Quiz 17: Production and Growth

Business

Over the past century, real GDP per person in the United States has grown about ________ percent per year, which means it doubles about every ________ years. A) 2, 14 B) 2, 35 C) 5, 14 D) 5, 35

Free

Multiple Choice

Number of years requires doubling the GDP: The real GDP of the United State is growing annually at a rate of around 2 percent, the numbers of year required to double the GDP can be calculated by using the Rules of 70. Rules of 70: …… (1) Substitute the respective values in Equation (1) to obtain the require number of years to double the GDP. It takes years to double the GDP of the United State. Thus, the option 'b' is correct.

Q 2

Most countries, including the United States, import substantial amounts of goods and services from other countries. Yet the chapter says that a nation can enjoy a high standard of living only if it can produce a large quantity of goods and services itself. Can you reconcile these two facts?

Free

True False

The two facts do not contradict with each other. GDP measures the level of income earned and expenditure on the goods and services produced in the economy. Productivity is the ability to produce goods and service. It is a good measure of GDP. The higher the ability to produce a large quantity of goods and services, the higher is the productivity, and the higher is the standard of living. At the same time, free trade can improve the productivity by offering a resource of technological advances. By importing goods and services from advanced countries, less advanced countries can learn more advance technological knowledge contained in the imports. In addition, free trade increases the amount and variety of goods and services of an economy than otherwise it produces everything by itself. Therefore, both the statements are TRUE. When a country is an importer they borrow against the future production of goods and services. When other countries that the importing countries produces the goods and services then there will be no exports in the first place.

Q 3

What does the level of a nation's GDP measure? What does the growth rate of GDP measure? Would you rather live in a nation with a high level of GDP and a low growth rate or in a nation with a low level of GDP and a high growth rate?

Free

Essay

GDP measures the total income earned in the economy and the total expenditure on the goods and services produced in the economy. Real GDP is a good gauge of economic prosperity. The growth of real GDP is a good gauge of economic progress. A country with high level of GDP has slower growth rate than the country with a low level of GDP. It is more desirable to live in a country with high level of GDP even though it has slower growth rate. There are more goods and services being produced by a country with high level of GDP; as a result, there is higher level of consumption. Country with low level of GDP can grow faster, but during its process of catching up a rich country it is producing less goods and services.

Q 4

The world's rich countries, such as Japan and Germany, have income per person that is about ________ times the income per person in the world's poor countries, such as Pakistan and India. A) 3 B) 6 C) 12 D) 36

Multiple Choice

Q 5

Suppose that society decided to reduce consumption and increase investment. a. How would this change affect economic growth? b. What groups in society would benefit from this change? What groups might be hurt?

Essay

Q 6

List and describe four determinants of productivity.

Essay

Q 7

Most economists are ________ that natural resources will eventually limit economic growth. As evidence, they note that the prices of most natural resources, adjusted for overall inflation, have tended to ______________________ over time. A) concerned, rise B) concerned, fall C) not concerned, rise D) not concerned, fall

Multiple Choice

Q 8

Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some of these decisions involve private spending; others involve government spending. a. Describe some forms of private spending that represent consumption and some forms that represent investment. The national income accounts include tuition as a part of consumer spending. In your opinion, are the resources you devote to your education a form of consumption or a form of investment? b. Describe some forms of government spending that represent consumption and some forms that represent investment. In your opinion, should we view government spending on health programs as a form of consumption or investment? Would you distinguish between health programs for the young and health programs for the elderly?

Essay

Q 9

In what way is a college degree a form of capital?

Essay

Q 10

Because capital is subject to diminishing returns, higher saving and investment does not lead to higher A) income in the long run. B) income in the short run. C) growth in the long run. D) growth in the short run.

Multiple Choice

Q 11

Explain how higher saving leads to a higher standard of living. What might deter a policymaker from trying to raise the rate of saving?

Essay

Q 12

When the Japanese car maker Toyota expands one of its car factories in the United States, what is the likely impact of this event on the GDP and GNP of the United States? A) GDP rises and GNP falls. B) GNP rises and GDP falls. C) GDP shows a larger increase than GNP. D) GNP shows a larger increase than GDP.

Multiple Choice

Q 13

In the 1990s and the first decade of the 2000s, investors from the Asian economies of Japan and China made significant direct and portfolio investments in the United States. At the time, many Americans were unhappy that this investment was occurring. a. In what way was it better for the United States to receive this foreign investment than not to receive it? b. In what way would it have been better still for Americans to have made this investment?

Essay

Q 14

Does a higher rate of saving lead to higher growth temporarily or indefinitely?

Essay

Q 15

Thomas Robert Malthus believed that population growth would A) put stress on the economy's ability to produce food, dooming humans to remain in poverty. B) spread the capital stock too thinly across the labor force, lowering each worker's productivity. C) promote technological progress, because there would be more scientists and inventors. D) eventually decline to sustainable levels, as birth control improved and people had smaller families.

Multiple Choice

Q 16

In many developing nations, young women have lower enrollment rates in secondary school than do young men. Describe several ways in which greater educational opportunities for young women could lead to faster economic growth in these countries.

Essay

Q 17

Why would removing a trade restriction, such as a tariff, lead to more rapid economic growth?

Essay

Q 18

International data show a positive correlation between income per person and the health of the population. a. Explain how higher income might cause better health outcomes. b. Explain how better health outcomes might cause higher income. c. How might the relative importance of your two hypotheses be relevant for public policy?

Essay

Q 19

How does the rate of population growth influence the level of GDP per person?

Essay

Q 20

The great 18th-century economist Adam Smith wrote, "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things." Explain how each of the three conditions Smith describes would promote economic growth.

Essay

Q 21

Describe two ways the U.S. government tries to encourage advances in technological knowledge.

Essay

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