Question 1

Use the data on U.S. real GDP below to compute real GDP per person for each year. Then use these numbers to compute the percentage increase in real GDP per person from 1993 to 2012.

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Question 2

Why does a nation's standard of living depend on property rights?

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Question 3

Some data that at first might seem puzzling: The share of GDP devoted to investment was similar for the United States and South Korea from 1960-1991. However, during these same years South Korea had a 6 percent growth rate of average annual income per person, while the United States had only a 2 percent growth rate. If the saving rates were the same, why were the growth rates so different?

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Question 4

In order to assess the level of prosperity in a nation in a given year, should we examine the level of that nation's real GDP per person, or should we examine the growth rate of that nation's real GDP per person?

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Question 5

The catch-up effect says that countries with low income can grow faster than countries with higher income.
However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

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Question 6

In addition to investment in physical and human capital, what other public policies might a country adopt to increase productivity?

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Question 7

Countries with high population growth rates tend to have lower levels of educational attainment.

Accepted Answer

This is because countries with high population growth rates often struggle to provide adequate resources and infrastructure for education, leading to lower levels of educational attainment. Additionally, families may prioritize having more children over investing in education for each child, further contributing to the lower levels of education in these countries.

Question 8

How would an economist typically assess the extent of economic progress in a nation?

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Question 9

How do outward-oriented policies affect a nation's productivity?

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Question 10

The population growth rate tends to be higher in developed countries than in developing countries.

Accepted Answer

This statement is actually false. Population growth rates are typically higher in developing countries where birth rates are higher and healthcare and family planning resources may be limited. Developed countries typically have lower population growth rates due to lower birth rates and access to better healthcare and family planning resources.

Question 11

Compare and contrast the population theories of Malthus and Kremer.

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Question 12

The level of real GDP is a good measure of economic prosperity, and the growth of real GDP is a good measure of
__________.

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Question 13

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

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Question 14

Some economists argue that it is possible to raise the standard of living by reducing population growth. As an economist interested in incentives rather than coercion, what kind of policy would you recommend to slow population growth?

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Question 15

What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.

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Question 16

Why is productivity related to the standard of living? In your answer be sure to explain what productivity and the standard of living mean. Make a list of things that determine labor productivity.

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Question 17

Economist Michael Kremer found that world growth rates fell as population increased.

Accepted Answer

Michael Kremer's research actually found the opposite - that economic growth tends to increase as population grows. This is known as the population-ideas theory, which suggests that larger populations lead to a greater number of innovative ideas and technological advancements.

Question 18

In countries where women are discriminated against, policies that increase the likelihood of career success and educational opportunities for women are likely to decrease the birth rate.

Accepted Answer

When women have greater access to education and career opportunities, they tend to delay marriage and childbearing in order to focus on their personal and professional growth. This trend has been observed in many countries, including those where women face discrimination and limited opportunities. As a result, policies aimed at empowering women and promoting gender equality can contribute to a decline in the birth rate.

Question 19

A country's standard of living depends on its ability to produce goods and services.

Accepted Answer

A country's standard of living is directly related to its gross domestic product (GDP), which is the total value of goods and services produced within the country. The more a country is able to produce, the higher its standard of living can be.

Question 20

What is the difference between human capital and technology?

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Quiz 12: Production and Growth