Deck 17: Economic Growth: Resources, technology, ideas, and Institutions

Question 1

Compare a property rights system in which people are allowed to keep one-third of the monetary rewards of their labor with a system in which they keep two-thirds.We should expect more entrepreneurship under the __________ system and faster real economic growth under the __________ system.

A) former;former
B) former;latter
C) latter;former
D) latter;latter

Answer 1

latter;latter

Question 2

Suppose the population of a country falls,but Real GDP remains constant.There is __________ economic growth.

A) both absolute and per-capita real
B) absolute,but not per-capita real
C) per-capita real,but not absolute
D) neither absolute nor per-capita real

Answer 2

per-capita real,but not absolute

Question 3

If an economy can increase its steady annual growth rate from 2 percent to 3.5 percent,this reduces the time it takes for the economy to double in size by __________ years.

A) 5
B) 8
C) 10
D) 15
E) 20

Answer 3

15

Question 4

Compare a property rights system in which people are allowed to keep one-third of the monetary rewards of their labor with a system in which they keep two-thirds.We should expect harder work under the __________ system and less risk taking under the __________ system.

A) former;former
B) former;latter
C) latter;former
D) latter;latter

Question 5

The range of laws,rules,and regulations that define the allowed forms of use and transfer of resources is called the __________ structure of the economy.

A) monetary
B) property rights
C) microeconomic
D) macroeconomic

Question 6

Stan Laurel and Oliver Hardy acted separately in comedy shorts for the Hal Roach Studio for over a decade without greatly distinguishing themselves from hundreds of other screen comedians.Then in 1927,Roach writer-director Leo McCarey tried them out as a comedy team in one more routine short.Only then was the fantastic chemistry between "the fiddle and the bow" realized.The rest is immortality.This story relates to the "new growth theory" idea of

A) employee involvement.
B) rearranging.
C) exogeneity.
D) objects and ideas.

Question 7

In 1961,President Kennedy committed the United States to a manned lunar mission by the end of the decade.Few thought we could actually do it,but of course we did,with five months to spare.This story might illustrate a __________ growth theory argument that technological change __________.

A) new;can be deliberately accelerated
B) new;relies on government policy
C) neoclassical;can be deliberately accelerated
D) neoclassical;relies on government policy

Question 8

An economy growing at a steady rate of 2 percent per year doubles in size approximately every __________ years.

A) 50.0
B) 35.0
C) 23.3
D) 12.0

Question 9

Meta-ideas involve

A) the methods of producing ideas.
B) persuading others of the validity of one's ideas.
C) putting ideas in a form capable of approval in a "yes" or "no" vote.
D) the expression of ideas in mathematical form.

Question 10

Real GDP in a small country is worth $8 billion.The population of the country is 200,000.What is per capita Real GDP?

A) $30,000
B) $40,000
C) $60,000
D) $300,000

Question 11

An economy doubles in size every 25 years if it maintains a steady annual growth rate of about __________ percent.

A) 4.0
B) 2.8
C) 3.5
D) 2.0

Question 12

The economist credited with pioneering the "new growth theory" is

A) Milton Friedman.
B) Jia-Tzu Weng.
C) Paul Romer.
D) Julian Simon.

Question 13

Neoclassical growth theory emphasized how __________ contribute to growth.

A) the resources labor and capital
B) technological changes
C) government policies
D) factors limiting population growth

Question 14

Technological advances make it possible to

A) produce goods without using any resources.
B) obtain the same output by using more resources.
C) obtain the same output by using fewer resources.
D) lower labor productivity.

Question 15

An economy growing at a steady rate of 3.5 percent per year doubles in size approximately every __________ years.

A) 40
B) 20
C) 28.6
D) 16

Question 16

"Absolute real economic growth" is defined as an increase in __________ from one period to the next.

A) GDP
B) Real GDP
C) Real GDP per person
D) the inflation rate

Question 17

An increase in nominal GDP

A) is absolute real economic growth.
B) is per capita real economic growth.
C) is both per capita and absolute real economic growth.
D) does not necessarily mean either absolute or per capita real economic growth.

Question 18

If an economy's steady annual growth rate falls from 2.5 percent to 2.0 percent,this adds __________ years to the time it takes for the economy to double in size.

A) 24.0
B) 7.0
C) 5.3
D) 10.2

Question 19

A useful rule of thumb called the "Rule of 70" states that if something grows at a constant rate of Z percent per year,it doubles in size approximately every __________ years.

A) 70 - Z
B) 70/Z
C) Z/70
D) 70 $\times$ (Z/100)

Question 20

Neoclassical growth theory does not emphasize how __________ contribute to growth.

A) the quantity of capital
B) technological changes
C) the quantity of labor
D) factors limiting population growth
E) a and c

Question 21

Neoclassical growth theory placed emphasis on two resources:

A) capital and entrepreneurship.
B) natural resources and capital.
C) capital and labor.
D) labor and entrepreneurship.
E) labor and natural resources.

Question 22

Two Harvard economists,Robert Barro and Rachel McCleary,have researched the role that ________________ plays in economic growth.

A) religion
B) meta-ideas
C) technology
D) human resource development

Question 23

A production function specifies the relation between ____________ and the ___________ to ____________________.

A) technology;output;Real GDP
B) technology;the factor inputs;Real GDP
C) price;quantity;Real GDP
D) Real GDP;the factor inputs;the price level

Question 24

If a country's economic growth rate is 4 percent a year,approximately how many years will it take to double its Real GDP?

A) 22.2
B) 25.0
C) 15.6
D) 17.5
E) 8.8

Question 25

If Real GDP is $6 billion and the population is 300,000,per-capita Real GDP is

A) $30,000.
B) $20,000.
C) $33,333.
D) $39,434.

Question 26

_______________________ specifies the relation between technology and the factor inputs to output.

A) Neoclassical growth theory
B) Meta-ideas
C) The LRAS curve
D) A production function

Question 27

In contrast to neoclassical growth theory,new growth theory lays more emphasis on

A) intangibles than tangibles.
B) tangibles than intangibles.
C) changes in the money supply than changes in taxes.
D) fiscal policy than monetary policy.
E) objects than ideas.

Question 28

The Real GDP of country X doubled in 20 years.It follows that the annual growth rate in country X during this time period was

A) 4.0 percent.
B) 5.0 percent.
C) 2.8 percent.
D) 3.5 percent.

Question 29

According to new growth theory,discovering and implementing new __________ is what causes economic growth.

A) ways of managing personnel
B) manufacturing techniques
C) ideas
D) resource sources
E) none of the above

Question 30

According to Paul Romer,one way to produce more ideas and knowledge is by

A) investing in research and development.
B) giving the federal government more control over the direction of research.
C) giving businesses less control over federal research monies.
D) a,b and c

Question 31

New growth theory holds that technology is __________ and that the more resources that go to develop technology,the __________ technology that is produced.

A) exogenous;more and better
B) exogenous;less
C) endogenous;more and better
D) endogenous;less

Question 32

The Real GDP of country X doubled in 10 years.It follows that

A) the per-capita Real GDP doubled during this time,too.
B) the per-capita Real GDP remained stable during this time.
C) the per-capita Real GDP fell during this time.
D) disposable income also doubled during this time.
E) none of the above

Question 33

Research by Harvard economists Barro and McCleary revealed that church attendance and economic growth have a(n)_______________ relationship.They also found that specific religious beliefs (in heaven,hell,and afterlife)and economic growth have a(n)___________ relationship.

A) inverse;inverse
B) direct;direct
C) inverse;direct
D) direct;inverse

Question 34

Country X experiences an increase in Real GDP and an increase in per-capita Real GDP.It follows that

A) the residents of country X are happier than they used to be.
B) the benefits of economic growth outweigh the costs of economic growth.
C) the costs of economic growth outweigh the benefits of economic growth.
D) all the residents of country X are "richer" in terms of goods and services than they used to be.
E) none of the above

Question 35

New growth theory puts emphasis on

A) ideas.
B) experimenting with new ways of doing things.
C) rearranging resources in ways that are more valuable.
D) b and c
E) a,b,and c

Question 36

According to new growth theory,technological advances can be promoted

A) from within the economy.
B) if only the right fiscal and monetary policies are in place.
C) in a few rare cases.
D) through industrial policy.
E) none of the above

Question 37

Absolute real economic growth is an increase in __________ from one period to the next.

A) GDP
B) Real GDP
C) per-capita Real GDP
D) per-capita GDP
E) none of the above

Question 38

__________ rights refer to the range of laws,rules,and regulations that define rights for the use and transfer of resources.

A) Individual
B) Constitutional
C) Property
D) Economic
E) none of the above

Question 39

New growth theory holds technology to be __________;neoclassical growth theory holds technology to be __________.

A) exogenous;endogenous
B) endogenous;endogenous
C) endogenous;exogenous
D) exogenous;exogenous

Question 40

Per-capita real economic growth refers to an increase from one period to the next in

A) per-capita GDP.
B) GDP.
C) Real GDP.
D) per-capita Real GDP.
E) none of the above

Question 41

Suppose that the production function for an economy is graphed with Real GDP on the vertical axis and labor on the horizontal axis.When the level of capital in this economy rises,it causes ____________________which shifts the LRAS curve ____________ resulting in ______________________.

A) a movement down along a given production function;leftward;a shrinking economy
B) the production function to shift downward;leftward;a shrinking economy
C) a movement up along a given production function;rightward;economic growth
D) the production function to shift upward;rightward;economic growth

Question 42

Exhibit 17-1
Production Function
Real GDP = T (L,K),such that Real GDP = T(L + K)
Assume that the technology coefficient is equal to 0.50.
Refer to Exhibit 17-1.If this production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,and labor rises from 6 units to 7 units it would cause a

A) shift upward in the production function to a higher level of Real GDP.
B) shift downward in the production function to a lower level of Real GDP.
C) movement down along the same production function to a lower level of Real GDP.
D) movement up along the same production function to a higher level of Real GDP.

Question 43

When interest rates fall in a given economy,it causes firms to borrow __________ funds used for purchasing capital goods.The result will be a(n)___________ in the level of capital employed in the economy.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis),this then causes ____________________ which makes the LRAS curve shift ____________ resulting in ______________________.

A) more;increase;the production function to shift upward;rightward;economic growth
B) less;decrease;the production function to shift downward;leftward;a shrinking economy
C) more;increase;a movement up along a given production function;rightward;economic growth
D) more;increase;a movement down along a given production function;leftward;a shrinking economy

Question 44

When income taxes are lowered in a given economy,it causes the supply of labor curve to shift __________which ___________ the equilibrium quantity of labor employed.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis)this then causes _______________,which makes the LRAS curve shift ____________ resulting in ______________________.

A) rightward;raises;the production function to shift upward;rightward;economic growth
B) leftward;lowers;the production function to shift downward;leftward;a shrinking economy
C) rightward;raises;a movement up along a given production function;rightward;economic growth
D) rightward;raises;a movement down along a given production function;leftward;a shrinking economy

Question 45

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________,and a rise in capital __________________.

A) shifts the production function upward;also shifts the production function upward
B) shifts the production function downward;shifts the production function upward
C) moves us up along a given production function;shifts the production function upward
D) shifts the production function upward;moves us up along a given production function

Question 46

Exhibit 17-1
Production Function
Real GDP = T (L,K),such that Real GDP = T(L + K)
Assume that the technology coefficient is equal to 0.50.
Refer to Exhibit 17-1.If this production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,the resulting graph would be

A) upward sloping.
B) downward sloping.
C) vertical.
D) horizontal.

Question 47

Exhibit 17-1
Production Function
Real GDP = T (L,K),such that Real GDP = T(L + K)
Assume that the technology coefficient is equal to 0.50.
Refer to Exhibit 17-1.If this production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,and capital rises from 4 units to 6 units it would cause a

A) shift upward in the production function to a higher level of Real GDP.
B) shift downward in the production function to a lower level of Real GDP.
C) movement down along the same production function to a lower level of Real GDP.
D) movement up along the same production function to a higher level of Real GDP.

Question 48

In the production function Real GDP = T (L,K,NR,H),the T represents the _____________ coefficient,the L represents ________________,the K represents _______________,the NR represents natural resources,and the H represents ________________.

A) tax;labor;capital;humanity
B) technology;labor;knowledge;humanity
C) technology;labor;capital;human capital
D) trade;labor;knowledge;human capital

Question 49

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________which shifts the LRAS curve ____________ resulting in ______________________.

A) shifts the production function up;rightward;economic growth
B) shifts the production function down;leftward;a shrinking economy
C) moves us up along a given production function;rightward;economic growth
D) moves us down along a given production function;leftward;a shrinking economy

Question 50

When taxes on the return to capital in a given economy are reduced,it causes firms to employ __________ capital goods.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis),this then causes ____________________ which makes the LRAS curve shift ____________ resulting in ______________________.

A) less;the production function to shift downward;leftward;a shrinking economy
B) more;the production function to shift upward;rightward;economic growth
C) more;a movement up along a given production function;rightward;economic growth
D) more;a movement down along a given production function;leftward;a shrinking economy

Question 51

Examples of physical capital include _______________________.Examples of human capital include ______________________________.

A) knowledge one picks up through education and training;factories and computers
B) machines and factories;chairs and desks
C) knowledge one picks up through education and experience;factories and machines
D) machines and factories;knowledge one picks up through education and training

Question 52

When interest rates in a given economy are reduced,it causes firms to employ __________ capital goods.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis),this then causes ____________________ .

A) more;the production function to shift upward
B) less;the production function to shift downward
C) more;a movement up along a given production function
D) more;a movement down along a given production function

Question 53

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in capital________________________,and a rise in the technology coefficient __________________.

A) shifts the production function upward;also shifts the production function upward
B) shifts the production function downward;shifts the production function upward
C) moves us up along a given production function;shifts the production function upward
D) shifts the production function upward;moves us up along a given production function

Question 54

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________,and a rise in the technology coefficient __________________.

A) shifts the production function upward;also shifts the production function upward
B) moves us up along a given production function;shifts the production function upward
C) shifts the production function downward;shifts the production function upward
D) shifts the production function upward;moves us up along a given production function

Question 55

In the production function Real GDP = T (L,K),the T represents the _____________ coefficient,the L represents ________________ and the K represents _______________.

A) tax;labor;capital
B) technology;labor;capital
C) technology;labor;knowledge
D) technology;livestock;knowledge

Question 56

Exhibit 17-1
Production Function
Real GDP = T (L,K),such that Real GDP = T(L + K)
Assume that the technology coefficient is equal to 0.50.
Refer to Exhibit 17-1.If this production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,and the technology coefficient rises from 0.50 to 0.60,it would cause a

A) shift upward in the production function to a higher level of Real GDP.
B) shift downward in the production function to a lower level of Real GDP.
C) movement down along the same production function to a lower level of Real GDP.
D) movement up along the same production function to a higher level of Real GDP.

Question 57

Exhibit 17-2
Refer to Exhibit 17-2.Assume that the starting point is always point 1.Which of the production function graphs shown, (a)or (b),represents an increase in the quantity of labor,and which represents an increase in the technology coefficient,respectively?

A) (a); (b)
B) (b); (a)
C) (a); (a)
D) (b); (b)

Question 58

Exhibit 17-1
Production Function
Real GDP = T (L,K),such that Real GDP = T(L + K)
Assume that the technology coefficient is equal to 0.50.
Refer to Exhibit 17-1.If there are 4 units of capital and 6 units of labor,________ units of output (Real GDP)will be produced.

A) 10
B) 5
C) 10.5
D) 20

Question 59

Exhibit 17-3
Refer to Exhibit 17-3 Assume that the starting point on the production function is point A.After an increase in the quantity of labor,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

A) movement along the production function to point C;LRAS₂;economic growth
B) shifting upward of the production function to point B;LRAS₂;economic growth
C) movement along the production function to point C;LRAS₃;a shrinking economy
D) shifting upward of the production function to point B;LRAS₃;a shrinking economy

Question 60

Exhibit 17-2
Refer to Exhibit 17-2.Assume that the starting point is always point 1.Which of the production function graphs shown, (a)or (b),represents an increase in the quantity of labor,and which represents an increase in the quantity of capital,respectively?

A) (a); (a)
B) (b); (a)
C) (a); (b)
D) (b); (b)

Question 61

When income taxes fall,the supply of labor curve shifts rightward,ultimately leading to the LRAS curve shifting rightward (economic growth).

Question 62

List and describe four factors that can contribute to economic growth.

Question 63

Describe new growth theory.Explain how it differs from neoclassical growth theory.

Question 64

Exhibit 17-4
Refer to Exhibit 17-4 Assume that the starting point in graphs (a)and (b)in Exhibit 17-4 is point 1.After a decrease in income taxes,there would be a ______________________ which would cause a movement along the production function from point 1 to point ______________.The result would be a shift of the LRAS curve from LRAS₁ to _______________ resulting in _______________..

A) leftward shift of the labor supply curve from S_L1 to S_L3;movement along the production function to point 3;LRAS₃;a shrinking economy
B) rightward shift of the labor supply curve from S_L1 to S_L2;movement along the production function to point 3;LRAS₃;a shrinking economy
C) leftward shift of the labor supply curve from S_L1 to S_L3;movement along the production function to point 2;LRAS₂;economic growth
D) rightward shift of the labor supply curve from S_L1 to S_L2;movement along the production function to point 2;LRAS₂;economic growth

Question 65

If the annual growth rate in Real GDP is 2 percent,then it will take 50 years for the economy to double in size.

Question 66

In the production function,the variable K represents human capital.

Question 67

Economists Barro and McCleary's research regarding the impact of religious beliefs on economic growth noted that a belief in hell matters more to economic growth than the belief in heaven.

Question 68

Property rights are a tangible factor in producing economic growth.

Question 69

In the production function Real GDP = T (L,K),the T represents the tax coefficient.

Question 70

The term economic growth can be used in reference to absolute real economic growth or to per- capita real economic growth.

Question 71

Using the labor market,the production function Real GDP = T (L,K),and the LRAS curve,describe the process by which a decrease in income taxes impacts economic growth.

Question 72

The concept that economic growth can do more than just give us more goods and services goes back to Adam Smith.

Question 73

Exhibit 17-3
Refer to Exhibit 17-3 Assume that the starting point on the production function is point A.After an increase in the technology coefficient,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

A) movement along the production function to point C;LRAS₂;economic growth
B) shift upward of the production function to point B;LRAS₂;economic growth
C) movement along the production function to point C;LRAS₃;a shrinking economy
D) shift upward of the production function to point B;LRAS₃;a shrinking economy

Question 74

According to economist Benjamin Friedman,sustained economic growth can make people more willing to work toward improving the environment and reducing poverty.

Question 75

Using the production function Real GDP = T (L,K),define the term production function and describe what each of the variables (T,L,and K)represents.When graphed with Real GDP on the vertical axis and labor on the horizontal axis,which variable(s)can shift the production function and which variable(s)can cause a movement along the production function?

Question 76

In the production function Real GDP = T (L,K),the T stands for tax coefficient.

Question 77

Using the production function Real GDP = T (L,K),define the term production function and describe what each of the variables (T,L,and K)represents.When graphed with Real GDP on the vertical axis and labor on the horizontal axis,which variable(s)can shift the production function and which variable(s)can cause a movement along the production function?

Question 78

Exhibit 17-3
Refer to Exhibit 17-3 Assume that the starting point on the production function is point A.After an increase in the quantity of capital,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

A) movement along the production function to point C;LRAS₂;economic growth
B) shift upward of the production function to point B;LRAS₂;economic growth
C) movement along the production function to point C;LRAS₃;a shrinking economy
D) shift upward of the production function to point B;LRAS₃;a shrinking economy

Question 79

Production functions used in economic growth theory are always limited to two inputs: labor and capital.

Question 80

The term human capital refers to education,training and experience.