Deck 7: The Wealth of Nations and Economic Growth

Question 1

For most of recorded human history, real GDP per capita has:

A) increased at a rapid rate.
B) increased at a modest rate.
C) remained about the same.
D) decreased at a modest rate.

Answer 1

remained about the same.

Question 2

Around the world, about one _____ people have incomes of less than $2 per day.

A) thousand
B) million
C) billion
D) trillion

Answer 2

billion

Question 3

If real GDP per capita in a country was $14,000 in year 1 and $14,140 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

A) 1%.
B) 2%.
C) 3%.
D) 4%.

Answer 3

1%.

Question 4

There is:

A) a strong positive correlation between per capita GDP and infant survival.
B) a weak positive correlation between per capita GDP and infant survival.
C) no correlation between per capita GDP and infant survival.
D) a weak negative correlation between per capita GDP and infant survival.

Question 5

Wealthier nations tend to have:

A) better educational opportunities.
B) lower infant survival rates.
C) lower life expectancy rates.
D) fewer opportunities for leisure and entertainment.

Question 6

When economists speak of "long-run economic growth," they mean increasing the:

A) real GDP of a country.
B) per capita real GDP of a country.
C) geographic size of a country.
D) population of a country.

Question 7

Every year, 1.8 million children in poor countries die of diarrhea. Which is most effective in preventing these deaths?

A) government subsidies
B) political reform
C) economic growth
D) humanitarian aid

Question 8

If real GDP per capita in a country was $14,000 in year 1 and $14,420 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

A) 1%.
B) 2%.
C) 3%.
D) 4%.

Question 9

In general, increases in a country's wealth will cause infant survival rates to:

A) increase.
B) decrease.
C) remain unchanged.
D) become unpredictable.

Question 10

Beginning in the _____ century, economic growth became a clear trend in parts of the world.

A) sixteenth
B) seventeenth
C) eighteenth
D) nineteenth

Question 11

If real GDP per capita in a country was $14,000 in year 1 and $14,560 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

A) 1%.
B) 2%.
C) 3%.
D) 4%.

Question 12

Wealthier countries have:

A) more conflicts, such as riots and civil wars.
B) higher infant mortality rates.
C) fewer educational opportunities.
D) more material goods.

Question 13

If real GDP per capita in a country were $14,000 in year 1 and $14,280 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

A) 1%.
B) 2%.
C) 3%.
D) 4%.

Question 14

Two thousand years ago, per capita GDP (in 2010 dollars) was:

A) less than $1,000.
B) about $10,000.
C) more than $50,000.
D) about the same as today.

Question 15

Most of the world's population:

A) is poor relative to the United States.
B) is about as well off as the average person in the United States.
C) is wealthy relative to the United States.
D) cannot be compared to the United States.

Question 16

A country's GDP per capita and infant survival rates usually are:

A) not correlated.
B) somewhat correlated.
C) strongly correlated.
D) correlated only in poor countries.

Question 17

Which statement best describes the cross-country evidence on the relationship between a nation's GDP per capita and standard measures of societal well-being?

A) GDP per capita is negatively related to measures of societal well-being.
B) GDP per capita is positively related to measures of societal well-being.
C) There is no relationship between GDP per capita and measures of societal well-being.
D) The relationship between GDP per capita and societal well-being is positive at times and negative at times.

Question 18

Data from countries around the world suggest that "health and wealth" (measured by infant survival rates and real GDP per capita) are:

A) positively related.
B) negatively related.
C) unrelated.
D) constant.

Question 19

The correlation between infant mortality and real GDP per capita is:

A) zero.
B) positive.
C) negative.
D) unpredictable.

Question 20

Piped water and flush toilets together can reduce infant mortality from diarrhea by approximately:

A) 20%.
B) 40%.
C) 60%.
D) 70% or more.

Question 21

The world's poorest country is:

A) Nigeria.
B) Argentina.
C) India.
D) the Democratic Republic of the Congo.

Question 22

At an annual growth rate of 0.7%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

A) 50 years
B) 100 years
C) 200 years
D) 400 years

Question 23

If the GDP of country X is 4 times the GDP of country Y and if the GDP of country X remains constant while GDP of country Y grows at a rate of 7% per year, which of the following statements is true?

A) Country Y's GDP will be equal to country X's GDP in 10 years.
B) Country Y's GDP will be equal to country X's GDP in 20 years.
C) Country Y's GDP will be equal to country X's GDP in 40 years.
D) Country Y's GDP will never catch up with country X's GDP.

Question 24

For most of recorded history, economic growth has been:

A) about the same as today.
B) virtually nonexistent.
C) a source of continuously rising living standards.
D) a way to equalize the distribution of wealth around the world.

Question 25

If U.S. per capita GDP is $50,000 and grows at 3% per year, what will U.S. per capita GDP be in 70 years?

A) $100,000
B) $200,000
C) $400,000
D) $800,000

Question 26

At an annual growth rate of 3.5%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

A) 5 years
B) 10 years
C) 15 years
D) 20 years

Question 27

At an average growth rate of 4%, approximately how long would it take for an economy to double its GDP?

A) 17.5 years
B) 25 years
C) 50 years
D) 70 years

Question 28

For most of recorded human history, long-run economic growth was:

A) much higher than it has been in recent decades.
B) the same as it is today.
C) the highest during the Dark Ages.
D) almost nonexistent.

Question 29

Economic growth refers to the growth rate of:

A) personal income.
B) GNP.
C) GDP.
D) GDP per capita.

Question 30

At an annual growth rate of 2%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

A) 15 years
B) 25 years
C) 35 years
D) 45 years

Question 31

According to the rule of 70, a country with an annual growth rate of 10% will double its GDP per capita in:

A) 70 years.
B) 10 years.
C) 7 years.
D) less than 1 year.

Question 32

If U.S. per capita GDP is $50,000 and grows at 2% per year, what will U.S. per capita GDP be in 70 years?

A) $100,000
B) $200,000
C) $400,000
D) $800,000

Question 33

If U.S. per capita GDP is $50,000 and grows at 5% per year, what will U.S. per capita GDP be in 70 years?

A) $400,000
B) $800,000
C) $1.2 million
D) $1.6 million

Question 34

Today, real GDP per capita is about _____ as large in the richest countries as in the poorest countries.

A) twice
B) 10 times
C) 20 times
D) 50 times

Question 35

If the average annual growth rate of a country increases from 2% to 3%, how much faster will its GDP double?

A) 10 years faster
B) 11 2/3 years faster
C) 17 years faster
D) 25 years faster

Question 36

One key fact about economic growth around the world is that:

A) most poor countries lack natural resources.
B) all countries used to be poor.
C) growth has occurred throughout human history.
D) the dispersion of GDP per capita has become more equal across countries over time.

Question 37

According to the rule of 70, a country with an annual growth rate of 7% will double its GDP per capita in:

A) 70 years.
B) 10 years.
C) 7 years.
D) less than 1 year.

Question 38

Roughly what percent of the world's population live in countries with per capita GDP lower than the average world per capita GDP?

A) 80%
B) 50%
C) 25%
D) 10%

Question 39

At an annual growth rate of 1.4%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

A) 50 years
B) 100 years
C) 200 years
D) 400 years

Question 40

Fully 80% of the world's population live in countries with a GDP:

A) less than the world average.
B) more than the world average.
C) per capita less than the world average.
D) per capita more than the world average.

Question 41

Economic growth is measured by the growth rate of:

A) nominal GDP.
B) real GDP.
C) nominal GDP per capita.
D) real GDP per capita.

Question 42

The rule of 70 states that if the annual growth rate of a variable is x%, the necessary time for doubling is:

A) 70 plus x.
B) 70 minus x.
C) 70 times x.
D) 70 divided by x.

Question 43

If a country's real GDP per capita in 1950 was $10,000, and it grew to $20,000 by year 2000, then the country's annual growth rate during this period would have been approximately:

A) 1.4%.
B) 1.8%.
C) 2%.
D) 2.2%.

Question 44

Which country had a growth miracle beginning in the late 1970s?

A) United States
B) Japan
C) North Korea
D) China

Question 45

Suppose a country's annual growth rate of real GDP per capita is approximately 2%. By which year would the country double its real GDP per capita from $10,000 in 1950 to $20,000?

A) 1970
B) 1985
C) 2000
D) 2005

Question 46

Relative to the United States, Argentina was _____ in 1950 and _____ in 2000.

A) poor; poor
B) rich; rich
C) poor; rich
D) rich; poor

Question 47

Relative to Japan, Argentina was _____ in 1950 and _____ in 2000.

A) poor; poor
B) rich; rich
C) poor; rich
D) rich; poor

Question 48

Since 1974 Nigeria's growth rate has been:

A) high and positive.
B) low and positive.
C) approximately zero.
D) negative.

Question 49

Over the past 200 years, economic growth in the United States has been:

A) among the slowest in the world.
B) the fastest in the world.
C) slow and consistent.
D) volatile.

Question 50

Two countries that may be considered examples of growth miracles are:

A) Mexico and China.
B) the United States and Spain.
C) Denmark and Luxembourg.
D) South Korea and Japan.

Question 51

Relative to China, Argentina was _____ in 1950 and _____ in 2007.

A) poor; poor
B) rich; rich
C) poor; rich
D) rich; poor

Question 52

Which statement best describes the economic growth patterns in the world since World War II?

A) Japan and South Korea experienced rapid growth while Argentina and Nigeria experienced slow growth.
B) Japan and South Korea experienced slow growth while Argentina and Nigeria experienced rapid growth.
C) Most countries in the world experienced rapid growth.
D) Most countries in the world except the United States experienced no growth at all.

Question 53

Relative to South Korea, Argentina was _____ in 1950 and _____ in 2000.

A) poor; poor
B) rich; rich
C) poor; rich
D) rich; poor

Question 54

Suppose a country's real GDP per capita was $9,000 in 1990, and it grew to $18,000 by 2000. What is the annual growth rate of the country's real GDP per capita during this period?

A) 7%
B) 10%
C) 20%
D) 25%

Question 55

In the year 2011, the world's average per capita GDP was $10,515. What percent of the world's population lived in a country with per capita GDP that was below $10,515?

A) 20%
B) 40%
C) 50%
D) 80%

Question 56

Slow economic growth sustained over long periods produces:

A) small changes in per capita GDP.
B) large changes in per capita GDP.
C) no changes in per capita GDP.
D) unpredictable changes in GDP.

Question 57

Use the following to answer questions: Figure: The Distribution of World Income
(Figure: The Distribution of World Income) Refer to the figure. Based on the data in the figure, about how many times wealthier is the richest country when compared to the poorest countries in the world?

A) 500 times
B) 100 times
C) 10 times
D) 30 times

Question 58

Use the following to answer questions: Figure: The Distribution of World Income
(Figure: The Distribution of World Income) Refer to the figure. Based on the data in the figure, living standards in the United States are about how many times higher than the world average?

A) 4 times
B) 10 times
C) 40 times
D) 50 times

Question 59

From 1950 to 1970 Japan's growth rate was:

A) high and positive.
B) low and positive.
C) approximately zero.
D) negative.

Question 60

The rule of 70 indicates that an increase in the growth rate of a variable will _____ the time needed to double living standards.

A) reduce
B) increase
C) have no effect on
D) have an unpredictable effect on.

Question 61

The world's average level of GDP per capita is $10,515 as of 2011. This is about the same as the living standard in which nation?

A) China
B) Mexico
C) Nigeria
D) India

Question 62

Physical capital is the:

A) stock of tools, including machines, structures, and equipment, used to produce output.
B) productive knowledge and skills that workers acquire through education, training, and experience.
C) knowledge about how the world works that is used to produce goods and services.
D) financial resources available to business owners.

Question 63

Which statement is TRUE about economic growth?

A) All countries eventually grow rich.
B) Once a country starts to grow, it will continue to grow.
C) A country can grow and become wealthy, never grow, or grow and then begin to stagnate.
D) Growth is a random process; in some years a country grows and in other years it doesn't.

Question 64

If real GDP in an economy increases from $20,000 billion to $20,200 billion from 2010 to 2011, what is the annual growth rate in this economy?

A) 10%
B) 5%
C) 2.01%
D) 1%

Question 65

If a country's initial real GDP is $60,000 and its annual growth rate is 5%, use the Rule of 70 to determine approximately how many years it would take for this economy to double its GDP.

A) 70 years
B) 20 years
C) 14 years
D) 12 years

Question 66

If a nation doubles its GDP per capita in 20 years, what is its annual growth rate?

A) 3.5%
B) 4.2%
C) 6.5%
D) 7%

Question 67

Countries that have high per capita GDP tend to have:

A) high levels of physical capital per worker.
B) high levels of human capital per worker.
C) high levels of technology per worker.
D) high levels of all three factors of production.

Question 68

What is the most immediate (or direct) cause of growth in real GDP per capita?

A) factors of production
B) institutions
C) the political system in the economy
D) incentives

Question 69

If you received a constant annual rate of return of 7% on an investment of $10,000, how many years will it take before you have $20,000?

A) 10 years
B) 7 years
C) 35 years
D) 2.86 years

Question 70

Use the following to answer questions: Figure: Economic Growth in Major World Regions
(Figure: Economic Growth in Major World Regions) Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that all regions of the world:

A) were poor at one time.
B) have been relatively rich throughout most of human history.
C) have experienced moderate growth throughout most of human history.
D) remain poor today.

Question 71

Use the following to answer questions: Figure: Economic Growth in Major World Regions
(Figure: Economic Growth in Major World Regions) Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that living standards in different regions began to _____ at the beginning of the nineteenth century.

A) diverge
B) converge
C) equalize
D) fall

Question 72

The United States and Western European countries began to experience accelerated economic growth during which century?

A) twelfth
B) sixteenth
C) seventeenth
D) nineteenth

Question 73

One measure of student output is number of completed math problems produced. Using pen and paper only, a student can complete 50 math problems in 2 hours. Using pen, paper, and a calculator, the same student can complete 100 math problems in 2 hours. (The student is already familiar with, and knows how to use, the calculator.) This scenario illustrates the use of which factor of production?

A) physical capital
B) human capital
C) technological knowledge
D) both human capital and technological knowledge

Question 74

Use the following to answer questions: Figure: Economic Growth in Major World Regions
(Figure: Economic Growth in Major World Regions) Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that:

A) all regions of the world eventually achieved significant growth.
B) some regions of the world have always experienced growth.
C) significant growth has occurred in some regions only since 1950.
D) all regions of the world remain poor today.

Question 75

What percentage of the world's population lives in a country that has a GDP per capita above the world average?

A) 10%
B) 20%
C) 50%
D) 75%

Question 76

Suppose economies A and B have the same initial level of GDP per capita at $15,000, and each economy begins with a constant growth rate of 1% per year. (Neither country has good institutions for economic growth at first.) Then Country A enters an era of political stability, establishes property rights, and installs incentives for entrepreneurship. Country A's economic growth rate consequently improves to 5%. Assuming population growth rates remain unaffected, how much longer will it take Country B to double its per capita GDP level compared to Country A?

A) 70 years
B) 14 years
C) 56 years
D) 28 years

Question 77

Factors of production that contribute to growth in per capita GDP include:

A) proximal and ultimate factors of production.
B) physical capital, skilled labor, and technological know-how.
C) organization of resources.
D) institutions.

Question 78

If real GDP per capita in the United States is currently $50,000 and grows at 2.5% per year, it will take approximately how many years to reach $200,000?

A) 28 years
B) 56 years
C) 84 years
D) 112 years

Question 79

Imagine an economy that has a growth rate of 2% per year. Use the Rule of 70 to estimate how long it would take for this economy to quadruple its GDP per capita.

A) 14 years
B) 35 years
C) 70 years
D) 140 years

Question 80

A rural village in a developing country has an economy based on agriculture. Then the government of the country provides the village with newly developed hybrid seeds that more than double the agricultural yield per acre. This story illustrates the growth of per capita GDP in the village through which factor(s) of production?

A) physical capital
B) human capital
C) technological knowledge
D) both human capital and technological knowledge