Question 1

Which of the following is an example of basic research?  
A) Soft-drink bottlers test consumer reactions to their advertisements. 
B) A statistician calculates the odds of winning a promotional sweepstakes. 
C) A catalogue-sales company monitors its telephone operators to see how many calls each is handling per day. 
D) A chemist builds a mathematical model of the atmosphere of Jupiter.

Accepted Answer

Basic research refers to scientific study that is aimed at gaining a comprehensive understanding of a phenomenon, while applied research focuses on finding solutions to specific problems. Building a mathematical model of the atmosphere of Jupiter would be an example of basic research as it seeks to gain a comprehensive understanding of a phenomenon.

Question 2

Which of the following best defines basic research?  
A) the search for knowledge without regard to how that knowledge will be used 
B) research that is NOT complex because it addresses elementary questions 
C) research that seeks to apply scientific discoveries to the development of specific products 
D) the search for knowledge to solve a particular problem

Accepted Answer

Basic research is conducted solely for the purpose of expanding knowledge and understanding a given subject without any immediate practical application or specific problem to solve.

Question 3

According to the convergence theory, compared to advanced economies, what should be the outcome in less-developed economies?  
A) Less-developed economies should grow faster than advanced ones because of the ability of the less-advanced economies to copy new technology. 
B) The growth rates of all economies should converge because, in the long run, all resources are alike. 
C) Less developed economies should grow slower than advanced ones because they CANNOT copy new technologies. 
D) The growth rates of all economies should converge because, in the long run, basic research and applied research converge.

Accepted Answer

Convergence theory states that in the long run, less-developed economies should grow faster than advanced ones because of the ability of the less-advanced economies to copy new technology. As these economies copy new technologies, they become more productive, leading to faster growth rates. This convergence in growth rates should eventually lead to similar levels of income and development across economies.

Question 4

In contrast to government research and development, what effect does private sector R&D have on productivity?  
A) Private sector R&D has more effect on productivity than government R&D does, because much government R&D focuses narrowly on military applications. 
B) Private sector R&D has more effect on productivity than government R&D does, because much government R&D focuses narrowly on the service sector. 
C) Private sector R&D has less effect on productivity than government R&D does, because the government is more motivated and able to hire better people and facilities. 
D) Private sector R&D has less effect on productivity than government R&D does, because private firms tend to hold back on research when results are likely to be easily copied.

Accepted Answer

Private sector R&D has more effect on productivity than government R&D does, because private firms are more motivated by profit and therefore focus on creating new products and processes that will increase productivity and efficiency. In contrast, government R&D often focuses narrowly on military applications or other areas that may not necessarily result in measurable increases in productivity. Additionally, private firms are often able to quickly bring new products to market, generating revenue and creating jobs.

Question 5

Which government policy uses taxes, subsidies, and regulation for the purpose of giving domestic industry an advantage?  
A) research and development policy 
B) economic development policy 
C) industrial policy 
D) trade policy

Accepted Answer

Industrial policy is a government policy that utilizes taxes, subsidies, and regulation to provide domestic industries with an advantage in the market. The policy aims to promote the growth and development of industries to enhance economic growth and competitiveness. Research and development policy focus on research and development activities to increase innovation and competitiveness. Economic development policy aims to promote economic growth by providing incentives for investment, improving infrastructure, and creating jobs. Trade policy focuses on regulating international trade to protect domestic industries and promote international competitiveness.

Question 6

Which of the following is an example of a tool of industrial policy?  
A) subsidies to industry 
B) forced savings of households 
C) allowing the market to allocate resources 
D) active monetary policy

Accepted Answer

Subsidies to industry are a tool of industrial policy as they involve government support to certain industries or companies to encourage growth and development. Forced savings of households, allowing the market to allocate resources, and active monetary policy are not specific tools of industrial policy.

Question 7

One economic theory states that as time passes, economic systems become much more similar, such that they have common rates of growth, common employment levels, and common rates of inflation.What is the name of this theory?  
A) divergence theory 
B) parallel path theory 
C) convergence theory 
D) noncompeting economic systems theory

Accepted Answer

The theory that economic systems become more similar over time is known as the convergence theory. This theory suggests that as economies become more developed, they tend to converge towards similar levels of economic growth, employment, and inflation. This convergence can occur due to factors such as increased trade, technological innovations, and the spread of ideas and best practices.

Question 8

What does the term industrial policy refer to?  
A) the policy that industries develop to promote growth 
B) industry policy related to marketing strategies 
C) the illegal activity that firms sometimes engage in to reduce competition 
D) government policy aimed at enhancing competitiveness with foreign industry

Accepted Answer

Industrial policy refers to government policies aimed at enhancing competitiveness with foreign industry. It involves the use of various measures such as subsidies, tax incentives, and regulations to create a favorable environment for industries to thrive and compete at both domestic and international levels. The ultimate objective of industrial policy is to foster economic growth, job creation, and technological advancement.

Quiz 9: Productivity and Growth

Which of the following is an example of basic research?

Which of the following best defines basic research?

According to the convergence theory, compared to advanced economies, what should be the outcome in less-developed economies?

In contrast to government research and development, what effect does private sector R&D have on productivity?

Which government policy uses taxes, subsidies, and regulation for the purpose of giving domestic industry an advantage?

Which of the following is an example of a tool of industrial policy?

One economic theory states that as time passes, economic systems become much more similar, such that they have common rates of growth, common employment levels, and common rates of inflation.What is the name of this theory?

What does the term industrial policy refer to?