Question 1

In the 1960s,Japan was the fastest-growing major economy,and it also:

Accepted Answer

Japan spent a larger share of its GDP on investment goods than did other major economies. This investment in capital goods, such as machinery and factories, allowed Japan to rapidly increase its productivity and become a major player in global trade.

Question 2

Economists believe that the BEST way to stimulate investment in physical capital is to encourage:

Accepted Answer

Encouraging higher rates of national saving would provide more funds for investment in physical capital. When individuals and businesses save more, there is a greater pool of funds available for investment in equipment, buildings, and other physical capital. This, in turn, can lead to increased productivity, wage growth, and economic growth.

Question 3

In 1820,Mexico had a higher real GDP per capita than did Japan.Yet now Japan is one of the richest countries in the world and Mexico is poor.Japan's high rate of economic growth can likely NOT be explained by a high:

Accepted Answer

The question asks for a factor that cannot explain Japan's high rate of economic growth, and therefore choice D, a high level of government interference, is the best option. Japan's success can be attributed to a strong investment in physical and human capital as well as a commitment to technological progress.

Question 4

Roads,telephone lines,power facilities,and schools are examples of a nation's:

Accepted Answer

Infrastructure refers to the basic physical and organizational structures needed for the operation of a society or enterprise. Roads, telephone lines, power facilities, and schools are all examples of infrastructure, as they are essential for the functioning of a nation. The other options, technostructure, physiostructure, and sociostructure, do not accurately describe this concept.

Question 5

Who established the first research and development laboratory?

Accepted Answer

Thomas Edison established the first research and development laboratory in Menlo Park, New Jersey in 1876. He hired a team of scientists and inventors to work on a variety of projects, including the development of the electric light bulb.

Question 6

Before the twentieth century,the MOST important determinant of productivity was:

Accepted Answer

Before the twentieth century, the availability and accessibility of natural resources, such as land and raw materials, were the primary factors affecting productivity. The development of efficient technology and the accumulation of physical and human capital were not as prominent at that time.

Question 7

Today,China is the fastest-growing major economy,and it also:

Accepted Answer

China spends a higher share of its GDP on investment goods than do other major economies. This investment-led growth model has allowed China to rapidly expand its infrastructure, manufacturing capacity, and technological developments, leading to its current status as the fastest-growing major economy.

Question 8

In the long run,an increase in saving will generally:

Accepted Answer

An increase in saving leads to an increase in investment, which in turn leads to an increase in capital stock. With a larger capital stock, productivity increases, leading to an increase in the potential output of goods and services. Therefore, an increase in saving generally leads to an increase in the rate of economic growth.

Question 9

Which item CANNOT properly be called a part of infrastructure?

Accepted Answer

While human capital is important for a functioning society and economy, it is not a physical structure or system that can be categorized as infrastructure. Infrastructure refers to the basic physical and organizational structures and facilities needed for the operation of a society or enterprise. Power lines, roads and bridges, and seaports are all examples of physical infrastructure.

Question 10

Ireland's recent economic growth and improving living standard are due primarily to:

Accepted Answer

Ireland's recent economic growth and improvement in living standards are largely attributed to their solid physical and human infrastructure, which includes a strong education system and reliable transportation facilities. The country has also attracted foreign investment and has taken advantage of its skilled workforce to become a hub for technology and pharma industries. The other options, such as refusing to join the European Union, imprisoning a political leader, or relying on immigrant labor, have had little to no impact on Ireland's economic growth.

Question 11

Which sources provide funds for investment spending?
I.domestic savings
II.foreign savings
III.consumption

Accepted Answer

Investment spending can be funded by both domestic savings and foreign savings. Consumption, on the other hand, is not a source of funds for investment spending, but rather a use of funds. Therefore, option A and option B are not correct answers. Option D is also not correct as consumption is not a source of funds for investment spending. Thus, the best choice is C, which includes both domestic and foreign savings as sources of funds for investment spending.

Question 12

From the standpoint of economic growth,banks are important to:

Accepted Answer

Banks play a crucial role in channeling savings into productive investments which can boost economic growth. Through loans to individuals and businesses, banks facilitate investment in new capital projects and expansion of existing businesses. This creates jobs and generates wealth, leading to economic growth. Fighting inflation and keeping interest rates low are also important functions of banks, but they are not directly related to economic growth. Channeling investment into savings is not a function of banks, as savings are usually channeled into banks for investment.

Question 13

Economic growth is likely to entail:

Accepted Answer

Economic growth generally leads to higher incomes and more wealth, which tends to increase saving rates. Higher saving rates can then be used to fuel further investment and growth. Therefore, option C is the most likely scenario. The other options are unlikely, as they would likely lead to reduced growth rather than increased growth.

Question 14

The main source of Kuwait's wealth is _____,while the main source of Germany's wealth is _____.

Accepted Answer

Kuwait's main source of wealth is oil, accounting for approximately 90% of its export earnings, while Germany's main source of wealth is manufacturing, accounting for approximately 23% of its GDP.

Question 15

A country's growth rate strongly depends on how it has invested in its physical capital.Generally,countries that have used _____ as a source of their capital investment have exhibited the highest growth rate.

Accepted Answer

Domestic saving refers to the money that a country's residents save and invest in businesses or other sectors of the economy within their own country. This type of investment in physical capital leads to long-term economic growth, as businesses have access to capital to purchase equipment and expand operations. Foreign direct investment (A) can also contribute to economic growth, but it is not solely dependent on a country's own efforts. Foreign portfolio investment (C) typically involves buying and selling stocks, bonds, and other securities, which may not directly support physical capital investment. Contracted globalization (D) is not a commonly used term in economics and is unclear in its meaning.

Question 16

Technological progress is advanced through:

Accepted Answer

Technological progress is mainly advanced through research and development, which involves the scientific investigation, experimentation, and testing of new ideas and processes in technology. This leads to the creation of new products, services, and processes that are more efficient, effective, and profitable. While government regulation, consumption, and infrastructure can also support technological progress, they are not the primary drivers of innovation and development in technology.

Question 17

Economies with high growth rates tend to be those that increase their:

Accepted Answer

Economies with high growth rates tend to have a focus on increasing their human capital, meaning the education, skills, and knowledge of their workforce. This leads to increased productivity, innovation, and competitiveness, which can all contribute to higher economic growth. Government regulation, consumption, and resources can all play a role in economic growth, but human capital tends to be a more significant factor.

Question 18

All else equal,a nation that has a high rate of _____ will have a high rate of _____ and therefore a high growth rate of _____ capital.

Accepted Answer

A nation with a high rate of savings will have a high rate of investment, and investment contributes to the growth of physical capital. Therefore, Choice C is the best answer as it includes the correct terms for the cause-and-effect relationship between savings, investment, and physical capital.

Question 19

The sources of funds for investment spending are:

Accepted Answer

The main source of funds for investment spending comes from savings by households, government, and foreigners. Investments usually require large sums of money, and this money is typically generated by savings. Taxes and transfer payments are not sources of funds for investment spending, while the funds are not always equal to Canadian spending on imports. The Canadian government can direct funding towards certain areas of investment, but ultimately the funds come from savings by different entities.

Question 20

In 1820,Mexico had a higher real GDP per capita than did Japan,but today Japan's real GDP per capita is higher than is Mexico's because Japan's real GDP per capita has grown at _____,and Mexico's real GDP per capita has grown at _____.

Accepted Answer

Japan's real GDP per capita has grown at a faster rate (1.9%) compared to Mexico's (1.3%), leading to Japan surpassing Mexico in terms of real GDP per capita over time.

Quiz 9: Long-Run Economic Growth