Question 1

Senator Noitall says that in order to help poor countries develop, the United States should: 1. Encourage poor countries to allow U.S. and other foreign firms to build and operate businesses in their country; 2. Reduce or eliminate subsidies to U.S. producers when poor countries have a comparative advantage producing goods the U.S. subsidizes; 3. Work to promote political stability in poor countries; and 4. Reduce poor countries reliance on market forces in their economies. How many of these ideas are likely to help poor countries grow?
A)1
B)2
C)3
D)4

Accepted Answer

Out of the four ideas proposed by Senator Noitall, the third one - working to promote political stability in poor countries - is the most likely to help these countries develop. This is because political instability can have a devastating effect on a country's economy, deterring foreign investment and disrupting local business operations. By promoting political stability, the United States can help create a more conducive environment for economic growth and development in these countries.

The other three ideas are not as straightforward. While encouraging foreign investment and reducing subsidies may help some sectors of the economy, it may not necessarily lead to overall economic growth or benefit the most vulnerable populations in these countries. Similarly, reducing reliance on market forces may be a difficult task and may require significant government intervention, which may not always be feasible or desirable.

Question 2

Which of the following is correct?
A)There is no debate about the effects of higher population growth on economic growth.
B)Natural resources clearly place limits on growth; there is simply no way to reduce either the amount or type of natural resources needed to produce goods.
C)How much an increase in capital increases a country's output is independent of that country's current level of capital.
D)Economists argue that outward rather than inward policies are likely to promote economic growth.

Accepted Answer

The answer of Which of the following is correct?
A)There is...

Question 3

Other things the same, higher population growth
A)raises the amount of physical capital per worker and there is some evidence that it raises the pace of technological progress.
B)raises the amount of physical capital per worker, but there is some evidence that it reduces the pace of technological progress.
C)reduces the amount of physical capital per worker, but there is some evidence that it raises the pace of technological progress.
D)reduces the amount of physical capital per worker and there is some evidence that it reduces the pace of technological progress.

Accepted Answer

The answer of Other things the same, higher population growth
A)raises...

Question 4

Which of the following provide benefits to society at large and not just to the person(s) who pursues it?
A)both technological knowledge that is a public good and education
B)technological knowledge that is a public good, but not education
C)education, but not technological knowledge that is a public good
D)neither education, nor technological knowledge that is a public good

Accepted Answer

Both technological knowledge that is a public good and education provide benefits to society at large and not just to the person(s) who pursues it. Technological knowledge that is a public good can be freely shared among individuals and can lead to advancements in various fields such as medicine, engineering, and communication. Education is also a public good as it provides individuals with skills and knowledge that can positively impact society as a whole.

Question 5

Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor country to catch up?
A)The poor country has outward-oriented trade policies.
B)The poor country allows foreign direct investment.
C)The poor country has poorly developed property rights.
D)All of the above are correct.

Accepted Answer

Poorly developed property rights can discourage domestic and foreign investment, hindering economic growth and the ability to catch up with richer countries. Outward-oriented trade policies and foreign direct investment can actually help promote growth and catch-up, so they are not likely explanations for failure to catch up.

Question 6

Which of the following is correct?
A)If developing countries limit career and educational opportunities for women, birth rates are likely to be lower.
B)Growth rates in developed and developing countries are nearly the same.
C)Historically, in periods where the rate of population growth was high, so was the rate of growth in world real GDP per person.
D)None of the above is correct.

Accepted Answer

The answer of Which of the following is correct?
A)If developing...

Question 7

Which of the following is true?
A)Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production.
B)Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.
C)Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production.
D)Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.

Accepted Answer

Kremer argued that with greater population, society would generate more ideas through the process of technological change, leading to economic growth and an increase in real GDP per person. On the other hand, Malthus argued that increasing population would outstrip the capacity of the agricultural sector to produce food, leading to a decline in the standard of living.

Question 8

All else equal, which of the following would tend to cause real GDP per person to rise?
A)a change from inward-oriented policies to outward-oriented policies
B)an increase in investment in human capital
C)strengthening of property rights.
D)All of the above are correct.

Accepted Answer

Each of the options listed would lead to an increase in productivity and a higher potential for economic growth, which would in turn cause real GDP per person to rise. A change from inward-oriented policies to outward-oriented policies would increase access to foreign markets and facilitate the exchange of goods and services, leading to increased trade and economic growth. Investment in human capital, such as through education and training, would increase the skills and abilities of workers, leading to higher productivity and output. Strengthening property rights would encourage investment and innovation, as individuals and firms would have greater confidence in the security of their assets and ideas. Therefore, all of these options would tend to cause real GDP per person to rise.

Question 9

Over extended periods of time, population growth
A)has no effect on the standard of living.
B)has uncertain effects on the standard of living.
C)clearly raises the standard of living.
D)clearly lowers the standard of living.

Accepted Answer

The effects of population growth on the standard of living are uncertain, as it depends on various factors such as resource availability, technology, and government policies. While population growth can lead to increased demand and stimulate innovation, it can also strain resources and lead to environmental degradation if not managed properly. Therefore, the impact of population growth on the standard of living cannot be clearly determined.

Question 10

The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries. She asks you to pick the one you think most likely explains her country's low growth. Which of the following contributes to low growth?
A)poorly enforced property rights
B)outward-oriented trade policies
C)policies that permit foreign investment
D)All of the above are correct.

Accepted Answer

Poorly enforced property rights can hinder investment and growth as investors may be hesitant to invest in a country where their rights to property are not protected. Outward-oriented trade policies and policies that permit foreign investment can actually stimulate growth. Therefore, option D is incorrect.

Question 11

Rapid population growth
A)was hailed by Thomas Robert Malthus as the key to future economic growth.
B)tends to lead to higher levels of educational attainment.
C)is the main reason that less developed nations are poor.
D)may depress economic prosperity by reducing the amount of capital which each worker has to work with.

Accepted Answer

Rapid population growth may lead to a decrease in economic prosperity because there is less capital to go around for each worker. This can lead to lower wages, a reduced standard of living, and diminished economic growth.

Question 12

Thomas Malthus's predictions turned out to be wrong due to
A)technological advances such as those during the Industrial Revolution.
B)smaller populations now than in the time of Malthus.
C)the effects of brain-drain.
D)unlimited natural resources.

Accepted Answer

Malthus predicted that population growth would outpace food production and lead to widespread famine and poverty. However, technological advances, such as those during the Industrial Revolution, greatly increased food production and overall standards of living, thus disproving Malthus's predictions.

Question 13

The president of a poor country has announced that he will implement the following measures that he claims are designed to increase growth: 1. Reduce corruption in the legal system; 2. Reduce reliance on market forces because they allocate goods and services in an unfair manner; 3. Restrict investment in domestic industries by foreigners because they take some of the profits out of the country; 4. Encourage trade with neighboring countries; and 5. Increase the fraction of GDP devoted to consumption. How many of these measures will have a positive effect on growth?
A)1
B)2
C)3
D)4

Accepted Answer

Measure 1 (Reduce corruption in the legal system) is likely to have a positive effect on growth as it can increase investment and improve the rule of law. 
Measure 2 (Reduce reliance on market forces) is unlikely to have a positive effect on growth as it can lead to inefficiencies and disincentivize productive activity. 
Measure 3 (Restrict investment in domestic industries by foreigners) is also unlikely to have a positive effect on growth as it can decrease foreign investment and limit access to capital and expertise. 
Measure 4 (Encourage trade with neighboring countries) is likely to have a positive effect on growth as it can increase exports and create potential for specialization and economies of scale. 
Measure 5 (Increase the fraction of GDP devoted to consumption) is unlikely to have a positive effect on growth as it can lead to higher inflation and reduced savings and investment.

Question 14

Senator Smith says that in order to help poor countries develop, the United States should: 1. Prevent U.S. corporations from investing in poor countries because they take profits that the poor countries should have; 2. Not import goods from poor countries that use child labor; 3. Work to promote political stability in poor countries; and 4. Reduce poor countries' reliance on market forces in their economies. How many of these ideas are likely to help poor countries grow?
A)1
B)2
C)3
D)4

Accepted Answer

The answer of Senator Smith says that in order to...

Question 15

Which of the following statements is not correct?
A)The catch-up effect is based on the assumption of diminishing returns to capital.
B)Investment in poor countries by citizens of rich countries is one way poor countries can learn new technologies.
C)Malthus argued that charity and government aid was an effective way to reduce poverty.
D)Peace and justice are keys to growth.

Accepted Answer

Malthus argued against charity and government aid as effective ways to reduce poverty, instead believing that population growth would always outstrip increases in food production, leading to a perpetual state of poverty.

Question 16

Which of the following is an observation made by economist Michael Kremer?
A)World growth rates increased as the population increased.
B)Technological progress allows for increasing population because of advances in agriculture.
C)World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will decline.
D)All of the above are observations made by Kremer.

Accepted Answer

The answer of Which of the following is an observation...

Question 17

Malthus predicted that the power of population
A)was greater than the power of the earth to produce subsistence. His forecast was on the mark.
B)was greater than the power of the earth to produce subsistence. His forecast was off the mark.
C)was less than the power of the earth to produce subsistence. His forecast was on the mark.
D)was less than the power of the earth to produce subsistence. His forecast was off the mark.

Accepted Answer

The answer of Malthus predicted that the power of population
A)was...

Question 18

An increase in a country's population may contribute to the rate of technological progress because a larger population
A)forces the capital stock to be spread more thinly.
B)forces natural resources to be spread more thinly.
C)brings with it more scientists, inventors, and engineers.
D)brings with it more favorable recognition from other countries.

Accepted Answer

With an increase in population, the number of scientists, inventors, and engineers is also likely to increase, leading to more technological progress.

Question 19

All else equal, which of the following would tend to cause real GDP per person to rise?
A)a change from outward-oriented policies to inward-oriented policies
B)an increase in investment in human capital
C)a weakening of property rights
D)All of the above are correct.

Accepted Answer

Increasing investment in human capital, such as education and training, improves a person's skills and productivity, ultimately leading to an increase in real GDP per person. A change from outward-oriented policies to inward-oriented policies or a weakening of property rights can have negative effects on the economy and reduce real GDP per person. Therefore, choice A and C are incorrect.

Question 20

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions?
A)A relatively simple way to increase growth rates permanently is to increase a country's saving rate.
B)Growth is generally inhibited rather than promoted by policies like protective tariffs.
C)Well-established property rights that are enforced by fair and efficient courts are important to economic growth.
D)Countries with few domestic natural resources still have opportunities for economic growth.

Accepted Answer

The answer of On the basis of theory and empirical...

Quiz 25: Production and Growth

Which of the following is correct?

Other things the same, higher population growth

Which of the following provide benefits to society at large and not just to the person(s) who pursues it?

Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor country to catch up?

Which of the following is correct?

Which of the following is true?

All else equal, which of the following would tend to cause real GDP per person to rise?

Over extended periods of time, population growth

Rapid population growth

Thomas Malthus's predictions turned out to be wrong due to

Which of the following statements is not correct?

Which of the following is an observation made by economist Michael Kremer?

Malthus predicted that the power of population

An increase in a country's population may contribute to the rate of technological progress because a larger population

All else equal, which of the following would tend to cause real GDP per person to rise?

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions?