Question 1

Country A and Country B initially have the same real GDP per capita.Country A experiences no economic growth, while Country B grows at a sustained rate of 5 percent.In 14 years, Country A's GDP will be approximately ____ that of Country B.

Accepted Answer

After 14 years, Country B's GDP per capita will have increased by (1.05)^14 = 2.078. This means Country B will have approximately twice the GDP per capita of Country A, as Country A's GDP per capita has not increased. Therefore, the answer is B, one-half.

Question 2

For a low-income country to develop into a high-income country, ____ is (are) needed.

Accepted Answer

Sustained economic growth is necessary for a low-income country to develop into a high-income country. This growth can occur through various means such as increasing exports, attracting foreign investment, investing in infrastructure, improving education and health systems, and implementing sound economic policies. Expansion in the money supply or tax breaks on consumption goods may provide short-term benefits but are not sustainable approaches to long-term economic growth. Deflation can actually harm economic growth by causing a decrease in consumer spending and business investment.

Question 3

Changes in the growth rate of real GDP per capita do not reflect which of the following?

Accepted Answer

Changes in the growth rate of real GDP per capita are only affected by changes in the total production of final goods and services in the economy, changes in the population size, and changes in the productivity of labor. The distribution of income does not directly affect the growth rate of real GDP per capita.

Question 4

The rule of 70 which predicts the time required for the economy of a nation to double, is based on the mechanism of:

Accepted Answer

The rule of 70 is based on the concept of compound interest, which is the process of earning interest on both the principal and accumulated interest. The rule states that if the annual growth rate of an economy is divided into 70, the result is the approximate number of years required for the economy to double. Therefore, the rule of 70 is based on the mechanism of compound interest.

Question 5

As of 2009, the U.S.per capita real GDP was approximately:

Accepted Answer

In 2009, the U.S. per capita real GDP was approximately $42,200.

Question 6

If a country's annual growth rate is 2%, then its output will double in approximately ____ years.

Accepted Answer

The Rule of 70 is used to estimate the number of years it takes for a quantity to double, given a constant annual growth rate. By dividing 70 by the growth rate (2%), we get approximately 35 years.

Question 7

Which of the following factors contribute to economic growth?

Accepted Answer

All of the factors listed - growth in physical capital, an increase in the availability of natural resources, an increase in the productivity of labor, and technological advances - contribute to economic growth. Physical capital includes things like buildings, equipment, and infrastructure, while natural resources could be minerals, energy, or land. Increased productivity of labor means workers are able to produce more with the same or fewer inputs. And technological advances lead to increased efficiency and innovation in production processes.

Question 8

A country will roughly double its GDP in twenty years if its annual growth rate is:

Accepted Answer

Using the Rule of 70, which states that you can estimate the number of years it takes for a quantity to double by dividing 70 by the annual growth rate, a 3.5% growth rate will double GDP in approximately 20 years (70/3.5 ≈ 20).

Question 9

A country will roughly double its GDP in five years if its annual growth rate is:

Accepted Answer

Using the Rule of 70, which states that you can estimate the number of years it takes for a quantity to double by dividing 70 by the annual growth rate. For a 14% growth rate, 70/14 ≈ 5 years.

Question 10

Which of the following is not considered a factor that contributes to economic growth?

Accepted Answer

Increased infant mortality rates are a negative factor that may hinder economic growth, as it suggests poor healthcare and could lead to a reduction in the labor force in the long run. The other options listed (increased labor productivity, technological advances, and migration of resources from low to high productivity areas) are all positive factors that contribute to economic growth.

Question 11

Growth in a production possibilities curve diagram is shown as:

Accepted Answer

Growth in a production possibilities curve is shown as an outward shift of the curve, indicating an increase in the economy's capacity to produce goods and services.

Question 12

An increase in growth rates will cause:

Accepted Answer

An increase in growth rates implies that an economy is able to produce more output with the same level of input. This means that the economy is becoming more efficient and effective in its production process. An outward shift of an economy's production possibilities curve represents an increase in productive capacity of the economy, indicating the ability to produce more goods and services with the same inputs. Therefore, choice B is the correct answer.

Question 13

A decrease in growth rates will cause:

Accepted Answer

A decrease in growth rates means that the economy is producing less than before, which indicates a reduction in the economy's capacity to produce goods and services. This will result in an inward shift of the economy's production possibilities curve, showing a reduced range of possible outputs.

Question 14

All of the following affect the growth in real GDP per capita except:

Accepted Answer

The distribution of income may affect income inequality, but it does not directly impact the production of goods and services, which is the main determinant of real GDP per capita. Total production of final goods and services (A), population (C), and the production of final services (D) all directly impact real GDP per capita.

Question 15

In the long run, the most important source of increase in a nation's standard of living is a:

Accepted Answer

A high rate of economic growth leads to increased production and income, which in turn leads to increased consumption and a higher standard of living. The other choices may have short-term benefits but do not have the same long-term impact on a nation's standard of living.

Question 16

There are several factors that nearly everyone agrees have contributed to economic growth in some or all countries.They do not include which of the following?

Accepted Answer

All of the choices are included in the list of factors that contribute to economic growth.

Question 17

For a low-income country to develop into a high-income country, ____ is (are) needed.

Accepted Answer

Sustained economic growth is necessary for a low-income country to develop into a high-income country. Without sustained economic growth, a country will not be able to generate enough income to support higher levels of development. High rates of inflation and high interest rates can often hinder economic growth, while restrictions on international trade can limit a country's ability to access global markets and resources, which can also impede economic development.

Question 18

The ____ shows roughly how long it will take a nation to double its output at various growth rates.

Accepted Answer

The rule of 70 states that if you divide the number 70 by the annual growth rate of a country's real GDP, the result is the approximate number of years it will take for the country's real GDP to double. For example, if a country has a 4% annual growth rate, it will take approximately 17.5 years for its GDP to double (70 ÷ 4 = 17.5).

Question 19

If productivity of an economy increases then:

Accepted Answer

Productivity measures the amount of output produced per unit of input (usually labor). Therefore, if productivity increases, it means that each worker is producing more goods and services per hour. This leads to an increase in the overall output of the economy, which is reflected in a higher real GDP per capita. Choices B and D are not related to productivity, and choice C is incorrect because an increase in productivity leads to an increase, not a decrease, in real GDP per capita.

Question 20

According to the rule of 70,

Accepted Answer

The rule of 70 states that to find the approximate number of years for an amount to double, divide 70 by the annual growth rate (as a percentage). Using this formula, we can see that:

A) 70/14 = 5 years
B) 70/10 = 7 years
C) 70/2 = 35 years

Therefore, all of the above choices are true.

Quiz 12: Economic Growth

Country A and Country B initially have the same real GDP per capita.Country A experiences no economic growth, while Country B grows at a sustained rate of 5 percent.In 14 years, Country A's GDP will be approximately ____ that of Country B.

For a low-income country to develop into a high-income country, ____ is (are) needed.

Changes in the growth rate of real GDP per capita do not reflect which of the following?

The rule of 70 which predicts the time required for the economy of a nation to double, is based on the mechanism of:

As of 2009, the U.S.per capita real GDP was approximately:

If a country's annual growth rate is 2%, then its output will double in approximately ____ years.

Which of the following factors contribute to economic growth?

A country will roughly double its GDP in twenty years if its annual growth rate is:

A country will roughly double its GDP in five years if its annual growth rate is:

Which of the following is not considered a factor that contributes to economic growth?

Growth in a production possibilities curve diagram is shown as:

An increase in growth rates will cause:

A decrease in growth rates will cause:

All of the following affect the growth in real GDP per capita except:

In the long run, the most important source of increase in a nation's standard of living is a:

There are several factors that nearly everyone agrees have contributed to economic growth in some or all countries.They do not include which of the following?

For a low-income country to develop into a high-income country, ____ is (are) needed.

The ____ shows roughly how long it will take a nation to double its output at various growth rates.

If productivity of an economy increases then:

According to the rule of 70,