Question 1

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of
A)the money supply.
B)compounding.
C)regression towards the mean.
D)averaging.

Accepted Answer

Compounding occurs when the growth rate builds upon past growth, resulting in a larger increase over time. As a result, even a small increase in the annual rate of economic growth can lead to significant growth over time. The other options (money supply, regression towards the mean, averaging) do not explain the relationship between growth rates over time.

Question 2

An outward shift of the production possibilities curve demonstrates
A)a recession.
B)an increased rate of inflation.
C)economic growth.
D)a cyclical shock.

Accepted Answer

An outward shift of the production possibilities curve reflects an increase in the economy's ability to produce goods and services, which is often the result of economic growth. A recession, an increased rate of inflation, and cyclical shocks, on the other hand, can all lead to a inward shift of the production possibilities curve.

Question 3

Which of the following would typically be considered a cost of economic growth?
A)increased illiteracy
B)decreased levels of health
C)increased poverty
D)urban congestion

Accepted Answer

Urban congestion is a cost of economic growth as economic growth often leads to increased urbanization and concentration of people in cities, which results in congestion, pollution, and other urban problems. Increased illiteracy, decreased levels of health, and increased poverty are not typically considered costs of economic growth, but rather consequences of inadequate policies and allocation of resources.

Question 4

Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?
A)Because the faster-growing countries gain a political advantage over poorer countries,and use that advantage for their economic gain.
B)Because the annual growth rate is compounded over time.
C)Because the slower-growing countries save too much.
D)Because the slower-growing countries don't export enough.

Accepted Answer

Small differences in annual growth rates can lead to big differences in the degree of long-term economic growth because of the compounding effect over time. As the faster-growing countries continue to grow at a faster pace, the difference in their economies compared to slower-growing countries becomes greater and greater over time. For example, a 2% annual growth rate over 40 years results in a doubling of the economy, while a 3% growth rate over the same period results in an almost tripling of the economy. Thus, even a small difference in annual growth rates can lead to significant differences in economic outcomes over time.

Question 5

When looking at economic growth in a country,the distribution of output and income
A)generally follows predictable patterns.
B)is not taken into consideration.
C)is skewed toward the lowest quintile of the population.
D)is shared equally.

Accepted Answer

The answer of When looking at economic growth in a...

Question 6

Economic growth is
A)an increase in the per person real production in a nation.
B)an increase in stock market values.
C)an increase in real estate values.
D)an increase in the number of people employed in agriculture.

Accepted Answer

Economic growth is typically measured by an increase in the real Gross Domestic Product (GDP) of a country, which means an increase in the total value of goods and services produced within a given period, adjusted for inflation. Per person real production, or real GDP per capita, is a commonly used measure of economic growth that takes into account changes in population. B, C, and D are not necessarily indicative of economic growth and can be influenced by factors other than production and consumption.

Question 7

Economic growth is defined as
A)an increase in the satisfaction of all people within a country.
B)an increase in per capita real GDP measured by its rate of change per year.
C)any increase in per capita nominal GDP measured by its rate of change per year.
D)an increase in the supply of money measured by its rate of change per year.

Accepted Answer

Economic growth is commonly measured by an increase in per capita real GDP (gross domestic product) over a period of time, usually a year. Real GDP takes into account the effects of inflation, allowing for a more accurate measurement of economic growth. Therefore, option B is the most appropriate definition of economic growth. Option A is too broad and subjective, option C is incorrect as nominal GDP does not adjust for inflation, and option D refers to an increase in the money supply, which may not necessarily lead to economic growth.

Question 8

A change in the growth rate of a country of one percentage point annually has
A)very little impact on the economy of a country.
B)a large impact in the future due to compounding.
C)a small impact in the current year,and smaller impact in the future because of compounding.
D)a large impact on the economy in the current year,but not in the future.

Accepted Answer

A small change in growth rate can have a significant impact in the long run due to compounding. For example, a 1% increase in annual growth over a period of 25 years can lead to an increase in GDP by approximately 34%. Therefore, the most suitable option is B because a small change in growth rate has a large impact on the economy in the future due to compounding.

Question 9

The definition of economic growth is the annual percentage
A)increase in the per capita real GDP.
B)increase in the per capita nominal GDP.
C)increase in the total nominal GDP.
D)increase in total exports.

Accepted Answer

Economic growth is measured as the annual percentage increase in the real GDP. Per capita real GDP is a better measure than per capita nominal GDP because it accounts for inflation and changes in the value of money over time, giving a more accurate picture of the growth in the economy. Total nominal GDP and total exports may increase even if the economy is not necessarily growing, as they do not account for changes in inflation or population size.

Question 10

Assume a country produces two types of goods: manufactured goods and agricultural goods.When this country experiences economic growth,we know that
A)the production possibilities curve will shift outward.
B)the production possibilities curve will shift inward.
C)there will be a movement along the curve toward more manufactured goods.
D)there will be movement along the curve toward more agricultural goods.

Accepted Answer

Economic growth means an increase in the country's capacity to produce goods and services. This will lead to an outward shift of the production possibilities curve, indicating that more of both types of goods can be produced.

Question 11

Graphically,economic growth is represented as
A)a movement along the production possibilities curve.
B)a movement from a point inside the production possibilities curve to a point on the curve itself.
C)an inward shift of the production possibilities curve.
D)an outward shift of the production possibilities curve.

Accepted Answer

Economic growth is represented by an increase in production possibilities, which is shown by an outward shift of the production possibilities curve. This indicates that more goods and services can be produced with the same amount of resources.

Question 12

Suppose per capita real GDP grows by 3.5% per year.Based on the Rule of 70,approximately how many years will it take for the level of per capita real GDP to double (i.e. ,increase by 100%)?
A)3.5 years
B)10 years
C)20 years
D)35 years

Accepted Answer

According to the Rule of 70, the estimated number of years for a variable to double is calculated by dividing 70 by the annual growth rate. So, in this case, we would divide 70 by 3.5%, which equals 20 years.

Question 13

The variable used to measure economic growth is
A)the growth of the money supply.
B)the trade surplus.
C)the growth in per capita real GDP.
D)the number of new jobs created.

Accepted Answer

Economic growth is usually measured by the increase in per capita real GDP, which indicates the increase in the production of goods and services in an economy over a certain period of time, adjusted for inflation and population growth. The growth of the money supply (A) and the trade surplus (B) can be indicators of economic activity, but they do not give a comprehensive measure of overall economic growth. The number of new jobs created (D) is also an indicator of economic activity, but it does not necessarily indicate economic growth as it depends on factors such as population growth and labor force participation.

Question 14

According to the World Bank and the International Monetary Fund,which of the following countries has shown the greatest rate of economic growth in the past two decades?
A)China
B)Germany
C)United States
D)Mexico

Accepted Answer

According to the World Bank and the International Monetary Fund, China has consistently shown the highest rate of economic growth in the past two decades. Its annual GDP growth rate has averaged around 9.5% from 1990 to 2020, making it the fastest-growing major economy in the world.

Question 15

The modification of manufacturing processes so as to reduce the resulting environmental damage is an endeavor that requires capital investment,labor inputs,and technology.What then follows from this statement?
A)Economic growth can benefit the environment.
B)Environmental damage is a regrettable but necessary side effect of economic growth.
C)The condition of the environment will be better in slower-growing countries.
D)The way to reduce pollution is to educate people about its effects.

Accepted Answer

The statement implies that reducing environmental damage requires investment in technology and labor, which can spur economic growth. Therefore, economic growth and environmental protection can be mutually beneficial, rather than being in opposition to one another.

Question 16

What is the real GDP after four years if Country X's average annual growth rate is 8.6 percent and the initial real GDP was $2,756.0 million?
A)$2,993.0 million
B)$3,833.5 million
C)$1,077.5 million
D)$3,250.4 million

Accepted Answer

The answer of What is the real GDP after four...

Question 17

Economic growth will
A)shift the production possibilities curve inward.
B)shift the production possibilities curve outward.
C)shift along the production possibilities curve toward the X-axis.
D)be a movement from inside the productions possibilities curve to the curve itself.

Accepted Answer

Economic growth will shift the production possibilities curve outward, allowing for more goods and services to be produced at any given point in time. This could result from factors such as technological advancements, increased investment in capital, or improvements in labor productivity.

Question 18

Which of the following is a negative effect of economic growth?
A)higher inflation
B)higher unemployment
C)environmental pollution
D)all of the above

Accepted Answer

Environmental pollution is often a negative effect of economic growth due to increased production and consumption, which can lead to more waste and emissions.

Question 19

Which of the following is NOT a benefit of economic growth?
A)urban congestion
B)reduction in illiteracy
C)improved health
D)longer lives

Accepted Answer

Urban congestion is a negative consequence of economic growth, as it often results from increased industrialization and urbanization without proper transportation infrastructure. The other options (B, C, and D) are all positive benefits of economic growth.

Question 20

One of the problems with the definition of economic growth is that
A)it overstates economic growth because it does not account for leisure time.
B)it does not account for the distribution of income.
C)it overstates economic growth because it does not account for the reduction in work time.
D)it understates economic growth because it does not account for the reduction in work time.

Accepted Answer

The definition of economic growth only focuses on aggregate output and does not take into consideration the distribution of income. As a result, economic growth could occur without any increase in the standard of living for the majority of the population, and some individuals or groups may become worse off in the process.

Quiz 9: Global Economic Growth and Development

A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of

An outward shift of the production possibilities curve demonstrates

Which of the following would typically be considered a cost of economic growth?

Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?

When looking at economic growth in a country,the distribution of output and income

Economic growth is

Economic growth is defined as

A change in the growth rate of a country of one percentage point annually has

The definition of economic growth is the annual percentage

Assume a country produces two types of goods: manufactured goods and agricultural goods.When this country experiences economic growth,we know that

Graphically,economic growth is represented as

Suppose per capita real GDP grows by 3.5% per year.Based on the Rule of 70,approximately how many years will it take for the level of per capita real GDP to double (i.e. ,increase by 100%) ?

The variable used to measure economic growth is

According to the World Bank and the International Monetary Fund,which of the following countries has shown the greatest rate of economic growth in the past two decades?

The modification of manufacturing processes so as to reduce the resulting environmental damage is an endeavor that requires capital investment,labor inputs,and technology.What then follows from this statement?

What is the real GDP after four years if Country X's average annual growth rate is 8.6 percent and the initial real GDP was $2,756.0 million?

Economic growth will

Which of the following is a negative effect of economic growth?

Which of the following is NOT a benefit of economic growth?

One of the problems with the definition of economic growth is that