Chapter 7 Test bank

Assuming a country's economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________.

30

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

. one-half

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year.

2%

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

3.5 percent

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________.

300

Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day.

5 billion

In Bangladesh during the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________.

78%; 75%

Which of the government policies below is most unlikely to encourage per capita economic growth? A. high taxes on companies that spend a lot on capital formation B. the use of tax revenues for investment and capital formation C. special subsidies for capital-intensive forms of production D. promotion of education and training programs for workers

A

Which of the following is correct? A. An increase in the quantity of labor always leads to economic growth. B. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. C. A decrease in the productivity of labour leads to economic growth. D. Third World countries are rich in human capital.

B

Country Able and Country Baker initially have the same real GDP per capita. Country Able experiences no economic growth, while Country Baker grows at a sustained rate of 7 percent. In 12 years, Country Baker's GDP will be approximately ___________ that of Country Able.

B. double

Which of the following is most likely to contribute to economic growth as measured by GDP per capita? A. the imposition of tariffs and quotas on imported goods B. increased capital formation C. rapid population growth D. an increase in marginal tax rates

B. increased capital formation

Which of the following best describes the relationship between economic growth and literacy? A. As the economy grows, literacy declines because it becomes less and less useful in a developed economy. B. Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. C. Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education. D. There is no correlation between economic growth and literacy.

C

Which of the following is unlikely to affect the rate of economic growth? A. the quality of available resources B. the quantity of available resources C. the level of government spending D. technological change

C

Economists typically measure economic growth by tracking: A. the employment rate. B. the unemployment rate. C. averaged GDP growth D. real GDP per capita.

D

Investment in human capital: A. is of minor importance to economic growth. B. can be acquired through on-the-job training. C. is an important source of economic growth. D. is characterized by both b) and c).

D

Which of the following did not result in economic growth? A. Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California. B. The invention of a threshing machine for harvesting grains. C. Increased government funding of post-secondary education. D. Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

D

Which of the following factors contribute to economic growth? A. an increase in the average wage rate paid to workers B. an increase in the standard of living C. a decrease in the productivity of labor D. an increase in the proportion of the population that is college educated

D

What are the three main sources for economic growth in any economy?

Explanation: Technology, human capital, and physical capital

A nation's prosperity is sometimes measured in terms of ___________.

GDP per capita

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.

GDP per capita

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

GDP per captia

Some prominent members of the slow-economic growth country club include a high-income country like _________.

Germany

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy.

Productivity

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

The Industrial Revolution

Increased investment alone will guarantee economic growth. is this a true or false statement?

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.

an aggregate production function

When society has a higher level of capital per person, it is called ______________.

capital deepening

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ .

geography and climate

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

high rate of economic growth.

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

The value of what is produced per worker, or per hour worked, is called ____________.

productivity

_________ is output per hour in the business sector.

productivity

To achieve a high standard of living, a nation should:

promote economic growth.

28. Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.

technology