Question 1

What happens to a production possibilities frontier (with capital goods on the vertical axis and consumption goods on the horizontal axis)when there is technological improvement?

Accepted Answer

Technological improvement leads to an increase in productivity and efficiency in producing both capital and consumption goods, leading to an outward shift of the entire production possibilities frontier. This allows for a greater output of both types of goods.

Question 2

Economic growth caused by increased employment creates a trade-off between income and

Accepted Answer

Economic growth caused by increased employment often leads to a trade-off between income and leisure time, as individuals work more hours to earn higher incomes, thereby sacrificing leisure time.

Question 3

Any pro-growth policy that increases investment requires

Accepted Answer

Any pro-growth policy that increases investment requires a sacrifice of current consumption spending. This is because the funds that would have been spent on consumption goods are redirected towards investment in capital goods, which will lead to increased production and eventual increase in GDP.

Question 4

What would happen to a production possibilities frontier (with capital goods measured on the vertical axis and consumption goods on the horizontal axis)if there is an increase in the labor force?

Accepted Answer

An increase in the labor force would result in an increase in production capacity, allowing for more production of both capital and consumption goods. As a result, the entire production possibilities frontier would shift outward.

Question 5

By pursuing growth,some less developed countries have sacrificed other social goals,especially

Accepted Answer

The answer of By pursuing growth,some less developed countries have...

Question 6

A less developed country can increase its capital stock by

Accepted Answer

Shifting resources away from production of consumer goods and toward production of capital goods is the most effective way for a less developed country to increase its capital stock. Capital goods include factories, machinery, and technology, which are necessary for economic growth and development. By prioritizing the production of these goods, a country can increase its productivity and create more jobs, leading to increased economic growth and development. Raising taxes on purchases of capital goods, accepting high unemployment rates, reducing government spending, or providing more opportunities for individuals to spend their savings will not necessarily lead to an increase in capital stock.

Question 7

The most important macroeconomic goal is

Accepted Answer

The importance of macroeconomic goals can vary depending on the specific economic context, priorities of a country, and the perspectives of different stakeholders. Therefore, no single goal can be universally considered the most important across all situations.

Question 8

An investment tax credit will lead to

Accepted Answer

The answer of An investment tax credit will lead to
...

Question 9

-Refer to Figure 9-7.Everything else equal,which attainable production point will result in the most economic growth?

Accepted Answer

The answer of 
-Refer to Figure 9-7.Everything else equal,which attainable...

Question 10

By driving up interest rates,an increase in investment spending causes

Accepted Answer

The answer of By driving up interest rates,an increase in...

Question 11

-Refer to Figure 9-8.If the economy starts at point X,growth in the capital stock will cause the economy to move

Accepted Answer

The answer of 
-Refer to Figure 9-8.If the economy starts...

Question 12

-Refer to Figure 9-7.Everything else equal,which efficient production point will result in the least economic growth?

Accepted Answer

The answer of 
-Refer to Figure 9-7.Everything else equal,which efficient...

Question 13

-Refer to Figure 9-9.The production possibilities frontier tells us that there is a trade-off between investment in capital and

Accepted Answer

The answer of 
-Refer to Figure 9-9.The production possibilities frontier...

Question 14

Many less developed countries have low rates of economic growth because

Accepted Answer

High population growth rates reduce living standards as an increase in population leads to a decrease in resources available for each individual, resulting in poverty and a low standard of living. This can hinder economic growth as individuals may not have the means to invest in businesses or education, which are important factors for economic growth.

Question 15

If a nation uses all of its resources to produce capital goods,that will

Accepted Answer

If a nation uses all of its resources to produce capital goods, there will be no resources left to produce consumption goods. This means that people will not have access to goods and services they need for daily consumption, which is unsustainable and will ultimately lead to a decrease in living standards.

Question 16

Everything else equal,as increase in investment in physical and human capital will mean lower living standards in the present,because the opportunity cost of investment is foregone consumer goods.

Accepted Answer

When more resources are allocated towards investment in physical and human capital, fewer resources are available for immediate consumption. This trade-off between current consumption and investment is known as the opportunity cost. Therefore, an increase in investment in physical and human capital means a lower standard of living in the present.

Question 17

Increases in investment spending cause interest rates to increase.As a result,

Accepted Answer

The answer of Increases in investment spending cause interest rates...

Question 18

A country can attempt to increase its capital stock by

Accepted Answer

Shifting resources away from consumer goods toward capital goods will increase the country's capital stock. This is because capital goods are themselves used to produce other goods and services in the future, increasing the economy's productive capacity in the long run. Shifting resources from physical capital goods to human capital goods or from consuming tomorrow to today may provide short-term benefits, but in the long run, they will decrease the economy's capital stock and growth potential.

Question 19

Higher productivity is the most direct route to higher living standards.

Accepted Answer

Higher productivity means producing more output with the same amount of input, which leads to lower costs of production and higher profits. This, in turn, allows companies to invest in new technologies, expand their businesses, and create new jobs. Increased productivity also means that more goods and services are available for consumption, which leads to higher living standards for individuals and society as a whole.

Question 20

Restructuring social security benefits might stimulate economic growth;however,we must consider the cost of this action,which is

Accepted Answer

The answer of Restructuring social security benefits might stimulate economic...

Quiz 21: Economic Growth and Rising Living Standards

What happens to a production possibilities frontier (with capital goods on the vertical axis and consumption goods on the horizontal axis) when there is technological improvement?