Deck 46: Growth and Waste

Question 1

Whats defention of terms:
-average propensity to save

Answer 1

the proportion of savings to income

Question 2

Whats defention of terms:
-outsourcing

Answer 2

process whereby corporations shift jobs from high-wage workers in the United States to low-wage workers in less developed countries

Question 3

Whats defention of terms:
-rate of growth

Answer 3

the ratio of savings to output times the ratio of output to capital

Question 4

Explain the role of savings and investment on growth in capitalist economies.
-What are sources of savings? What does Say's law say will happen with savings?

Question 5

Explain the role of savings and investment on growth in capitalist economies.
-Why is investment important to economic growth? Can there be growth without investment? Explain.

Question 6

Explain the role of technology and productivity on growth in capitalist economies.
-Why is productivity important for growth? What happens if productivity falls?

Question 7

Explain the role of technology and productivity on growth in capitalist economies.
-How are technology and productivity related?

Question 8

Discuss conservative policies for growth derived from the two key sources of growth.
-What policies would conservatives argue help increase savings? Investment?

Question 9

Discuss conservative policies for growth derived from the two key sources of growth.
-What would conservatives recommend to encourage technological breakthroughs?

Question 10

Describe the progressive critique of conservative policies for growth.
-How would progressive economists view conservative policies on savings and investment? Explain.

Question 11

Summarize patterns of growth and the explanations for the patterns of growth in recent U.S. history.
-Since World War II, what two decades had the highest growth rates? What three decades had lower growth rates? What were some of the factors leading to lower growth rates?

Question 12

Explain problems associated with growth in the United States.
-List the types of waste in the economy described in this chapter. Which ones do you disagree with (if any), and why?

Question 13

Explain problems associated with growth in the United States.
-Describe one type of waste in detail and explain why it occurs.

Question 14

Explain problems associated with growth in the United States.
-Does high growth of GDP always lead to high growth of employee compensation, middle-class income, and income of the poor?

Question 15

Explain why Malthus made predictions of mass starvation and why it has not always happened in developed economies.
-What did Malthus assume about increasing production? Why?

Question 16

Explain why Malthus made predictions of mass starvation and why it has not always happened in developed economies.
-What is relationship of increasing production and population growth? Why would this be a problem?

Question 17

Explain why Malthus made predictions of mass starvation and why it has not always happened in developed economies.
-Why have developed countries not experienced mass starvation as their populations grew? Explain.

Question 18

Annual growth in industrialized countries is usually measured in terms of

A) consumer spending.
B) new net investment
C) income distribution
D) real GDP

Question 19

The money used to buy equipment and buildings is called

A) physical capital
B) human capital
C) financial capital.
D) depreciation.

Question 20

The percentage of national income that flows into savings each year is

A) the average propensity to save
B) the rate of growth
C) the accumulated profits of businesses.
D) the government budget deficit.

Question 21

What 2 things does the rate of growth of the economy depend on?

A) the amount saved out of national income and the amount invested.
B) the amount of GDP produced per dollar of investment and the rate of depreciation.
C) the amount saved out of national income and the amount of GDP produced per investment dollar.
D) the amount saved out of national income and the rate of interest.

Question 22

The assumption that all savings out of national income are channeled into investment each year is called

A) the average propensity to consume
B) Say's Law
C) the Mellon Effect.
D) the Greenspan Rule

Question 23

According to conservatives, what are the two ways to increase the rate of economic growth?

A) increase savings and increase consumption.
B) increase savings and increase gross investment.
C) increase savings and increase the productivity of capital.
D) increase savings and reduce taxes on wealthy investors.

Question 24

According to conservatives, which policy should government implement to encourage economic growth?

A) cut taxes on low income individuals to increase consumer spending.
B) cut taxes on the middle class to encourage consumer spending and saving.
C) cut taxes on the wealthy who are more likely to save.
D) increase taxes on the middle class to discourage excess consumer spending.

Question 25

According to conservatives, which of the following will be most likely to increase the productivity of capital?

A) more research and development of new technology by government.
B) more research and development of new technology by business.
C) increasing the level of gross investment.
D) increasing the rate of depreciation.

Question 26

The possibility that there would be sufficient money for investment from savings and a very low rate of investment

A) is predicted by Say's Law.
B) will not occur according to Say's Law.
C) has never occurred.
D) will occur if profit rates are too high.

Question 27

A higher rate of national saving

A) is always a good thing.
B) is beneficial during an expansion at full employment.
C) is not helpful during a recession.
D) is beneficial as long as it is accompanied by increased consumer spending.

Question 28

A high level of consumer spending

A) is always a good thing.
B) is especially beneficial during a recession.
C) is not helpful during an expansion at full employment.
D) is beneficial as long as it is accompanied by increased consumer saving.

Question 29

A high rate of military spending by the government

A) is beneficial to the economy during a period of full employment.
B) tends to increase investment and consumer goods during a period of full employment.
C) will tend to put the economy into a recession.
D) will tend to reduce the rate of capital investment over a long period of time.

Question 30

Between 1950 and 1999 the annual rate of GDP growth in the US

A) has been between 1 and 3%
B) has been at least 5%
C) has been between 3% and 5%
D) has been around 10% per year.

Question 31

The economist who argued that the future growth of population would outstrip the growth of output was

A) Jean Baptiste Say
B) Adam Smith
C) Thomas Malthus
D) Karl Marx

Question 32

Why was economics dubbed "the dismal science?"

A) because it is so boring.
B) because of the depressing prediction that future economic growth would eventually lead to starvation.
C) because of the depressing view that technology inevitably leads to resource depletion.
D) because of the depressing conclusion that human beings have unlimited wants.