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Economic Growth

10 Questions
Economic Growth

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Questions and Answers
  • 1. 
    A nation’s standard of living is measured by its
    • A. 

      Nominal GDP

    • B. 

      Nominal GDP per capita

    • C. 

      Real GDP

    • D. 

      Real GDP per capita

  • 2. 
    Which of the following is not true?
    • A. 

      a. Growth rates of real GDP per person vary substantially from country to country.

    • B. 

      b. GDP measures total expenditures and total income.

    • C. 

      c. Richer countries have more televisions, better nutrition, better health care, and longer life expectancy.

    • D. 

      d. Productivity is not closely linked to government policies.

  • 3. 
    A nation's standard of living is determined by
    • A. 

      Productivity

    • B. 

      Gross domestic product

    • C. 

      National income

    • D. 

      How much it has relative to others

  • 4. 
    Which of the following is correct?
    • A. 

      a. Both levels and growth rates of real GDP per person are diverse across countries.

    • B. 

      b. People in countries where real GDP growth was higher over the last 100 years have higher standards of living than people in all countries where real GDP growth was smaller.

    • C. 

      c. The typical citizen of China has about as much real income as the typical American in 1950.

    • D. 

      d. All of the above are correct.

  • 5. 
    Both Tom and Jerry work eight hours a day. Tom can produce six baskets of goods per hour while Jerry can produce just four baskets of the same goods per hour. It follows that Tom’s
    • A. 

      a. productivity is greater than Jerry’s.

    • B. 

      b. output is greater than Jerry’s.

    • C. 

      c. standard of living is higher than Jerry’s.

    • D. 

      d. All of the above are correct.

  • 6. 
    Which of the following is an example of a nonrenewable resource?
    • A. 

      Oil

    • B. 

      Livestock

    • C. 

      Lumber

    • D. 

      All of the above are correct

  • 7. 
    Although technological knowledge and human capital are closely related, there is an important difference. A relevant metaphor would be
    • A. 

      a. technological knowledge is the quality of society's textbooks, whereas human capital is the amount of time that the population has devoted to reading them.

    • B. 

      b. technological knowledge is the textbook, whereas human capital is the ink.

    • C. 

      c. technological knowledge is the thought process, whereas human capital is the calorie burn.

    • D. 

      d. None of the above are relevant.

  • 8. 
    • A. 

      a. grow slower than relatively rich countries; this is called the fall-behind effect.

    • B. 

      b. grow slower than relatively rich countries; this is called the Malthus effect.

    • C. 

      c. grow faster than relatively rich countries; this is called the catch-up effect.

    • D. 

      d. grow faster than relatively rich countries; this is called the constant-returns-to-scale effect.

  • 9. 
    The logic behind the catch-up effect is that
    • A. 

      a. workers in countries with low income will work harder than workers in countries with high incomes.

    • B. 

      b. the capital stock in rich countries deteriorates more rapidly than the capital stock in poor countries.

    • C. 

      c. new capital adds more to production in a country that doesn’t have much capital than in a country that already has much capital.

    • D. 

      d. None of the above are correct.

  • 10. 
    If your American-based firm opens and operates a new plastics factory in Ireland, your firm is engaging in
    • A. 

      a. foreign portfolio investment.

    • B. 

      b. foreign financial investment.

    • C. 

      c. indirect foreign investment.

    • D. 

      d. foreign direct investment.

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