Question 1

Since the 1960s, nations like South Korea have been a part of the so-called East Asian economic miracle because:

Accepted Answer

South Korea and other East Asian nations experienced rapid economic growth due to a combination of factors including high savings rates, greater quantities of physical capital per worker, and rapid improvement in human capital. These nations also invested heavily in education and technology, leading to significant improvements in productivity and economic output. This approach to economic development is often referred to as the East Asian economic miracle.

Question 2

The convergence hypothesis says that:

Accepted Answer

The convergence hypothesis predicts that differences in real GDP per capita among countries will tend to decrease over time. This is because poorer countries can adopt and mimic the technologies, institutions and policies of richer countries over time and gradually catch up with them. However, it should be noted that convergence is not inevitable or automatic, and that various factors such as geography, natural resources, governance, education and trade can affect the speed and extent of convergence.

Question 3

The convergence hypothesis says that international differences in GDP per capita tend to _____ over time.

Accepted Answer

The convergence hypothesis states that over time, countries with lower GDP per capita will experience faster economic growth, leading to a narrowing of the gap between the rich and poor countries. Therefore, the correct answer is A) narrow.

Question 4

The idea that relatively poor nations should have higher rates of growth of real GDP per capita than relatively rich nations is known as the:

Accepted Answer

The convergence hypothesis states that relatively poor nations will experience higher rates of growth of real GDP per capita than relatively rich nations, and eventually catch up or converge to the level of income of the richer nations. This hypothesis has been observed in some cases, such as the Four Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) in the 20th century.

Question 5

Reasons for the economic stagnation of Latin America during the last century do NOT include:

Accepted Answer

Excessively large flows of foreign investment are not a reason for economic stagnation in Latin America. In fact, many countries in the region have been dependent on foreign investment to support their economies. The other options (A, B, and C) are all possible factors contributing to economic stagnation in the region.

Question 6

Which factor has contributed to the lack of economic growth in Latin America? I. lack of natural resources
II) high rates of savings that led to insufficient consumption of goods and services
III) political instability

Accepted Answer

Political instability has been a major factor contributing to the lack of economic growth in Latin America. While lack of natural resources and high rates of savings may have had some impact, political instability has been consistently cited by experts as a major hindrance to economic development in the region.

Question 7

The main reason South Korea has grown so rapidly is that, because it was so poor:

Accepted Answer

As a result of being so poor, South Korea was able to leapfrog to new-generation technology. This meant they could skip steps that more developed countries had gone through and adopt newer and more efficient technology. This helped South Korea to grow rapidly and become a prosperous economy.

Question 8

Which reason is one that can explain Latin America's lack of economic growth since 1920?

Accepted Answer

Low savings and investment spending due to government policies, which led to inflation, bank failures, and other disruptions, are a major reason for Latin America's lack of economic growth since 1920. Overspending on education and a lack of natural resources cannot explain the region's long-term economic difficulties, and while competition with imported products may be a factor, it is less significant than the issue of low investment and savings.

Question 9

The reasons for which the East Asian countries have exhibited tremendous economic growth during the past 40 years do NOT inlcude:

Accepted Answer

The statement explicitly mentions that the growth is not due to "intervening governments with lots of regulations." Therefore, option D is the correct choice. Options A, B, and C are indeed the reasons for the rapid growth of East Asian countries.

Question 10

The convergence hypothesis states that international differences in real GDP per capita tend to _____ over time.

Accepted Answer

The convergence hypothesis suggests that countries with lower real GDP per capita will experience faster economic growth compared to countries with higher real GDP per capita, resulting in a narrowing of the gap over time. Therefore, the correct choice is D - narrow.

Question 11

According to the convergence hypothesis, differences in real GDP per capita among countries tends to narrow over time because countries that start with a _____ real GDP per capita tend to have _____ growth rates.

Accepted Answer

This is because countries with lower GDP per capita often have more room for growth and can adopt technologies and institutions from more developed countries, allowing them to catch up and achieve higher growth rates. Meanwhile, countries with higher starting GDP per capita may already be closer to their maximum potential and may experience diminishing returns to growth.

Question 12

Economic growth in sub-Saharan Africa has been dismal. Which factor is NOT a reason for Africa's problem?

Accepted Answer

Stable governments are actually a positive factor for economic growth. The real reasons for Africa's problem include government corruption, lack of property rights, and lack of infrastructure.

Question 13

The key factor explaining the poor growth performance in Africa is probably:

Accepted Answer

While overpopulation and resource scarcity can contribute to economic struggles, the lack of domestic political stability is often cited as the primary obstacle to sustained economic growth in many African countries. This can lead to corruption, lack of investment, and overall economic uncertainty. Military conflicts among neighboring countries can also exacerbate political instability and hinder economic development.

Question 14

Between 1980 and 1994, real per capita GDP in sub-Saharan Africa:

Accepted Answer

Between 1980 and 1994, sub-Saharan Africa experienced economic difficulties, leading to a decline in real per capita GDP by approximately 13%.

Question 15

Sub-Saharan Africa is so poor mainly because:

Accepted Answer

Political instability and civil wars have been ongoing in many countries in sub-Saharan Africa, leading to a lack of investment, infrastructure, and development. The instability and conflicts disrupt economic activity and stifle growth, perpetuating poverty. The other options, such as settlers owning all the land or diamond merchants taking away money, may contribute to poverty in some contexts but are not the primary reason for the region's poverty. The idea that all bright people move to other countries is also a limited view and does not account for the structural challenges and external factors that have hindered development in the region.

Question 16

The convergence hypothesis helps explain why:

Accepted Answer

The convergence hypothesis states that the income of high-income and lower-income countries will eventually get closer as lower-income countries catch up through technological improvements and other advancements. Therefore, option D is the correct choice. Options A and B are not explained by the convergence hypothesis, and option C is not necessarily true as high-income countries may experience periods of slower growth or even recessions.

Question 17

Which factor has contributed to the lack of economic growth in Latin America? I. low rates of savings and investment
II) low value on education
III) political instability

Accepted Answer

All three factors have contributed to the lack of economic growth in Latin America. Low rates of savings and investment limit the capital available for economic development. A low value on education can hinder the development of a skilled workforce, which is essential for economic growth. Political instability can create an uncertain environment for investment and disrupt economic activities.

Question 18

In the 1980s, which factor contributed to slow growth in Latin America countries?

Accepted Answer

Excessive government intervention in the economy contributed to slow growth in Latin America countries during the 1980s. Government policies such as price controls, subsidies, and state ownership of industries led to inefficiencies and a lack of innovation in the private sector. This, coupled with external debt and inflation, contributed to the economic struggles of the region in that decade. While the other factors such as reliance on the drug trade, high birth rates, and excessive reliance on the United States for foreign trade also played a role, they were not the primary factor.

Question 19

Throughout the twentieth century, nations in Latin America had disappointing growth rates primarily due to:

Accepted Answer

Latin American nations faced disappointing growth rates in the twentieth century due to a combination of factors, including low rates of national savings, political instability, and little emphasis on education. These factors hindered investment and economic development in the region. The other options do not accurately reflect the challenges faced by Latin American nations during this time period.

Question 20

Reasons for which Latin American growth since the 1920s has been relatively slow do NOT include:

Accepted Answer

The options A, B, and C are valid reasons for the slow growth of Latin America. However, U.S. intervention cannot be considered a general cause of slow growth in the region, although it may have had a negative impact in some specific cases.

Quiz 9: Long-Run Economic Growth