Deck 3: An Overview of Long- Run Economic Growth

Question 1

Assuming the current rate of economic growth continues,the average college student will have a lifetime income __________ that of his or her parents.

A)five times
B)ten times
C)about the same as
D)about twice
E)half

Answer 1

D

Question 2

Economic growth can be useful in describing why:

A)Europeans are better off in 2007 than they were in 1907 and why Europeans are better off than Thais.
B)Europeans are better off in 2007 than they were in 1907 and why Europeans are worse off than Thais.
C)Europeans are better off in 2007 than they were in 1907 only.
D)Europeans are worse off than Thais only.
E)Europeans are worse off in 2007 than they were in 1907 and why Europeans are better off than Thais.

Answer 2

A

Question 3

What country or countries do the following characteristics possibly describe?
• Life expectancy at birth is under 50 years.
• More than 90 percent of households do not have electricity.
• Fewer than 10 percent of young adults have graduated from high school.

A)Kenya
B)the United States in late 1800s
C)Bangladesh
D)Russia
E)a,b,and c

Answer 3

B

Question 4

If the 130,000-year period since anatomically modern humans made their first appearance were compressed into a single day,economic growth would have begun in the last __________.

A)three hours
B)hour
C)three minutes
D)half hour
E)two hours

Question 5

Economic growth is defined as:

A)the percent change in per capita income,or GDP.
B)the percent change in prices,or GDP.
C)the decline in the unemployment rate.
D)the difference between the nominal and real GDP.
E)changes in technology.

Question 6

The era of modern economic growth began about:

A)the time of the Egyptian pharaohs.
B)500 years ago.
C)the time of Caesar.
D)the time of the Renaissance.
E)300 years ago.

Question 7

In 2000 prices adjusted for inflation,the U.S.per capita GDP was about __________ in 1870,and by 2004 it had grown to about __________.

A)$500;$37,000
B)$2,500;$37,000
C)$500;$17,000
D)$10,000;$11,000
E)$100;$100,000

Question 8

Until about 12,000 years ago,humans were __________;at that point __________ led to the first towns and true economic development.

A)farmers;the Bronze Age
B)hunters and gatherers;the Iron Age
C)hunters and gatherers;agriculture
D)hunters and gatherers;universities
E)farmers;industry

Question 9

Assuming the current rate of economic growth continues,the average parent of a college student will have a lifetime income __________ that of his or her son or daughter.

A)ten times
B)half
C)about the same as
D)five times
E)about twice

Question 10

The rule of 70 states that:

A)if grows at a rate of g percent per year,then the number of years it takes
to double is approximately equal to 70/g.
B)if grows at a rate of g percent per year,then the number of years it takes
to double is exactly equal to 70/g.
C)if grows at a rate of g percent per year,then the number of years it takes
to double is approximately equal to g/70.
D)if grows at a rate of g percent per year,then the number of years it takes
to triple is approximately equal to 70/g.
E)if grows at a rate of g percent per year,then the number of years it takes
to double is approximately equal to 70/(1 + g).

Question 11

According to historical data,the wages in ancient Greece and Rome were __________ in sixteenthcentury Britain or eighteenth-century France.

A)somewhat lower than
B)a lot higher than
C)a lot lower than
D)about the same as
E)none of the above

Question 12

The study of economic growth concentrates on understanding the determinants of

A)the rate of price changes.
B)the short-term change in per capita GDP.
C)the rate of population growth.
D)the long-term change in per capita GDP.
E)none of the above.

Question 13

If,instead of labeling the vertical axis in the usual "1,2,3,4,..." fashion,we label it as "1,2,4,8,..." so that equal intervals represent a doubling,we call this:

A)the quadratic scale.
B)the logarithmic scale.
C)the exponential scale.
D)the ratio scale.
E)the geometric scale.

Question 14

Defining per capita GDP in 2003 as y2003 and per capita GDP in 2004 as
,the growth rate of per capita GDP,
,from 2003 to 2004 is given by:

A) .
B) .
C) .
D) .
E) .

Question 15

If per capita GDP in 2003 was $900,in 2004 was $1,000,and in 2005 was $1,200,the growth rate of per capita GDP between 2003 and 2005 was:

A)25 percent.
B)about 11 percent.
C)20 percent.
D)about 133 percent.
E)about 33 percent.

Question 16

If per capita GDP in 2004 was $1,000 and in 2005 was $1,200,the growth rate of per capita GDP was:

A)1.2 percent.
B)about 17 percent.
C)20 percent.
D)120 percent.
E)Not enough information is given.

Question 17

Developed countries' average incomes rose from about __________ in 1700 to about __________ today.

A)$100;$30,000
B)$2,500;$70,000
C)$500;$70,000
D)$500;$30,000
E)$500;$100,000

Question 18

The growth rate of any variable y between periods t and t + 1 is the __________ and is given by the term __________.

A)percentage of that variable;
B)percentage change in that variable;
C)percentage change in that variable;
D)percentage of that variable;
E)percentage change in that variable;

Question 19

According to the constant growth rate rule,if a variable starts at some initial value
At t = 0 and grows at
At a constant rate g¯,then the value of the variable in three periods is given by:

A) .
B) .
C) .
D) .
E) .

Question 20

The birthplace of modern economic growth was in __________ during the __________ century.

A)Japan;mid-twentieth
B)the United States;mid-nineteenth
C)the United Kingdom;mid-eighteenth
D)China;late twentieth
E)Germany;early nineteenth

Question 21

In the late nineteenth century,__________ was the richest country in the world,but it now lags behind the United States because of __________.

A)China;a lower rate of inflation
B)the United Kingdom;a lower economic growth rate
C)Germany;a higher economic growth rate
D)Japan;consistently being at war
E)China;a higher economic growth rate

Question 22

Suppose that,in 1950,Japan had an initial per capita GDP of $12,000 per year and China had a per capita GDP of $5,000.But China is growing at 5 percent per year and Japan is growing at 2 percent per year.__________ is richer in 2000 with a per capita GDP of approximately __________.

A)Japan;$32,299
B)Japan;$57,337
C)China;$57,337
D)China;$137,608
E)Not enough information is given.

Question 23

Over the past 50 years,Brazil's population growth rate has averaged about 2.3 percent.According to the rule of 70,Brazil's population will double in about:

A)three years.
B)30 years.
C)33 years.
D)161 years.
E)1.6 years.

Question 24

If we compress the vertical axis at "key doubling points," we call this:

A)the logarithmic scale.
B)the ratio scale.
C)the exponential scale.
D)the quadratic scale.
E)the geometric scale.

Question 25

Between 1970 and 1976,Israel's average inflation rate was about 65 percent per year.With that rate of inflation,prices would double about every __________ using the rule of 70.

A)93 years
B)107.7 years
C)0.95 years
D)1.1 years
E)9.3 years

Question 26

The compression of the vertical axis at "key doubling points" is called:

A)the quadratic scale.
B)the logarithmic scale.
C)the exponential scale.
D)the ratio scale.
E)the geometric scale.

Question 27

Since approximately 1950,__________ has been one of the fastest growing economies.

A)Germany
B)the United Kingdom
C)China
D)the United States
E)Mexico

Question 28

The president of the World Bank has asked you to calculate the average per capita GDP growth rate of Rwanda from 1980 to 2000.In 1980,per capita GDP was about $1,255 and in 2000 about $1,018.You tell him the average growth rate of per capita GDP is about:

A)1.0 percent.
B)-1.0 percent.
C)99 percent.
D)-19.0 percent.
E)-99 percent.

Question 29

The president of the World Bank has asked you to calculate the average population growth rate of Nigeria from 1960 to 2004.You know the population in 1960 is about 40 million and in 2004 about 137 million.The average growth rate is about:

A)-1.0 percent.
B)103.0 percent.
C)100.0 percent.
D)-3.0 percent.
E)3.0 percent.

Question 30

According to the rule of 70,if an economy averages a 4 percent growth rate,it will take about __________ years to double in size.

A)2.8
B)1,750
C)0.06
D)5.7
E)17.5

Question 31

Suppose population growth is given by
,where L0 is the population today,
Is the population in t periods,and
Is the population constant growth rate.If we do not know what value
Takes but do know the values of
,
,and t,we can calculate
By punching __________ into our calculator.

A)
B)
C)
D)
E)

Question 32

Suppose there are
People in the world today.If the population growth rate equals
,then in 50 years,the world population will be:

A) .
B) .
C)
D) .
E) .

Question 33

The president of the World Bank has asked you to calculate the average population growth rate of Hungary from 1970 to 2004.You know the population in 1970 was about 10.4 million and in 2004 about 10.1 million.The average growth rate is about:

A)0.09 percent.
B)-0.09 percent.
C)0.08 percent.
D)-63.0 percent.
E)36 percent.

Question 34

Of the industrialized countries,in 2000,__________ had the highest per capita GDP,and in 1950,__________ had the lowest per capita GDP.

A)Japan,the United Kingdom
B)Japan;Japan
C)Germany;Germany
D)the United Kingdom;Germany
E)the United Kingdom;Japan

Question 35

If the population of Romania was about 18.4 million in 1960 and the average population growth rate is 0.5 percent,then Romania's population would have been about __________ in 2000.

A)129.5 million
B)22.4 million
C)23.6 million
D)21.4 million
E)15.8 million

Question 36

When a lower-income economy's GDP is able to "catch up" with a higher-income economy's GDP,this behavior is related to an important concept in the study of economic __________.

A)growth
B)divergence
C)convergence
D)fluctuations
E)asset markets

Question 37

If the population of Romania was about 22.5 million in 2000 and the average population growth rate is 0.5 percent,then Romania's "initial" population was about __________ in 1960.

A)23.6 million
B)22.5 million
C)18.4 million
D)21.4 million
E)15.8 million

Question 38

The president of the World Bank is on his way to a meeting with the president of Uruguay.He bumps into you in the hallway and wants to know how long it will take for Uruguayan per capita GDP to double.All he knows is that the average growth rate has been about 1 percent.You quickly tell him it will take about __________ years because you know __________.

A)60;the rule of 60
B)7;the rule of 70
C)700;percentage change
D)70;the rule of 70
E)1;exponential growth

Question 39

If France's per capita GDP is $5,000 in 1950 and Portugal's is $2,500,but Portugal is growing faster,the expectation that by some time in the future Portugal's per capita GDP will equal that of France is called economic:

A)growth.
B)divergence.
C)convergence.
D)fluctuations.
E)asset markets.

Question 40

Suppose that,in 1950,Japan has an initial per capita GDP of $15,000 per year and China has a per capita GDP of $2,500.But China is growing at 7 percent per year and Japan is growing at 2 percent per year.In 2005,__________ is the lower-income country,with a per capita GDP of approximately __________.

A)China;$73,642
B)China;$40,374
C)Japan;$40,374
D)China;$6,729
E)Japan;$73,642

Question 41

Suppose K and L grow at constant rates given by
And
)What is the growth rate of y if
?

A)
B)
C)
D)Either a or b is correct.
E)None of the above is correct.

Question 42

Suppose k grows at a rate g¯k = 6 percent and k grows at a rate g¯l = 9 percent.If y = k1/3l-4/3,then y grows at:

A)-6 percent.
B)5 percent.
C)6 percent.
D)-5 percent.
E)12 percent.

Question 43

In 2000,only __________ had a per capita GDP higher than the United States.

A)the United Kingdom
B)Belgium
C)Luxembourg
D)Japan
E)Greece

Question 44

Suppose x grows at a rate
Percent and y grows at a rate
Percent.If z = y · x,then z grows at __________;while if z = x/y,z grows at __________.

A)7 percent;-17 percent
B)-17 percent;7 percent
C)17 percent;-7 percent
D)60 percent;42 percent
E)60 percent;-42 percent

Question 45

Suppose k,l,and A grow at constant rates given by
,
,and
)What is the growth rate of y if
?

A)
B)
C)
D)
E)

Question 46

Between 1960 and 2000,which country(ies)was (were)among the fastest growing?

A)South Korea
B)Ireland
C)Thailand
D)Hong Kong
E)all of the above

Question 47

In 1960,approximately __________ of the world's population lived on less than $5 per day;by 2000,it __________ to __________ of the population.

A)10 percent;rose;over one-third
B)10 percent;rose;over two-thirds
C)two-thirds;fell;less than 10 percent
D)one-third;fell;less than 1 percent
E)one-third;rose;over two-thirds

Question 48

Suppose x grows at a rate
Percent and y grows at a rate
Percent;if z = x · y,then z grows at __________;while if z = x/y,z grows at __________.

A)0 percent;6 percent
B)6 percent;0 percent
C)6 percent;12 percent
D)-6 percent;6 percent
E)1 percent;0 percent

Question 49

Suppose k,l,and m grow at constant rates given by
,
,and
)What is the growth rate of y if
?

A)
B)
C)
D)
E)both a and b

Question 50

Between 1960 and 2000,which country(ies)was (were)among the fastest growing?

A)Niger
B)Nicaragua
C)Madagascar
D)Venezuela
E)none of the above

Question 51

Which of the following is/are among the poorest countries in world?

A)Tanzania
B)Ethiopia
C)Burundi
D)all of the above
E)none of the above

Question 52

Suppose k,l,and A grow at constant rates given by
,
,and
)What is the growth rate of y if
,
?

A)
B)
C)
D)
E)Either a or b is correct.

Question 53

Suppose k grows at a rate
Percent and l grows at a rate
Percent.If
,then y grows at:

A)6 percent.
B)5 percent.
C)-5 percent.
D)-6 percent.
E)12 percent.

Question 54

Suppose k,l,and m grow at constant rates given by
,
,and
)What is the growth rate of y if
?

A)
B)
C)
D)
E)

Question 55

In 1960,approximately __________ of the world's population lived on less than $5 per day,and the rate has __________ steadily since.

A)10 percent;fallen
B)two-thirds;fallen
C)10 percent;risen
D)one-third;fallen
E)two-thirds;risen

Question 56

Suppose k grows at a rate
Percent and l grows at a rate
Percent,if
,then y grows at:

A)3 percent.
B)4 percent.
C)-3 percent.
D)12 percent.
E)-4 percent.

Question 57

Suppose k,l,and A grow at constant rates given by
,
,and
)What is the growth rate of y if
,
?

A)
B)
C)
D)
E)

Question 58

Suppose k0 = 100 and assume it grows at a constant rate
Percent per year.If
,what is the approximate value of y in 50 years?

A)
B)
C)
D)
E)Not enough information is given.

Question 59

Suppose k and l grow at constant rates given by
And
)What is the growth rate of y if
,a > 0?

A)
B)
C)
D)
E)

Question 60

Suppose k grows at a rate
Percent and l grows at a rate
Percent;if
,then y grows at:

A)5 percent.
B)15 percent.
C)9 percent.
D)4 percent.
E)3 percent.

Question 61

One of the nice properties of the rule of 70 is that it simply approximates how long it takes for a variable to double independent of the level of the variable.

Question 62

When a lower-income economy's GDP is able to "catch up" with a higher-income economy's GDP,this behavior is related to an important concept called economic growth.

Question 63

Despite the costs associated with economic growth,most believe:

A)they will get only higher.
B)there are not too many benefits.
C)they are higher than the benefits.
D)the benefits far outweigh the costs.
E)the benefits are negative.

Question 64

Defining per capita GDP in 2003 as
and per capita GDP in 2004 as
,the growth rate of per capita GDP,
,from 2003 to 2004 is given by
.

Question 65

The relationship between pollution and per capita GDP is documented as:

A)U shaped.
B)an inverse U.
C)positively related.
D)nonexistent.
E)negatively related.

Question 66

One of the nice properties of the rule of 70 is that it simply approximates how long it will take for a variable to double,but it is dependent on the level of the variable.

Question 67

The costs of economic growth include which of the following?

A)pollution and the depletion of natural resources
B)global warming
C)increased income inequality
D)Technological advances also may lead to the loss of specific jobs and industries.
E)all of the above

Question 68

If the 130,000-year period since anatomically modern humans made their first appearance were compressed into a single day,economic growth would have begun in the last hour.

Question 69

Assume that both Mexico's and Argentina's average annual per capita GDP growth rates are 3 percent per year,and both countries began with an initial per capita GDP of $1,000.However,Argentina has been growing since 1925 and Mexico only since 1950.In 2000,Mexico's per capita GDP would have been about __________,while Argentina's would have been about __________.

A)$19.42;$12.94
B)$9,179;$4,384
C)$51,500;$77,250
D)$48,544;$72,816
E)$4,384;$9,179

Question 70

The benefits of economic growth are which of the following?

A)the gradual release of individuals from physical labor
B)better health
C)more pollution
D)lower government deficits
E)a and b only

Question 71

According to historical data,wages in ancient Greece and Rome were about the same as wages in fifteenthcentury Britain.

Question 72

The benefits of economic growth are which of the following?

A)increases in life expectancy
B)reductions in infant mortality
C)higher incomes
D)the gradual release of individuals from physical labor
E)all of the above

Question 73

Economic growth is defined as the percentage change in per capita income or GDP.

Question 74

The costs of economic growth include which of the following?

A)pollution and the depletion of natural resources
B)global warming
C)the gradual release of individuals from physical labor
D)increased productivity
E)a and b

Question 75

Assume that both Japan's and the United States' average annual per capita GDP growth rates are 2 percent per year,and both countries began with an initial per capita GDP of $1,000.However,the United States has been growing since 1900 and Japan only since 1950.In 2000,the United States would have been __________ than Japan.

A)0.37 times poorer
B)99 times richer
C)2.69 times richer
D)4,555 times richer
E)0.269 times poorer

Question 76

The growth rate of any variable y between periods t and t + 1 is the percentage change in that variable,given by
.

Question 77

Suppose there are
people in the world today.If the population growth rate equals
,then in 50 years,the world population will be

Question 78

Assume that Mexico's average annual per capita GDP growth rate is 3 percent per year,while Argentina's is 2.5 percent.Next,assume that both countries began with an initial per capita GDP of $1,000 in 1950.By 2000,per capita GDP would have been __________ in Mexico and __________ in Argentina.

A)$228;$291
B)$3,437;$4,384
C)$4,515;$3,523
D)$4,384;$3,437
E)Not enough information is given.

Question 79

The "birthplace" of modern economic growth was the mid-nineteenth-century United States.

Question 80

In dynamic economies,it is true that economic growth may contribute to __________,but it also leads to __________.

A)unemployment;inflation
B)job creation;job destruction
C)job destruction;job creation
D)crime;unemployment
E)pollution;price instability