Question 1

An island nation is in a steady state. A major hurricane passes over the nation and destroys 25 percent of the physical capital. In the years that follow the storm, one would expect investment to ________ and net investment to ________.
A) decrease; decrease
B) increase; increase
C) decrease; increase
D) increase; decrease
E) decrease; remain the same

Accepted Answer

The answer of  An island nation is in a...

Question 2

Five college students share a house. As the number of computers owned by these students increases from one to five, what happens to the total number of hours they spend using a computer? As each computer is purchased, what happens to the marginal product, in terms of additional hours spent using the computer?

Accepted Answer

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Question 3

Net investment can be positive, negative, or zero. Is this true or false? Explain why.

Accepted Answer

Net investment is equal to investment minus depreciation,so depending on whether investment or depreciation is larger,net investment can be positive or negative.

Question 4

Explain the difference between physical capital and human capital.

Accepted Answer

The answer of Explain the difference between physical capital and...

Question 5

According to the Solow growth model, when wealthy countries donate funds to poorer countries, this will ________ investment, ________ the capital stock, and ________ economic growth.
A) increase; increase; increase
B) increase; increase; decrease
C) decrease; increase; increase
D) decrease; decrease; decrease
E) increase; decrease; decrease

Accepted Answer

The answer of According to the Solow growth model, when...

Question 6

What does it mean to say capital is the result of economic growth rather than it being the cause of economic growth?

Accepted Answer

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Question 7

Three countries have different levels of gross domestic product GDP) per capita and different growth rates of GDP per capita, as identified in the table. $$\begin{array} { l l l } 
\hline \text { Country } & \text { GDP per capita } & \begin{array} { c } 
\text { Growth rate of } \
\text { GDP per capita }
\end{array} \
\hline \text { Bohemia } & \$ 44,000 & 2.5 \text { percent } \
\text { Andover } & \$ 32,000 & 4 \text { percent } \
\text { Catalonia } & \$ 30,000 & 1.5 \text { percent } \
\hline
\end{array}$$ If these countries continue to grow at the rates indicated in the table, then, over the next few years,________ will have the highest level of GDP per capita and, in the long run, ________ will have the highest level of GDP per capita.
A) Andover; Bohemia
B) Andover; Andover
C) Bohemia; Bohemia
D) Bohemia; Andover
E) Bohemia; Catalonia

Accepted Answer

Andover has a higher growth rate than Bohemia, so in the long run, Andover will have the highest level of GDP per capita.

Question 8

Why are institutions so important for economic growth?

Accepted Answer

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Question 9

The primary reason why countries around the world have not converged to the same level of income is that they
A) do not have access to the same resources.
B) do not have the same level of the capital stock.
C) have different numbers of people.
D) have different institutions.
E) do not have access to the same technology.

Accepted Answer

Institutions such as property rights, rule of law, and governance have a significant impact on economic growth and development. Countries with better institutions tend to have higher levels of income as they create a favorable environment for innovation, investment, and entrepreneurship. Differences in institutions between countries result in diverging levels of economic development.

Question 10

Identify and describe each of the three factors of production as stated by the aggregate production function.

Accepted Answer

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Question 11

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads.
One would expect the country’s gross domestic product (GDP) to ________ and the country’s
marginal product of capital to ________.
A) decrease; decrease
B) increase; increase
C) decrease; increase
D) increase; decrease
E) decrease; remain the same

Accepted Answer

The answer of  A major hurricane passes over an...

Question 12

Explain the difference between investment and net investment.

Accepted Answer

The answer of Explain the difference between investment and net...

Question 13

If investment is larger than net investment, then the value of capital will increase. Is this true or false? Explain why.

Accepted Answer

If net investment is negative,then the value of capital will decrease.Investment is always larger than net investment unless depreciation is negative,which is not possible.

Question 14

If country X has a higher growth rate of real investment than country Y, then it must have a higher level of real gross domestic product GDP) than country Y. Is this true or false? Explain why.

Accepted Answer

Country X could have a lower level of real GDP (for example,China as compared to the United States),but it has a higher growth rate of real GDP than country Y.

Question 15

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads.
One would expect this to ________ the country’s gross domestic product (GDP) due to a(n) ________
the production function.
A) decrease; downward movement along
B) increase; upward movement along
C) decrease; downward shift of
D) increase; upward shift of
E) decrease; movement up along

Accepted Answer

The answer of A major hurricane passes over an island...

Question 16

Why does the Solow growth model predict that per capita gross domestic product GDP) levels across nations will equalize as nations approach the steady state?

Accepted Answer

The answer of Why does the Solow growth model predict...

Question 17

Juan has been doing some research on countries in Europe and Africa. Juan has observed that European countries are wealthier and that they have a higher percentage of workers who are college educated. Therefore, Juan concludes that sending more Africans to college will increase economic growth and wealth in Africa. Discuss the validity of this conclusion.

Accepted Answer

The answer of Juan has been doing some research on...

Question 18

How does the aggregate production function measure the labor input used to produce goods and services? Explain.

Accepted Answer

The answer of How does the aggregate production function measure...

Question 19

What policy prescriptions follow from the Solow growth model?

Accepted Answer

The answer of What policy prescriptions follow from the Solow...

Question 20

Consider a country in which most of the productive resources are collectively owned by the state. As
this country moves toward a system of private property rights, we can expect economic growth to
________ due to a(n) ________ the production function.
A) decrease; downward movement along
B) increase; upward movement along
C) decrease; downward shift of the
D) increase; upward shift of
E) decrease; movement up along

Accepted Answer

The answer of Consider a country in which most of...

Quiz 12: Growth Theory

An island nation is in a steady state. A major hurricane passes over the nation and destroys 25 percent of the physical capital. In the years that follow the storm, one would expect investment to and net investment to .

Net investment can be positive, negative, or zero. Is this true or false? Explain why.

Explain the difference between physical capital and human capital.

According to the Solow growth model, when wealthy countries donate funds to poorer countries, this will investment, the capital stock, and economic growth.

What does it mean to say capital is the result of economic growth rather than it being the cause of economic growth?

Why are institutions so important for economic growth?

The primary reason why countries around the world have not converged to the same level of income is that they

Identify and describe each of the three factors of production as stated by the aggregate production function.

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads. One would expect the country’s gross domestic product (GDP) to and the country’s marginal product of capital to .

Explain the difference between investment and net investment.

If investment is larger than net investment, then the value of capital will increase. Is this true or false? Explain why.

If country X has a higher growth rate of real investment than country Y, then it must have a higher level of real gross domestic product GDP) than country Y. Is this true or false? Explain why.

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads. One would expect this to the country’s gross domestic product (GDP) due to a(n) the production function.

Why does the Solow growth model predict that per capita gross domestic product GDP) levels across nations will equalize as nations approach the steady state?

How does the aggregate production function measure the labor input used to produce goods and services? Explain.

What policy prescriptions follow from the Solow growth model?

Consider a country in which most of the productive resources are collectively owned by the state. As this country moves toward a system of private property rights, we can expect economic growth to due to a(n) the production function.

Quiz 12: Growth Theory

An island nation is in a steady state. A major hurricane passes over the nation and destroys 25 percent of the physical capital. In the years that follow the storm, one would expect investment to ________ and net investment to ________.

Net investment can be positive, negative, or zero. Is this true or false? Explain why.

Explain the difference between physical capital and human capital.

According to the Solow growth model, when wealthy countries donate funds to poorer countries, this will ________ investment, ________ the capital stock, and ________ economic growth.

What does it mean to say capital is the result of economic growth rather than it being the cause of economic growth?

Why are institutions so important for economic growth?

The primary reason why countries around the world have not converged to the same level of income is that they

Identify and describe each of the three factors of production as stated by the aggregate production function.

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads. One would expect the country’s gross domestic product (GDP) to ________ and the country’s marginal product of capital to ________.

Explain the difference between investment and net investment.

If investment is larger than net investment, then the value of capital will increase. Is this true or false? Explain why.

If country X has a higher growth rate of real investment than country Y, then it must have a higher level of real gross domestic product GDP) than country Y. Is this true or false? Explain why.

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads. One would expect this to ________ the country’s gross domestic product (GDP) due to a(n) ________ the production function.

Why does the Solow growth model predict that per capita gross domestic product GDP) levels across nations will equalize as nations approach the steady state?

How does the aggregate production function measure the labor input used to produce goods and services? Explain.

What policy prescriptions follow from the Solow growth model?

Consider a country in which most of the productive resources are collectively owned by the state. As this country moves toward a system of private property rights, we can expect economic growth to ________ due to a(n) ________ the production function.

An island nation is in a steady state. A major hurricane passes over the nation and destroys 25 percent of the physical capital. In the years that follow the storm, one would expect investment to and net investment to .

According to the Solow growth model, when wealthy countries donate funds to poorer countries, this will investment, the capital stock, and economic growth.

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads. One would expect the country’s gross domestic product (GDP) to and the country’s marginal product of capital to .

A major hurricane passes over an island nation and destroys 25 percent of the buildings and roads. One would expect this to the country’s gross domestic product (GDP) due to a(n) the production function.

Consider a country in which most of the productive resources are collectively owned by the state. As this country moves toward a system of private property rights, we can expect economic growth to due to a(n) the production function.