Question 1

What are the five sources of growth?

Accepted Answer

The five sources of growth are:
1. Growth-compatible institutions.
2. Capital accumulation.
3. Available resources.
4. Technological development.
5. Entrepreneurship.

Question 2

Why is private property a source of growth?

Accepted Answer

Private property is a source of growth because it provides an incentive for people to produce by creating the possibility of benefiting from their efforts.

Question 3

If you know the percent change in output,what additional information would you need to calculate per capita growth of output? Give an example.

Accepted Answer

You would need to know population growth rate.Per capita growth = % change in output - % change in population.If a country's output grew at 5% and its population at 2%,per capita growth would be 3%.

Question 4

What is Say's Law? What is the reasoning behind it?

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Question 5

How have markets contributed to growth?

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Question 6

Explain the convergence hypothesis and give four reasons why convergence has not taken place for many poor countries.

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Question 7

Explain the difference between diminishing marginal productivity and decreasing returns to scale.

Accepted Answer

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Question 8

The dire prediction of economic growth based upon the Classical growth model has not been very accurate.What is this prediction and why hasn't it they come true?

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Question 9

Six types of government policies designed to promote growth are (1.)Encourage savings and investment.(2.)Formalizing property rights and reducing bureaucracy and corruption (3.)Providing more of the right kind of education.(4.)Promote institutions that encourage technological innovation.(5.)Provide funding for basic research.(6.)Promote policies that allow taking advantage of specialization.Discuss three of these policies.

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Question 10

Explain the relationship between the production function,the production possibilities curve,and potential output.

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Question 11

What is median income? Why is it a better measurement of living standards than per capita output?

Accepted Answer

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Question 12

List and briefly describe the three types of capital.

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Question 13

What are scale economies? List and explain the three types of scale economies.

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Question 14

Explain the difference between diminishing marginal productivity and decreasing returns to scale.Describe how diminishing marginal productivity might apply in the agricultural sector.

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Question 15

Five important sources of economic growth are (1.)Growth-compatible institutions, (2.)Capital accumulation.(3.)Available resources, (4.)Technological development,and (5.)Entrepreneurship.Discuss three of these sources.

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Question 16

What is economic growth and how does it relate to living standards?

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Question 17

Economists treat potential output differently when considering the short run than when considering the long run.Explain this difference.

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Question 18

Economists once viewed capital accumulation as the key element to economic growth.Why is this no longer the case?

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Question 19

What is the Classical growth model? How is it different from new growth theory?

Accepted Answer

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Question 20

What is economic growth? How does it relate to the production possibilities curve model?

Accepted Answer

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Quiz 9: Growth,productivity,and the Wealth of Nations