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Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 4 percent, the growth rate of technology is 3 percent, and α = 0.8, then the growth rate of capital can be estimated to be:

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Convergence theory is based on the idea of:

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The _______ captures how inputs of production are related to output.

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Factories owned by U.S. firms on the Mexican side of the U.S.-Mexico border are:

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Which of the following is a sustainable long-term source of growth?

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Natural resources:

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If a country grows at an average rate of 5 percent per year over a 5 year period, what is its compounded growth rate over that time period?

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Countries with low levels of GDP per capita usually also have:

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Which of the following is an example of a renewable resource?

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Use the table shown, which displays income and growth rates, to assess convergence. Which country is converging the quickest?

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Suppose that a country has a nominal GDP of 10.3 trillion dollars in year 1. If the country grows at an average rate of 3 percent per year over a 15-year period, what will its compounded GDP be at the end of that time period?

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Human capital is generally acquired through: education. job training. job experience.

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One explanation for the growth in the U.S. economy over the last 100 years is:

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Physical capital is:

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Diamonds are:

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The government can encourage economic growth by:

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Which of the following is not an example of a renewable resource?

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A country that starts with very little physical capital will receive a _ return from adding a unit of capital than a country that _.

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