Question 1

What does the Index of Economic Freedom measure?

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Question 2

Explain why real GDP per capita is a good indicator of how an economy grows over time.

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Question 3

A politician in a developing country has vowed to double GDP per capita within eight years. Approximately, what annual growth rate would be necessary to attain this target? (Round to two decimal places.) Has this rate of growth been achieved by any developing country in the past 20 years?

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Question 4

Compare and contrast the tangible and intangible components of infrastructure, and explain their importance in economic growth.

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Question 5

In August 2013, Russia's State Statistics Committee reported that its growth rate fell to 1.2% in the second quarter of 2013.
A) If this rate of growth continues, how long will it take for Russia's GDP to double?
B) President Vladimir Putin was targeting a 5% growth rate. If Russia achieves such a growth rate, how long will it take for Russia's GDP to double?

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Question 6

How has growth in the labor force affected economic growth in the United States?

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Question 7

If Macronomica has a growth rate of 2.6% per year, how long will it take for its output to double?

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Question 8

Country A and country B had the same real GDP per capita in 2000. However, country A's real GDP per capita had doubled by 2010, but it took until 2050 for country B's real GDP per capita to double. Use the Rule of 70 to explain this discrepancy.

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Question 9

What are the sources of productivity growth in the labor market?

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Question 10

Some countries block access to social media because of fears that opposition to the government will be coordinated through social media platforms. What effect would blocking social media have on economic growth in these countries, all other things being equal?

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Question 11

Assume that output = 4[(a × L) + (b × K) + (c × H) + (d × N)]. Assume that a = 100; b = 2,000; c = 500; and d = 30. Complete the following table.  Explain how an increase in each input in turn affects output.

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Question 12

The year-over-year growth rate of real GDP in the United States in the fourth quarter of 2012 was 1.5%. About how long will it take for the economy to double in size at this rate?

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Question 13

In July 2013, Brazil's Ministry of Finance announced that the GDP forecast for the year had been lowered to 3% from 3.5%. Why would Brazil's Ministry of Finance announce a 0.5% difference in GDP growth? Explain why a 0.5% change in the growth rate is significant, aside from the lower current GDP.

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Question 14

What is infrastructure, and how is it relevant to economic growth?

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Question 15

In August 2013, Brazil announced that its economy grew 3.3% year-over-year in the second quarter. At this rate, how long will it take for its GDP to double?

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Question 16

How is it possible for GDP per capita to increase when the standard of living in a country has in fact deteriorated?

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Question 17

Describe the intangible components of infrastructure in a country's legal system. How do they affect economic growth?

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Question 18

If a country's growth rate is 1.5%, then it will take about 25 years for its output to double.

Accepted Answer

According to the rule of 70, if a country's growth rate is 1.5%, it will take approximately 46.6 years for its output to double (70/1.5).

Question 19

Given the form of a typical production function, which of these would have the greatest impact on the output of a country?

Accepted Answer

The factor that has the greatest impact on the output of a country is usually the level of technology or entrepreneurial ability. This could be manifested in better production techniques or more efficient use of resources. While increases in the other factors (land, capital, and labor) can also lead to increased output, they usually come with diminishing returns, meaning that each additional unit of input results in a smaller increase in output. On the other hand, increases in technology or entrepreneurial ability can lead to much larger increases in output, as they improve the productivity of all other factors of production.

Question 20

How do governments provide capital and technology?

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Quiz 7: Economic Growth