Question 1

The poverty trap refers to:

Accepted Answer

A)   poorer countries having a harder time buying the things that will end their poverty.
B)   richer countries spiraling downward into poverty if they invest in the wrong industries.
C)   richer countries spiraling downward into poverty if they fail to invest enough in physical capital.
D)   All of these describe the poverty trap.E) C) and D)
F) A) and C)

Question 2

An example of a natural resource is:

Accepted Answer

A)   Michael Jordan's athletic ability.
B)   Farmer Joe's farm fields.
C)   Bill Gates' revolutionary iPod.
D)   All of these are examples of natural resources.E) A) and B)
F) None of the above

Question 3

Diamonds are considered:

Accepted Answer

A)   a renewable resource.
B)   a nonrenewable resource.
C)   physical capital.
D)   technology.E) B) and C)
F) A) and C)

Question 4

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) None of the above
F) A) and C)

Question 5

Output per person on a country level is another way to think about:

Accepted Answer

A)   real GDP per capita.
B)   nominal GDP.
C)   productivity.
D)   GDP growth rates.E) C) and D)
F) B) and C)

Question 6

For a country to acquire more physical capital it:

Accepted Answer

A)   must forgo current consumption.
B)   faces the investment trade-off.
C)   must pay for the investment by reducing current consumption.
D)   All of these are true.E) None of the above
F) All of the above

Question 7

Using the growth accounting equation, if the growth rate of output is 5%, the growth of labor is 2% and the growth of capital is 2% then if Î±=0.50 then growth of technology can be estimated to be:

Accepted Answer

A)   4.25%.
B)   4.00%.
C)   3.00%.
D)   4.75%.E) None of the above
F) All of the above

Question 8

Fossil fuels are considered:

Accepted Answer

A)   a renewable resource.
B)   a nonrenewable resource.
C)   physical capital.
D)   technology.E) A) and B)
F) None of the above

Question 9

If a nation has a higher level of technology than another nation it means that they will be able to produce:

Accepted Answer

A)   more outputs with the same inputs.
B)   less with the same amount of physical capital.
C)   more with no capital.
D)   the same output with the same level of inputs.E) A) and D)
F) A) and C)

Question 10

Countries that start with very little physical capital will get a:

Accepted Answer

A)   higher return from adding a unit of capital than a country that starts at a higher initial level will.
B)   lower return from adding a unit of capital than a country that starts at a higher initial level will.
C)   similar return from adding a unit of capital than a country that starts at a higher initial level will.
D)   higher return from adding a unit of capital the more natural resources they possess.E) A) and D)
F) A) and C)

Question 11

The basic idea behind the convergence theory is:

Accepted Answer

A)   that countries starting at low levels of income will tend to grow at much faster rates than those starting with high levels of income.
B)   each additional unit of capital provides larger gains when you're coming from behind.
C)   also the basic idea behind the catch-up effect.
D)   All of these are true.E) A) and B)
F) All of the above

Question 12

When Skippy the sailor forgets how to tie a slip knot his:

Accepted Answer

A)   human capital decreases.
B)   human capital increases.
C)   human capital is unaffected.
D)   None of these is true.E) A) and C)
F) A) and B)

Question 13

If a country has a high level of growth in income, it:

Accepted Answer

A)   must be rapidly increasing its GDP per capita.
B)   must have a high level of income.
C)   must have an equitable distribution of wealth.
D)   All of these are true.E) A) and B)
F) A) and C)

Question 14

When a country continually adds more capital to its existing stock productivity will:

Accepted Answer

A)   increase at a decreasing rate.
B)   increase at an increasing rate.
C)   decrease at a decreasing rate.
D)   decrease at an increasing rate.E) B) and D)
F) None of the above

Question 15

Industrial policies are:

Accepted Answer

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

Question 16

The fact that the United States has grown _______ per year for the last hundred years is ______________.

Accepted Answer

A)   1 %; alarming and needs to be altered
B)   2 %; alarming and needs to be altered
C)   2 %; impressive and hopefully will continue
D)   3 %; impressive and hopefully will continueE) B) and C)
F) A) and D)

Question 17

A reduction in current consumption to pay for the 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) A) and D)
F) A) and C)

Question 18

An example of U.S. foreign direct investment would be a:

Accepted Answer

A)   factory in Canada owned by a U.S. citizen.
B)   factory in Japan owned by a Canadian citizen.
C)   factory in New Mexico owned by a Japanese citizen.
D)   All of these are examples of foreign direct investment.E) None of the above
F) B) and C)

Question 19

Rapid economic growth:

Accepted Answer

A)   is a modern phenomenon, happening only in the last century or two.
B)   has happened in various places around the world since the 1300s.
C)   has occurred since 1500, but backsliding has prevented real growth.
D)   is a modern phenomenon, happening only this year.E) B) and D)
F) B) and C)

Question 20

Which of the following would not be considered physical capital?

Accepted Answer

A)   An axe
B)   Fertile soil
C)   A factory
D)   A forkliftE) A) and B)
F) A) and C)

Exam 10: Economic Growth

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

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

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The poverty trap refers to:

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Output per person on a country level is another way to think about:

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For a country to acquire more physical capital it:

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Industrial policies are:

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If a country has a high level of growth in income, it:

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An example of a natural resource is:

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Using the growth accounting equation, if the growth rate of output is 5%, the growth of labor is 2% and the growth of capital is 2% then if Î±=0.50 then growth of technology can be estimated to be:

Correct AnswerverifiedShow Answer

The basic idea behind the convergence theory is:

Correct AnswerverifiedShow Answer

Diamonds are considered:

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When a country continually adds more capital to its existing stock productivity will:

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The fact that the United States has grown _______ per year for the last hundred years is ______________.

Correct AnswerverifiedShow Answer

Fossil fuels are considered:

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Which of the following would not be considered physical capital?

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When Skippy the sailor forgets how to tie a slip knot his:

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An example of U.S. foreign direct investment would be a:

Correct AnswerverifiedShow Answer

If a nation has a higher level of technology than another nation it means that they will be able to produce:

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Rapid economic growth:

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Countries that start with very little physical capital will get a:

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The fact that the United States has grown _ per year for the last hundred years is ________.

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