Deck 7: Economic Growth in the Global Economy

Question 1

Which of the following statements about economic growth is the most accurate?

A)It is the annual percentage change in real GDP.
B)It is the annual percentage change in nominal GDP.
C)It is the annual percentage change in per capita real GDP.
D)It is the annual percentage change in disposable income.

Answer 1

It is the annual percentage change in per capita real GDP.

Question 2

How does economic growth impact the output of goods and services in an economy and the quantity of goods that citizens will have to consume?

A)It increases output resulting in less goods for consumption.
B)It decreases output resulting in less goods for consumption.
C)It decreases output resulting in more goods for consumption.
D)It increases output resulting in more goods for consumption.

Answer 2

It increases output resulting in more goods for consumption.

Question 3

What is the measure most commonly used by economists to gauge the standard of living of a nation?

A)capital investment
B)labour productivity
C)real GDP per capita
D)real GDP

Answer 3

real GDP per capita

Question 4

Which of the following is a measure of economic growth?

A)the marginal change in nominal output divided by total output from the previous year
B)the advancement in the quality of a nation's technology
C)the annual percentage change in per capita real output of goods and services
D)the rate of business investment and capital formation

Question 5

What do economists typically track to measure economic growth?

A)the unemployment rate
B)the expansion index
C)real GDP per capita
D)the employment rate

Question 6

Given a constant rate of growth of real GDP,what would cause a fall in real GDP per capita?

A)a decrease in the capital stock
B)an increase in the size of the labour force
C)a rate of population growth that is less than the rate of growth of real GDP
D)a rate of population growth that is greater than the rate of growth of real GDP

Question 7

What is the best way to measure economics growth?

A)by the annual percentage change in nominal GDP
B)by the annual percentage change in nominal GDP per capita
C)by the annual percentage change in real GDP per capita
D)by the annual percentage change in real GDP

Question 8

What is another term for how much a country's economy will produce at its potential output?

A)the trough of the business cycle
B)the trend line
C)a country's economic welfare
D)the natural level of output

Question 9

Which economist is given credit for stating that "in the long run,we are all dead"?

A)Adam Smith
B)David Ricardo
C)John Maynard Keynes
D)Milton Friedman

Question 10

In which direction will improvements in and greater stocks of land,labour,capital,and entrepreneurial activity shift the production possibilities curve?

A)Inward, such that the marketplace experiences a decrease in price and output levels.
B)Inward, because more resources will be used up and not renewed.
C)Outward, such that the cost of living rises.
D)Outward, such that more goods and services can be produced.

Question 11

What will cause the standard of living to decline?

A)if the rate of population growth is less than the rate of growth of real GDP
B)if the nominal GDP grows at a slower rate than real GDP
C)if the rate of population growth exceeds the rate of growth of real GDP
D)if the nominal GDP grows at a faster rate than real GDP

Question 12

Given a constant rate of growth of real GDP,what would lead to an increasing real GDP per capita?

A)an increase in the size of the labour force
B)a rate of population growth that is greater than the rate of growth of real GDP
C)a rate of population growth that is less than the rate of growth of real GDP
D)an increase in the capital stock

Question 13

Which of the following best describes output per capita?

A)It is one measure of the marginal level of economic well-being in a country.
B)It is total output (GDP) divided by the labour force.
C)It is measured by GDP per capita.
D)It is total output (GDP) divided by the number of persons among who contributed to production.

Question 14

If real GDP is increasing more rapidly than the population,what can we conclude?

A)The economy must be experiencing inflation
B)Per capital real GDP will be decreasing.
C)Interest rates must be falling
D)Per capita real GDP will be increasing.

Question 15

How is the prosperity of a nation typically measured today?

A)by its real output per capita
B)by its proportionate share of international trade
C)by its gold reserves
D)by its total output or gross national product

Question 16

If real GDP per capita is decreasing,what can we conclude about real output?

A)It is growing more rapidly than the population.
B)It is growing less rapidly than the population.
C)It is growing more rapidly than are prices.
D)It is growing at the same rate as the population.

Question 17

Which of the following will cause an economy's production possibilities curve to shift outward over time?

A)if the quality of resources decreases
B)if the productivity of labour decreases
C)if the stock of available capital decreases
D)if technological progress occurs

Question 18

If real GDP per capita is increasing,what can we conclude about real output?

A)It is growing more rapidly than are prices.
B)It is growing more rapidly than the population.
C)It is growing less rapidly than the population.
D)It is growing at the same rate as the population.

Question 19

What will cause the standard of living to increase?

A)if the nominal GDP grows at a slower rate than real GDP
B)if the rate of population growth is less than the rate of growth of real GDP
C)if the rate of population growth exceeds the rate of growth of real GDP
D)if the nominal GDP grows at a faster rate than real GDP

Question 20

What is the effect of an increase in the stock of capital on an economy's production?

A)It causes an economy's production possibilities curve to shift inward over time.
B)It causes an economy's production possibilities curve to shift outward over time.
C)It has no effect on the position of an economy's production possibilities curve over time.
D)It causes a movement from a point on an economy's production possibilities curve to a point inside the curve.

Question 21

What annual growth rate will result in a country roughly doubling its GDP in ten years?

A)5 percent
B)7 percent
C)10 percent
D)12 percent

Question 22

According to the rule of 70,if a nation grows at a rate of 4 percent per year,in roughly how many years will national income double?

A)7 years
B)10 years
C)12.5 years
D)17.5 years

Question 23

Country A and Country B initially have the same real GDP per capita.Country A experiences no economic growth,while Country B grows at a sustained rate of 5 percent.In 14 years,how will Country A's GDP compare to that of Country B's?

A)It will be approximately one-fourth of Country B's.
B)It will be approximately one-half of Country B's.
C)It will be approximately double of Country B's.
D)It will be approximately triple of Country B's.

Question 24

According to the rule of 70,if a nation grows at a rate of 2 percent per year,in roughly how many years will national income double?

A)2 years
B)7 years
C)10 years
D)35 years

Question 25

What rule shows roughly how long it will take a nation to double its output at various growth rates?

A)the rule of 70
B)the rule of 1950
C)the rule of rapid growth
D)the duopoly rule

Question 26

According to the rule of 70,if a nation's economy grows at a rate of 5 percent per year,in roughly how many years will national income double?

A)10 years
B)14 years
C)20 years
D)70 years

Question 27

According to the rule of 70,if a nation grows at a rate of 7 percent per year,in roughly how many years will national income double?

A)5 years
B)7 years
C)10 years
D)70 years

Question 28

What is needed for a low-income country to develop into a high-income country?

A)tax breaks on consumption goods
B)continuous economic expansion
C)a sustained and rapid expansion in the money supply
D)deflation

Question 29

What annual growth rate will result in a country roughly doubling its GDP in five years?

A)5 percent
B)7 percent
C)12 percent
D)14 percent

Question 30

According to the rule of 70,if a nation grows at a rate of 1 percent per year,in roughly how many years will national income double?

A)7 years
B)10 years
C)70 years
D)100 years

Question 31

What should a nation do to achieve a high standard of living?

A)increase the tax deduction for child dependents
B)promote economic growth
C)use less capital and more labour in the production process
D)increase welfare payments to the poor

Question 32

In the long run,what is the most important source of increase in a nation's standard of living?

A)high rate of consumption
B)zero rate of population growth
C)high rate of labour force growth
D)high rate of economic growth

Question 33

What is needed for a low-income country to develop into a high-income country?

A)high interest rates
B)sustained economic growth
C)high rates of inflation
D)restrictions on international trade

Question 34

Country A and Country B initially have the same real GDP per capita.Country A experiences no economic growth,while Country B grows at a sustained rate of 7 percent.In 12 years,how will Country B's GDP compare to that of Country A's?

A)It will be approximately one-fourth of Country A's.
B)It will be approximately one-half of Country A's.
C)It will be approximately double of Country A's.
D)It will be approximately triple of Country A's.

Question 35

In any country,under which of the following circumstances will the population generally be better off?

A)if the quantity and quality of output decreases and the population does not increase faster than real output
B)if the technology improves and the population increases faster than real output
C)if the quantity and quality of output increases and the population increases faster than real output
D)if the quantity and quality of output increases and the population does not increase faster than real output

Question 36

Which of the following will cause the production possibilities curve to shift outward?

A)improved public education
B)increased regulation of the financial sector
C)reallocation of resources toward food production
D)decreased unemployment

Question 37

What effect will better technology have on an economy's production possibilities curve?

A)It will shift the curve outwards.
B)It will result in a movement along the curve.
C)It will shift the curve inwards.
D)It will not shift the curve.

Question 38

Which of the following will NOT cause the production possibilities curve to shift outward?

A)a very low birth rate
B)increased educational opportunities
C)increased entrepreneurial activity
D)improvements in the stock of land

Question 39

According to the rule of 70,if a nation grows at a rate of 10 percent per year,in roughly how many years will national income double?

A)5 years
B)7 years
C)10 years
D)50 years

Question 40

What annual growth rate will result in a country roughly doubling its GDP in 20 years?

A)2.5 percent
B)3.5 percent
C)7.5 percent
D)12 percent

Question 41

Which of the following countries has a relative abundance of natural resources?

A)Somalia
B)Canada
C)Hong Kong
D)Japan

Question 42

Which of the following does NOT affect growth in real GDP per capita?

A)the total production of final goods in the economy
B)the distribution of income
C)the population
D)the production of final services in the economy

Question 43

Which of the following factors contributes to economic growth?

A)an increase in the proportion of the population that is college educated
B)a decrease in the productivity of labour
C)an increase in the average wage rate paid to workers
D)an increase in the standard of living

Question 44

Which of the following is NOT considered a factor that contributes to economic growth?

A)growth in the quantity and quality of labour resources used
B)growth in physical capital inputs (machines, tools, buildings, and inventories)
C)growth in the money supply that exceeds the growth of final goods and services
D)government protection of property rights

Question 45

How is economic growth illustrated on a production possibilities diagram?

A)an inward shift of an economy's production possibilities curve
B)a movement from a point on an economy's production possibilities curve to a point inside the curve
C)an outward shift of an economy's production possibilities curve
D)an upward slope on an economy's production possibilities curve

Question 46

How is a decrease in economic growth illustrated on a production possibilities diagram?

A)an inward shift of an economy's production possibilities curve
B)a slowing in the outward shift of an economy's production possibilities curve
C)an upward slope in an economy's production possibilities curve
D)a movement from a point inside an economy's production possibilities curve to a point on the curve

Question 47

Which of the following is NOT considered to be a significant factor contributing to economic growth?

A)a less intense work effort in the heat of the tropics
B)an increase in the quantity of physical capital
C)a greater division of labour and specialization
D)an increase in use of land inputs

Question 48

Which of the following factors will NOT contribute to economic growth?

A)technological advances
B)an increase in minimum wage
C)growth in physical capital
D)an increase in the productivity of labour

Question 49

In the long run,what is the most important determinant of a nation's standard of living?

A)its ability to export cheap labour
B)its rate of productivity growth
C)its ability to control the nation's money supply
D)its endowment of natural resources

Question 50

Which of the following countries does NOT have an abundance of natural resources?

A)Japan
B)Australia
C)United States
D)Brazil

Question 51

How is growth in a production possibilities curve diagram shown?

A)as an outward shift of the curve
B)as a movement along the curve to the southeast
C)as an inward shift of the curve
D)as a movement along the curve to the southwest

Question 52

Which of the following is generally NOT considered a factor that contributes to economic growth?

A)technological advances
B)increased labour
C)the migration of resources from areas of low productivity to areas of high productivity
D)increased labour productivity

Question 53

Which of the following government policies is NOT likely to encourage per capita economic growth?

A)special subsidies for capital-intensive forms of production
B)promotion of education and training programs for workers
C)high taxes on companies that spend a lot on capital formation
D)the use of tax revenues for investment and capital formation

Question 54

What does the extent to which the economy can produce at its natural rate of output NOT depend upon?

A)the number of consumers
B)the productivity of labour
C)the stock of available capital
D)technology

Question 55

Which of the following factors contributes to economic growth?

A)an increase in the minimum wage
B)a decrease in the productivity of labour while holding the productivity of capital fixed
C)the discovery of new oil reserves
D)a decrease in the quantity of labour due to emigration

Question 56

What,if any,do most modern economists believe is the single most important factor that can be used to explain economic growth?

A)Nearly all economists agree that there is more than a single factor, but that capital formation is the most important factor.
B)Nearly all economists believe that extensive private property rights are the most important factor.
C)Nearly all economists believe that economic growth is a complex process without a single dominant factor.
D)Nearly all economists agree that abundant resources are the most important factor.

Question 57

Which of the following did NOT result in economic growth?

A)the instillation of a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of Southern Ontario
B)the emigration of many citizens from Zimbabwe when a politically repressive regime took office
C)the increase in government funding of post-secondary education
D)Cyrus McCormack inventing a threshing machine for harvesting grains

Question 58

Which of the following statements best illustrates economic growth?

A)An increase in the quantity of labour always leads to economic growth.
B)Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.
C)A decrease in the productivity of labour leads to economic growth.
D)An increase in the minimum wage will always lead to economic growth.

Question 59

Which of the following is NOT likely to affect the rate of economic growth?

A)technological change
B)the level of government spending
C)the quantity of available resources
D)the quality of available resources

Question 60

Which of the following is NOT associated with changes in the growth rate of real GDP per capita?

A)changes in the total production of final goods in the economy
B)changes in the size of the population
C)changes in the distribution of income
D)changes in the production of final services in the economy

Question 61

What will better technology enable producers to do?

A)economize on the use of resources
B)reallocate resources toward the production of capital
C)increase wages for low skilled workers
D)rely less on entrepreneurs

Question 62

In countries with low levels of income,which of the following is NOT likely?

A)The opportunity cost of an education is higher than in high-income countries.
B)Illiteracy rates are higher than in high-income countries.
C)Economies are primarily agriculture based.
D)Property rights are well defined and enforced.

Question 63

Which of the following will NOT increase the rate of growth in an economy?

A)an increase in labour productivity
B)technological progress
C)higher rates of investment
D)a reduction in the rate of savings

Question 64

Which of the following is NOT considered a factor that contributes to economic growth?

A)government regulation of key industries
B)improved efficiencies through economies of scale
C)government protection of property rights
D)increased specialization of labour

Question 65

Which of the following does NOT describe an investment in human capital?

A)It is of minor importance to economic growth.
B)It can be acquired through on-the-job training.
C)It can be acquired through education.
D)It is an important source of economic growth.

Question 66

Many scholars believe that the importance of research and development is understated.Which of the following is included in research and development efforts?

A)improvements to management
B)foreign trade
C)increased use of unemployed resources
D)reallocation of resources among different products

Question 67

What correlates with a faster rate of technological progress?

A)a slower rate of growth of the money supply
B)a greater rate of economic growth
C)a slower rate of economic growth
D)a greater rate of population growth

Question 68

Which of the following can help a nation achieve higher economic growth?

A)more resources allocated to consumption goods
B)taxes imposed on investment in capital
C)increased wages in the service sector
D)more resources devoted to research and development

Question 69

Will increased investment alone guarantee economic growth?

A)No, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.
B)No, because an economy must rely on capital injections from abroad.
C)Yes, because money is the only resource needed for growth.
D)Yes, because growth occurs only with savings.

Question 70

Is it possible to have economic growth with no opportunity cost?

A)No, because growth depletes the stock of knowledge so that more growth today means less growth tomorrow.
B)No, but economic growth is always worth whatever sacrifice is required.
C)No, because growth requires the sacrifice of consumption goods in order to invest in capital formation and research and development.
D)Yes, economic growth requires no current sacrifices, only the passage of time.

Question 71

Which of the following is one of the most important determinants of economic growth?

A)the birth rate
B)the savings rate
C)the unemployment rate
D)the rate of infant mortality

Question 72

Sergei has developed a new fat substitute that has no calories and produces no side effects.What kind of support from the government is he most likely to want,in order to bring this innovation to the marketplace?

A)a trademark
B)a patent
C)an education subsidy
D)a marketing subsidy

Question 73

In a country that does not protect patents,what impact would you expect to see on the amount of research and development?

A)There would be more, because companies are civic-minded and highly motivated to introduce innovations that improve the standard of living.
B)There would be less, because the benefits to society of engaging in research and development would be less than the costs to society.
C)There would be less, because if they made a significant investment in the development, they would be unable to protect the innovations or discoveries long enough to be sufficiently compensated for their efforts.
D)There would be more, because they could still hope to monopolize the market.

Question 74

In a consumer-oriented economy,what can we conclude about the decision to save in order to promote economic growth?

A)It must be enforced by high levels of taxation.
B)It means a sacrifice of current consumption in order to enhance future consumption.
C)It cannot be expected to benefit future generations.
D)It can be expected to cause widespread unemployment.

Question 75

Other things being equal,what is the impact of a higher rate of savings across countries?

A)a lower rate of change of real GDP per capita
B)a higher rate of change of real GDP per capita
C)a lower rate of investment
D)a lower productivity of labour

Question 76

Which of the following will NOT directly affect the size of a nation's capital stock?

A)resources reallocated to the production of food
B)a new machine installed in a company's plant
C)a newly constructed factory
D)an eighteen-year-old student enrolled in university as a full-time student

Question 77

What correlates with a slower rate of capital formation?

A)a slower rate of economic growth
B)a greater rate of population growth
C)a slower rate of growth of the money supply
D)a greater rate of economic growth

Question 78

Which of the following is most likely to contribute to economic growth as measured by real GDP per capita?

A)the imposition of tariffs and quotas on imported goods
B)rapid population growth
C)an increase in marginal tax rates
D)increased capital formation

Question 79

In a fully employed economy,which of the following best describes invention and discovery?

A)They are achieved through sacrifices in current consumption.
B)They have negative opportunity costs.
C)They cannot be achieved without further economic growth.
D)They are automatic.

Question 80

Which of the following is likely to occur as a result of falling incomes?

A)Reduced incomes will lead to reduced savings and, as a result, a reduction in capital formation.
B)Reduced incomes will lead to a decrease in spending on consumption but an increased spending on research and development.
C)Reduced incomes will result in a decrease in the availability of labour inputs for production.
D)Reduced incomes will lead to increased savings and, as a result, an increase in capital formation.