Question 1

It is always better for the economy to experience economic growth.

Accepted Answer

While economic growth can bring numerous benefits such as increased employment and improved living standards, it can also lead to negative outcomes such as environmental degradation, increased inequality, and potential for economic bubbles and subsequent crashes. Sustainable and inclusive growth is important for overall economic health.

Question 2

The four primary resources are land, labor, capital, and entrepreneurship.

Accepted Answer

The four primary resources in economics are land, labor, capital, and entrepreneurship.

Question 3

It pays to increase the production of capital goods if the marginal cost of the production decision exceeds the marginal benefit.

Accepted Answer

It pays to increase the production of capital goods if the marginal benefit of the production decision exceeds the marginal cost. If the marginal cost exceeds the marginal benefit, it would not be efficient to increase production.

Question 4

The economic decisions that influence growth are those that increase capital and improve technology.

Accepted Answer

Capital and technology are two key factors that contribute to economic growth. Increasing capital means increasing the amount of resources available for production, while improving technology means making production processes more efficient and effective. These decisions can have a significant impact on an economy's growth potential.

Question 5

Productivity growth rates in Japan and Europe are greater than the productivity growth rate in the United States.

Accepted Answer

Productivity growth rates in Japan and Europe have been higher than in the United States for several decades.

Question 6

Per capita GDP in Japan exceeds per capita GDP in Europe because Japanese employees work more hours.

Accepted Answer

Japanese employees work longer hours and are known for their strong work ethic, which has contributed to Japan's high per capita GDP despite facing economic challenges in recent years. This is in contrast to many European countries where there are shorter work hours and more emphasis on work-life balance.

Question 7

The production possibilities curve shows the maximum combinations of goods and services that can be produced by an economy when unemployment is below the natural rate.

Accepted Answer

The production possibilities curve shows the maximum combinations of goods and services that can be produced by an economy with full employment of its resources, not necessarily below the natural rate of unemployment.

Question 8

Technological improvement allows more output to be obtained from a given level of inputs, thereby shifting the production possibilities curve to the right.

Accepted Answer

Technological improvement leads to more efficient use of inputs, therefore increasing productivity and shifting the production possibilities curve to the right.

Question 9

The growth of labor productivity is caused by the growth of capital relative to labor and by technological and efficiency improvements.

Accepted Answer

Labor productivity is defined as the amount of goods and services produced by one unit of labor in a given amount of time. The growth of labor productivity can be attributed to several factors, including the growth of capital relative to labor and the introduction of new technologies and efficiency improvements. The more capital a worker has to work with, the more they can produce in a given amount of time. Similarly, the adoption of new technologies and efficiency improvements can help workers produce more goods and services in less time, which contributes to higher labor productivity.

Question 10

According to Gwartney, economic freedom causes prosperity

Accepted Answer

The answer of According to Gwartney, economic freedom causes prosperity...

Question 11

The use of information technology (IT) capital services grew at almost 20 percent per year from 1995 to 1999.

Accepted Answer

The statement is true according to the information provided.

Question 12

Since 1973, the growth rate of per capita GDP in the U.S. has been lower than it was in previous periods.

Accepted Answer

This is true. The growth rate of per capita GDP in the U.S. has been lower since 1973 compared to the pre-1973 period.

Question 13

Creative destruction leads to a decrease in economic growth

Accepted Answer

Creative destruction, which refers to the replacement of old technologies or industries by new ones, may cause short-term disruption and job losses. However, over the long term, it is seen as a driving force for innovation and economic growth, as it leads to the emergence of new industries and opportunities. Therefore, creative destruction does not lead to a decrease in economic growth, but rather to its acceleration.

Question 14

The decline in the growth of capital intensity in the United States has been caused largely by a rapid increase in labor inputs in addition to slow growth in capital inputs.

Accepted Answer

The statement is true. The decline in capital intensity growth in the United States has been due to a combination of factors, including increased labor inputs and slow growth in capital inputs. This has led to a decrease in the ratio of capital to labor in production processes.

Question 15

As resources are transferred from production of trucks to the production of computers, marginal cost of computers decreases.

Accepted Answer

According to the law of increasing opportunity costs, as resources are transferred from the production of one good (trucks) to another (computers), the marginal cost of producing the additional units of the second good (computers) typically increases, not decreases. This is because resources are not equally efficient in all uses, so as more resources are reallocated, less suitable resources are used, increasing costs.

Question 16

Increases in resources, technological improvement, and efficiency improvement are all potential sources of economic growth.

Accepted Answer

Increases in resources, technological improvement, and efficiency improvement are all known sources of economic growth.

Question 17

All points on or below the production possibilities curve are attainable.

Accepted Answer

The production possibilities curve represents the maximum combinations of two goods that can be produced using all available resources efficiently. Therefore, any point on or below the curve is attainable because it represents a possible combination of the two goods that can be produced using available resources. Any point above the production possibilities curve is not attainable because it represents a combination of the two goods that cannot be produced using available resources.

Question 18

The best combination of goods and services is being produced when marginal cost and marginal benefit are equal.

Accepted Answer

This statement is true according to the fundamental economic principle of equating marginal cost to marginal benefit to achieve allocative efficiency. Allocative efficiency means that resources are being used in the most efficient way to produce goods and services that satisfy consumers' wants and needs. When marginal cost and marginal benefit are equal, any further production of a good or service would not create a surplus of benefits over costs or cause a shortfall of benefits compared to costs, which implies that the production has reached the optimal level.

Question 19

Productivity per hour in Japan is almost twice as large as productivity per hour in the United States.

Accepted Answer

According to data from the Organization for Economic Cooperation and Development (OECD) for 2020, productivity per hour in the United States is higher than in Japan. The United States has a productivity per hour of $70.70, while Japan has a productivity per hour of $44.40. Therefore, productivity per hour in the United States is not almost twice as large as productivity per hour in Japan.

Question 20

Growth based on capital accumulation can be more costly than growth based on efficiency improvement.

Accepted Answer

Growth based on capital accumulation often requires high levels of investment and can result in environmental degradation, resource depletion, and income inequality. On the other hand, growth based on efficiency improvement can reduce costs, increase productivity, and promote sustainable development.

Quiz 1: Economic Growth: an Introduction to Scarcity and Choice