Question 1

Table 22-6
 
-Refer to Table 22-6. 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 22-6
 
-Refer to Table 22-6. Consider...

Question 2

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 3

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 4

Table 22-5
 
-Refer to Table 22-5. 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 22-5
 
-Refer to Table 22-5. Consider...

Question 5

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

According to the theory of convergence, countries with lower levels of GDP per capita tend to grow faster in the short term, but eventually their growth rate slows down as they catch up with higher-income countries. This means that countries with higher levels of GDP per capita have slower but more sustainable long-term growth rates. Therefore, the statement is false.

Question 6

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 in developing nations can reduce growth in an economy by reducing human capital. When individuals are sick, malnourished, or unable to access proper medical care, their ability to work and learn is hindered. This results in lower productivity and overall economic output. Therefore, reducing human capital is the best choice.

Question 7

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. Foreign direct investment involves the ownership and control of assets in a foreign country, such as a foreign subsidiary or a joint venture.

Question 8

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 businesses with the assurance that their investments will be protected and not expropriated by others. Thus, enforcing property rights will increase the level of investment in the economy.

Question 9

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 10

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 refers to the emigration of highly educated individuals from developing countries to high-income countries in search of better opportunities, resulting in a loss of talent and skills in the former.

Question 11

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 hinder economic growth by reducing the influx of capital, technology, and skills from other countries. The other options (A, B, and C) can promote long-run economic growth by improving public health, reducing corruption, and protecting property rights, respectively.

Question 12

Table 22-7
 
-Refer to Table 22-7. 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 22-7
 
-Refer to Table 22-7. Consider...

Question 13

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

A law requiring that the funds in an individual retirement account be taxed would not promote economic growth as it would discourage individuals from saving for retirement and could potentially decrease investment in the economy. The other three options (B, C, and D) could potentially promote economic growth by reducing corruption, promoting healthcare, and fostering innovation, respectively.

Question 14

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 is the best choice to promote long-term economic growth as it encourages businesses to invest in new technology and equipment, which can lead to increased productivity and innovation. On the other hand, reducing sales taxes or taxes on luxury items may provide a short-term boost to consumer spending, but it does not necessarily lead to long-term economic growth.

Question 15

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 16

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 a poorly educated workforce and a population that is unable to work due to illnesses or disabilities, both of which can hinder economic growth.

Question 17

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 18

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

Accepted Answer

According to data from the World Bank, in 2012 the highest real GDP per capita among industrialized nations was in the United States, followed by Norway, Switzerland, and Luxembourg. Japan ranked 7th.

Question 19

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 likely end in high-income countries because of increasing pollution and the depletion of natural resources. The report argued that continued economic and population growth was not sustainable in the long-term and that urgent action was needed to address these environmental concerns.

Question 20

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

Robert Lucas argues that there are increasing returns to human capital, which means that as individuals invest more in their education and skills, their productivity and earnings increase at an increasing rate. This is because as individuals acquire new knowledge and skills, they improve their ability to learn and adapt to new challenges, which enhances their productivity and earning potential in the long run.

Quiz 22: Long-Run Economic Growth: Sources and Policies

Table 22-6 -Refer to Table 22-6. 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.

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.

Table 22-5 -Refer to Table 22-5. Consider the statistics in the table above in describing the industrialized countries. Are these consistent with the economic growth model? Briefly explain.

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.

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

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

Enforcing property rights in an economy will

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.

The term "brain drain" refers to

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

Table 22-7 -Refer to Table 22-7. 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.

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

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?

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

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

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.

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

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.