Question 1

Decreasing the accessibility to college in order to funnel workers into the workforce faster will

Accepted Answer

Decreasing accessibility to college will result in a less educated and skilled workforce, which will decrease productivity of the economy in the long run. A less educated workforce is also likely to earn lower wages and have lower job satisfaction, which could lead to negative impacts on the overall economy.

Question 2

By investing heavily in the consumption of goods, the government promotes a higher level of labor productivity in the United States.

Accepted Answer

Investing heavily in the consumption of goods does not necessarily promote a higher level of labor productivity. It may stimulate economic growth and create jobs, but productivity depends more on factors such as technology, education, and skills training.

Question 3

Historically, immigration has helped fuel economic growth in the United States.

Accepted Answer

This is true, as immigrants have filled labor shortages, launched new businesses, and contributed to economic innovation and diversity throughout U.S. history.

Question 4

One way a stable financial system supports economic growth is that it

Accepted Answer

A stable financial system facilitates the movement of capital from those who have savings to those who need it for investment, allowing businesses to expand and create jobs. This can lead to economic growth as more goods and services are produced and sold in the economy. The other options, subsidizing borrowers or keeping tax rates low, may also have some impact on economic growth but are not directly related to the role of a stable financial system in supporting it. The fourth option, increasing the incidence of unanticipated price changes, would actually be detrimental to economic growth as it would create uncertainty and make it harder for businesses to plan and invest.

Question 5

According to Thomas Malthus, a fixed quantity of land and a growing human population will eventually produce

Accepted Answer

According to Malthusian theory, a fixed quantity of land and a growing human population will eventually lead to diminishing returns to labor and a deterioration in living standards, leading to a decline in economic growth. This is known as the "Malthusian trap." Therefore, the best choice is D.

Question 6

The legal enforcement of contract rights is an important component of intangible infrastructure that promotes economic growth.

Accepted Answer

The legal enforcement of contract rights can provide stability and predictability for businesses, encourage investment and innovation, and facilitate trade both domestically and internationally, all of which can contribute to economic growth.

Question 7

Rocky Gap Furniture hires 10 employees working eight hours each to produce 100 rocking chairs. What is the productivity of these workers?

Accepted Answer

The productivity is calculated by dividing the total output (100 rocking chairs) by the total input (10 employees working 8 hours each, which equals 80 hours). So, 100 chairs divided by 80 hours equals 1.25 chairs per hour.

Question 8

If it will take 10 years for a nation's income to double, then its growth rate must be 7%.

Accepted Answer

The rule of 72 is a shortcut to calculate the approximate number of years it takes for an investment to double in value at a given annual rate of return. The rule states that the number of years it takes for an investment to double is approximately equal to 72 divided by the annual rate of return. In this case, the annual rate of return is 7%, so the number of years it takes for the nation's income to double is approximately 72 / 7 = 10 years.

Question 9

Increases in _____ often lead to economic growth.

Accepted Answer

Increases in capital, such as investments in machinery, infrastructure, and technology, can enhance productivity and efficiency, leading to economic growth.

Question 10

Which of these does NOT increase productivity?

Accepted Answer

An increase in the money supply does not directly impact productivity. It may stimulate economic activity, but it does not necessarily lead to increased efficiency or output per worker. The other options (research and development, improvements in labor quality, capital investment) all have the potential to increase productivity by improving technology, skills, and resources available to workers.

Question 11

The Rule of 70 would be most accurate for estimating the doubling time in which situation?

Accepted Answer

The Rule of 70 is most accurate for estimating the doubling time of an investment or population when the growth rate is steady. At a steady growth rate of 4%, the Rule of 70 provides a close approximation of the doubling time by dividing 70 by the growth rate percentage.

Question 12

A country's infrastructure does not affect its economic growth.

Accepted Answer

Infrastructure, which includes transportation, communication, and energy systems, is a crucial factor in promoting economic growth by facilitating trade, increasing productivity, and attracting new businesses and investments. Countries with better infrastructure tend to have higher levels of economic development and growth.

Question 13

In general, free societies have more economic growth than totalitarian societies do.

Accepted Answer

Free societies typically have more economic freedom, which leads to increased innovation, entrepreneurship, and overall economic growth. Totalitarian societies often have government-controlled economies, which can limit economic growth and innovation.

Question 14

Economic growth is hindered if consumers and businesses do not have a good idea of the likely rate of inflation in the near future.

Accepted Answer

If consumers and businesses do not have a good idea of the likely rate of inflation in the near future, they may be hesitant to spend or invest, which can slow down economic growth. This uncertainty can also lead to market volatility and decreased consumer confidence. Therefore, understanding and predicting inflation is important for promoting economic growth.

Question 15

Which is NOT an example of infrastructure?

Accepted Answer

Infrastructure refers to the physical and organizational structures and facilities needed for the operation of a society or enterprise. Walmart stores are privately owned businesses and do not fall under the category of infrastructure.

Question 16

Which change is likely to increase wages the MOST in a country?

Accepted Answer

An increase in capital-to-labor ratio means that there is more equipment and technology available to each worker, making them more productive. This increased productivity leads to higher wages. While the other options could also lead to some increase in wages, the increase in capital-to-labor ratio would likely have the greatest impact.

Question 17

Which statement about short-run economic growth is NOT true?

Accepted Answer

Short-run economic growth typically involves the utilization of underutilized resources, is often easier to achieve than long-run growth, and is common during recovery from economic downturns. However, putting obstacles in place that prevent resources from being used would not facilitate growth but rather hinder it, making statement D incorrect.

Question 18

Which technology most strongly affected the growth in U.S. productivity in recent decades?

Accepted Answer

Microcomputers have revolutionized the way businesses operate, introducing new software, communication tools, and automation, all of which have greatly increased productivity in recent decades. While railroads, ticker tape, and petrochemicals have all played important roles in U.S. economic growth, they do not compare to the transformative impact of microcomputers.

Question 19

Whispering Valley Furniture hires 5 employees working eight hours each to produce 80 rocking chairs. Rocky Gap Furniture hires 10 employees working eight hours each to produce 160 rocking chairs. Which company's workers are more productive?

Accepted Answer

Both companies' workers have the same level of productivity. At Whispering Valley, each employee produces 80 chairs / 5 employees = 16 chairs per employee. At Rocky Gap, each employee produces 160 chairs / 10 employees = 16 chairs per employee.

Question 20

The Rule of 70 is a valuable tool for understanding the power of compounding growth rates over time.

Accepted Answer

The Rule of 70 states that if you divide 70 by a growth rate, the result is approximately the number of years it will take for a particular value to double. This can help individuals understand the potential impact of compounding growth rates over time.

Quiz 7: Economic Growth