Question 1

The investment trade-off:

Accepted Answer

A)  is a reduction in current consumption to pay for the investment in capital intended to increase future production.
B)  is why countries don't devote all their resources to capital investment.
C)  defines the opportunity cost of capital investment.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 2

Physical capital is:

Accepted Answer

A)  the stock of equipment and structures that allow for the production of goods and services.
B)  the skills a human being acquires that enhances the available stock of equipment.
C)  the set of skills,knowledge,experience,and talent that determine the productivity of workers.
D)  All of these describe physical capital.E) A) and D)
F) C) and D)

Question 3

An example of U.S.foreign direct investment would be:

Accepted Answer

A)  a factory in Canada owned by a U.S.citizen.
B)  a factory in Japan owned by a Canadian citizen.
C)  a factory in New Mexico owned by a Japanese citizen.
D)  All of these are examples of foreign direct investment.E) B) and D)
F) A) and C)

Question 4

The idea that governments can plan growth by setting industrial policies to encourage growth of certain industries:

Accepted Answer

A)  is a proven method for economic growth.
B)  is controversial.
C)  has worked for the majority of countries that have tried it.
D)  None of these is true.E) A) and D)
F) None of the above

Question 5

Productivity is generally measured as:

Accepted Answer

A)  output per worker.
B)  nominal output over time.
C)  real output over time.
D)  output per year.E) C) and D)
F) A) and C)

Question 6

The basic idea behind the convergence theory is:

Accepted Answer

A)  that countries starting at low levels of will tend to grow at much faster rates than those starting with high levels of income.
B)  each additional unit of capital provides larger gains when you're coming from behind.
C)  also the basic idea behind the catch-up effect.
D)  All of these are true.E) A) and C)
F) A) and B)

Question 7

When a country continually adds more capital to its existing stock:

Accepted Answer

A)  productivity will increase at a decreasing rate.
B)  productivity will decrease at an increasing rate.
C)  productivity will decrease at a decreasing rate.D) B) and C)
E) All of the above

Question 8

An example of acquiring human capital would be:

Accepted Answer

A)  taking an economics course.
B)  learning how to make chicken parmigiana.
C)  playing varsity soccer.
D)  All of these are examples of acquiring human capital.E) A) and B)
F) A) and C)

Question 9

According to the rule of 70,if a country grows at an average rate of 2 percent per year,what would happen after 35 years?

Accepted Answer

A)  The country's real GDP per capita would double.
B)  The country's nominal GDP would double.
C)  The country's real GDP would double.
D)  The country's nominal GDP per capita would double.E) A) and D)
F) All of the above

Question 10

Computing capacity has approximately:

Accepted Answer

A)  doubled every two years since the invention of computers.
B)  tripled every two years since the invention of computers.
C)  doubled every five years since the invention of computers.
D)  tripled every three years since the invention of computers.E) A) and B)
F) All of the above

Question 11

Governments:

Accepted Answer

A)  can use tax revenues to invest in physical capital.
B)  will fund underlying infrastructure to increase the productivity of business.
C)  encourage economic growth by investing in physical capital.
D)  All of these are true.E) B) and C)
F) All of the above

Question 12

Using public policy to promote health can:

Accepted Answer

A)  contribute to growth.
B)  take away resources from those that promote growth.
C)  hurt a country's chance of reaching high growth.
D)  discourage citizens from taking care of themselves.E) All of the above
F) A) and B) A

Question 13

Factories owned by U.S.firms on the Mexican side of the U.S.-Mexico border are:

Accepted Answer

A)  an important source of foreign direct investment in Mexico.
B)  not an example of foreign direct investment in Mexico.
C)  troubling for the Mexican government.
D)  harmful to Mexico's efforts to increase their economic growth.E) All of the above
F) B) and D)

Question 14

Altering the demographic of your workforce in a manner that increases the labor force,like raising a legal minimum retirement age,is likely to:

Accepted Answer

A)  lead to a higher level of income for a country.
B)  lead to a sustainable high rate of growth in income for a country.
C)  create more productive workers in all facets of the economy.
D)  All of these are true.E) A) and D)
F) A) and C) A

Question 15

A renewable resource:

Accepted Answer

A)  can be replenished naturally over time.
B)  is used to regenerate an old piece of capital.
C)  is used when adopting new technology,and replacing old capital.
D)  cannot be replenished naturally over time.E) A) and B)
F) A) and C)

Question 16

Human capital contributes to growth because it helps workers in the economy:

Accepted Answer

A)  produce more with the same amount of physical capital.
B)  work smarter.
C)  be more productive with their time.
D)  All of these are true.E) C) and D)
F) A) and D)

Question 17

If a country grows at an average rate of 3.5 percent per year,we can estimate it will double its:

Accepted Answer

A)  growth rate in 70 years.
B)  real GDP per capita in 70 years.
C)  real GDP per capita in 20 years.
D)  growth rate in 20 years.E) B) and D)
F) A) and B)

Question 18

Many governments actively work to:

Accepted Answer

A)  attract foreign direct investment,hoping it will build up their capital stock when domestic savings aren't sufficient.
B)  attract foreign direct investment,so that when foreign companies invest in local firms,they can transfer human capital to local managers.
C)  discourage foreign direct investment,in an effort to encourage locals to invest in their own economy.
D)  discourage foreign direct investment,in an effort to avoid "crowding out."E) B) and D)
F) A) and C) A

Question 19

Which of the following is not a nonrenewable resource?

Accepted Answer

A)  Oil
B)  Coal
C)  Trees
D)  Natural gasE) B) and D)
F) A) and B)

Question 20

For a country to acquire more physical capital:

Accepted Answer

A)  it must forgo current consumption.
B)  it faces the investment trade-off.
C)  it must pay for the investment by reducing current consumption.
D)  All of these are true.E) A) and C)
F) None of the above

Exam 26: Economic Growth

The investment trade-off:

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Physical capital is:

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An example of U.S.foreign direct investment would be:

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The idea that governments can plan growth by setting industrial policies to encourage growth of certain industries:

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Productivity is generally measured as:

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The basic idea behind the convergence theory is:

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When a country continually adds more capital to its existing stock:

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An example of acquiring human capital would be:

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According to the rule of 70,if a country grows at an average rate of 2 percent per year,what would happen after 35 years?

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Computing capacity has approximately:

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Governments:

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Using public policy to promote health can:

Correct AnswerverifiedA

Factories owned by U.S.firms on the Mexican side of the U.S.-Mexico border are:

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Altering the demographic of your workforce in a manner that increases the labor force,like raising a legal minimum retirement age,is likely to:

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A renewable resource:

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Human capital contributes to growth because it helps workers in the economy:

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If a country grows at an average rate of 3.5 percent per year,we can estimate it will double its:

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Many governments actively work to:

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Which of the following is not a nonrenewable resource?

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For a country to acquire more physical capital:

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