Question 1

Disease,poor nutrition,and substandard health care in developing nations can reduce growth in an economy by
A)reducing physical capital.
B)reducing human capital.
C)increasing labor productivity.
D)increasing technological change.

Accepted Answer

Disease, poor nutrition, and substandard health care can reduce human capital, which refers to the knowledge, skills, and abilities that workers possess and that are essential to economic growth. When a large portion of the population is sick, malnourished, or unable to access healthcare, they are less productive and less able to contribute to the economy. As a result, economic growth is slowed or even stalled.

Question 2

You are an economic advisor to the president.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?
A)a reduction in sales taxes
B)an investment tax credit
C)a reduction in taxes on luxury yachts
D)all of the above

Accepted Answer

An investment tax credit can incentivize businesses to invest in growth and innovation, leading to long-term economic growth. Reducing sales taxes or taxes on luxury items may provide short-term boosts to consumption, but they are unlikely to have a significant impact on long-term growth.

Question 3

The purchase of stocks and bonds issued in another country is known as foreign direct investment.

Accepted Answer

The purchase of stocks and bonds issued in another country is known as portfolio investment, not foreign direct investment. Foreign direct investment refers to the acquisition of control over a company in another country or the establishment of a new business in another country.

Question 4

The term "brain drain" refers to
A)highly educated individuals who leave developing countries for high-income countries.
B)the diminishing returns to studying for an exam.
C)the negative impact on brain function of an individual's overinvestment in human capital.
D)the decreased quality of the college-educated workforce.

Accepted Answer

Brain drain specifically refers to the emigration of highly skilled or educated individuals from a country, often from developing or less economically developed countries to more advanced or high-income countries. This can have negative impacts on the country losing its skilled workforce as it can lead to a shortage of skilled workers, reduced productivity and economic growth, and a loss of investment in education and training.

Question 5

In 1973,the Club of Rome published a book titled The Limits to Growth,which predicted that economic growth would likely end in high-income countries because of
A)declining populations.
B)rapid increases in government debt.
C)increases in outsourcing of the production of goods and services to low-income countries.
D)increasing pollution and the depletion of natural resources.

Accepted Answer

The Limits to Growth predicted that economic growth would end in high-income countries due to increasing pollution and the depletion of natural resources. This would lead to environmental degradation and a decline in the availability of resources needed for economic growth.

Question 6

Robert Lucas,a Nobel laureate in economics,argues that there are ________ returns to human capital.
A)increasing
B)decreasing
C)constant
D)negative

Accepted Answer

Lucas argues that there are increasing returns to human capital, meaning that investing in education and skills leads to greater productivity and higher income in the long run. This is because as individuals acquire more knowledge and skills, they are able to innovate and generate new ideas, leading to higher economic growth and prosperity.

Question 7

Table 11-6
 
-Refer to Table 11-6.Consider the statistics in the table above in describing the developing countries.Are these consistent with the economic growth model? Briefly explain.

Accepted Answer

The answer of Table 11-6
 
-Refer to Table 11-6.Consider the...

Question 8

Explain the meaning of the word "convergence" in the context of economic growth and standards of living.

Accepted Answer

The answer of Explain the meaning of the word "convergence"...

Question 9

Which of the following policies would not help promote economic growth?
A)a law requiring that the funds in an individual retirement account be taxed
B)a law restricting elected officials from accepting expensive gifts and trips from private individuals
C)a law that funds prenatal care for all expectant mothers
D)a law that subsidizes research in nanotechnology

Accepted Answer

Requiring that the funds in an individual retirement account be taxed would not promote economic growth as it would negatively impact individuals' savings and investment potential. The other three policies could all potentially have positive impacts on the economy.

Question 10

Table 11-7
 
-Refer to Table 11-7.Consider the statistics in the table above in describing the following industrialized and developing countries.Are these consistent with the economic growth model? Briefly explain.

Accepted Answer

The answer of Table 11-7
 
-Refer to Table 11-7.Consider the...

Question 11

Of all industrialized nations,real GDP per capita was the highest in Japan in 2012.

Accepted Answer

According to the World Bank data, as of 2012, the highest real GDP per capita among industrialized nations was in Luxembourg, followed by Norway, Switzerland, and the United States. Japan ranked 10th on the list.

Question 12

Table 11-5
 
-Refer to Table 11-5.Consider the statistics in the table above in describing the industrialized countries.Are these consistent with the economic growth model? Briefly explain.

Accepted Answer

The answer of Table 11-5
 
-Refer to Table 11-5.Consider the...

Question 13

List two ways the labor force experience is different between workers in Europe and in the United States.How do these differences influence productivity?

Accepted Answer

The answer of List two ways the labor force experience...

Question 14

Draw a graph of "catch-up" that shows where you would expect to see a country with low saving rates and low levels of health and education.How would you expect real GDP per capita to grow in a country like this? Explain.

Accepted Answer

The answer of Draw a graph of "catch-up" that shows...

Question 15

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.
A)decrease; increase
B)increase; decrease
C)decrease; decrease
D)increase; increase

Accepted Answer

This policy encourages savings for education, which increases the supply of loanable funds, lowering interest rates and facilitating more investments, including in human capital, thus potentially increasing the rate of long-term growth.

Question 16

Would you expect to see higher or lower growth rates for countries that start out with a relatively low level of real GDP per capita? Explain using the concept of "catch-up" and support your answer with a graph.

Accepted Answer

The answer of Would you expect to see higher or...

Question 17

All of the following policies are ways for a country to promote long-run economic growth except
A)increasing vaccinations against infectious diseases.
B)undergoing political reform to decrease corruption.
C)enacting stronger laws to protect property rights.
D)imposing stricter regulations to limit foreign direct investment.

Accepted Answer

Imposing stricter regulations to limit foreign direct investment can actually hinder a country's long-run economic growth potential since it limits access to capital and resources from foreign investors. The other policies listed can promote economic growth by creating a healthier and more stable environment for businesses and individuals to thrive.

Question 18

As predicted by the economic growth model,countries that start with lower levels of GDP per capita always grow faster than countries that start with higher levels of GDP per capita.

Accepted Answer

This is not always true as countries with higher levels of GDP per capita may have better technology, infrastructure, and institutions which can lead to sustained growth in the long run. On the other hand, countries with lower levels of GDP per capita may face more challenges in achieving economic growth.

Question 19

One reason why many low-income countries experience low rates of growth is because of poor public education and health.

Accepted Answer

Poor public education and health can lead to low productivity and high rates of illness, which can hinder economic growth in low-income countries. Without a healthy and educated workforce, it can be difficult for these countries to attract investment and develop their economies.

Question 20

Enforcing property rights in an economy will
A)cause the market system to work less efficiently.
B)decrease the level of foreign portfolio investment.
C)encourage corruption and expand the underground economy.
D)raise the level of investment.

Accepted Answer

Enforcing property rights provides individuals and firms with the incentive to invest in their property, knowing that their investments are protected. This increases the level of investment in the economy and encourages growth. Therefore, option D is the correct answer.

Quiz 11: Long-Run Economic Growth: Sources and Policies

Disease,poor nutrition,and substandard health care in developing nations can reduce growth in an economy by

You are an economic advisor to the president.You are asked to recommend a policy to promote long-term economic growth in the economy.Which of the following policies would you choose?

The purchase of stocks and bonds issued in another country is known as foreign direct investment.

The term "brain drain" refers to

In 1973,the Club of Rome published a book titled The Limits to Growth,which predicted that economic growth would likely end in high-income countries because of

Robert Lucas,a Nobel laureate in economics,argues that there are ________ returns to human capital.

Table 11-6 -Refer to Table 11-6.Consider the statistics in the table above in describing the developing countries.Are these consistent with the economic growth model? Briefly explain.

Explain the meaning of the word "convergence" in the context of economic growth and standards of living.

Which of the following policies would not help promote economic growth?

Table 11-7 -Refer to Table 11-7.Consider the statistics in the table above in describing the following industrialized and developing countries.Are these consistent with the economic growth model? Briefly explain.

Of all industrialized nations,real GDP per capita was the highest in Japan in 2012.

Table 11-5 -Refer to Table 11-5.Consider the statistics in the table above in describing the industrialized countries.Are these consistent with the economic growth model? Briefly explain.

List two ways the labor force experience is different between workers in Europe and in the United States.How do these differences influence productivity?

Draw a graph of "catch-up" that shows where you would expect to see a country with low saving rates and low levels of health and education.How would you expect real GDP per capita to grow in a country like this? Explain.

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should the equilibrium level of loanable funds and the rate of long-term growth.

Would you expect to see higher or lower growth rates for countries that start out with a relatively low level of real GDP per capita? Explain using the concept of "catch-up" and support your answer with a graph.

All of the following policies are ways for a country to promote long-run economic growth except

As predicted by the economic growth model,countries that start with lower levels of GDP per capita always grow faster than countries that start with higher levels of GDP per capita.

One reason why many low-income countries experience low rates of growth is because of poor public education and health.

Enforcing property rights in an economy will