Question 1

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

Accepted Answer

Economist Benjamin Friedman argues that sustained economic growth can create a virtuous cycle that leads to greater investment in environmental and social initiatives, as people become more financially secure and have a greater stake in the future.

Question 2

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

Accepted Answer

The T in the production function Real GDP = T (L,K) typically represents the level of technology or total factor productivity, not the tax coefficient.

Question 3

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

Accepted Answer

Economic growth can refer to both absolute growth in a country's economy, measured by increases in its real Gross Domestic Product (GDP), and to per-capita real economic growth, which adjusts for population size to reflect changes in the economic well-being of the average individual.

Question 4

Technology is defined as "the humanly devised constraints that shape human interaction."

Accepted Answer

Technology is broadly defined as the application of scientific knowledge for practical purposes, especially in industry. It encompasses the tools, machines, techniques, and systems used to solve problems or improve conditions; it is not limited to constraints on human interaction.

Question 5

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

Accepted Answer

In the production function, the variable K typically represents physical capital, such as machinery and equipment, whereas the variable H represents human capital, which refers to the knowledge, skills, and abilities of workers.

Question 6

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

Accepted Answer

While labor and capital are the most commonly used inputs in economic growth theory, production functions can be modeled with other factors such as technology, natural resources, and infrastructure. Therefore, production functions are not always limited to two inputs.

Question 7

In the production function,the variable H represents hunger.

Accepted Answer

The production function typically includes variables such as capital, labor, technology, and materials, but hunger does not typically factor into it.

Question 8

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

Accepted Answer

The T in the production function Real GDP = T (L,K) typically stands for a technology coefficient, not a tax coefficient.

Question 9

According to Mancur Olson,transfer-promoting policies are more likely to be lobbied for instead of growth-promoting policies when a country has a relatively large number of special-interest groups.

Accepted Answer

Mancur Olson's theory of collective action suggests that in societies with many interest groups, it is easier for a small group with a concentrated interest to lobby for benefits at the expense of the broader public interest. Therefore, transfer-promoting policies (i.e. policies that redistribute wealth from one group to another) are more likely to be pursued and successfully implemented than growth-promoting policies that benefit the entire society.

Question 10

The knowledge and skills a person acquires through education,training,and experience is termed human capital.

Accepted Answer

This statement is true. Human capital refers to the stock of knowledge, skills, and abilities possessed by an individual, which can be developed through education, training, and experience.

Question 11

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

Accepted Answer

The term human capital refers to the skills, knowledge, experience, and attributes that contribute to the productivity and economic growth of individuals and society. It includes education, training, and experience, among other factors.

Question 12

If the annual growth rate in Real GDP is 4 percent,then it will take 25 years for the economy to double in size.

Accepted Answer

The rule of 70 states that to determine the approximate number of years it takes for a parameter to double, divide 70 by the annual growth rate in percentage terms. Therefore, if the annual growth rate in Real GDP is 4 percent, it will take approximately 17.5 years for the economy to double in size (70/4 = 17.5).

Question 13

According to some economists,economic growth can be promoted by certain institutions which promote the discovery of new ideas.

Accepted Answer

This is true according to the theory of economic growth known as endogenous growth theory, which emphasizes the role of innovation and knowledge creation in driving long-term economic growth. Institutions such as universities, research centers, and intellectual property protection can help to foster the discovery of new ideas and their application in the economy.

Question 14

The relation between technology and the quantity of factor inputs to Real GDP is specified by the production function.

Accepted Answer

The production function captures the technology and the relationship between factor inputs (such as labor, capital and land) and the output of goods and services. Therefore, it shows the impact of technology on the quantity of factor inputs to Real GDP.

Question 15

When a country's GDP is higher one year than it was the previous year,absolute real economic growth has occurred.

Accepted Answer

A higher GDP does not necessarily indicate real economic growth, as it may be due to inflation. Real economic growth is measured by the increase in GDP adjusted for inflation.

Question 16

Changes in the tax treatment of capital returns can result in a change in the amount of capital employed in the production process.

Accepted Answer

If the tax treatment of capital returns changes, it can affect the incentives for investors to hold or invest in capital. This can lead to a change in the amount of capital employed in the production process, which can ultimately affect the economy's productivity and growth.

Question 17

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

Accepted Answer

Adam Smith, the father of modern economics, famously argued that economic growth could lead to a wider range of benefits beyond just an increase in material goods and services. He believed that it could also lead to increases in human welfare, technological progress, and social well-being. This idea has been developed further by many other economists and social scientists over the years.

Question 18

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.

Accepted Answer

Barro and McCleary's research found that a belief in hell had a positive impact on economic growth, while the belief in heaven did not have a significant effect.

Question 19

When income taxes fall,the supply of labor curve shifts rightward,ultimately leading to the LRAS curve shifting leftward.

Accepted Answer

The statement is not accurate as a decrease in income taxes would result in an increase in after-tax income, which in turn would likely increase the demand for labor, resulting in a rightward shift of the labor demand curve. The LRAS curve represents the long-run potential of an economy to produce goods and services, and is mainly influenced by factors such as technology, capital accumulation, and labor force growth. Therefore, tax policies are not likely to directly impact the LRAS curve.

Question 20

Property rights are a tangible factor in producing economic growth.

Accepted Answer

The answer of Property rights are a tangible factor in...

Quiz 17: Market Failure: Externalities, public Goods, and Asymmetric Information