Econ test 2

According to Matt Ridley, exchange of goods between groups is ___ as old as farming

10 times

Hans Rosling claims that an entirely new converging worked emerged since

1948

If the average annual growth rate of a country increases from 1% to 2%, how much faster will GDP double?

35 years later

Diminishing returns to capital implies that: a) the marginal product of capital is decreasing b) the production function is downward sloping c) more capital goods produce less output d) capital is not the most efficient input

A

What is the formula for ideas?

A = population x incentives x ideas per hour

As other countries grow wealthier, the incentive to undertake research and development projects a) increases, since there is more government subsidization when countries are wealthier. b) increases, since the potential for profits rises. c) decreases, since competition drives profits lower. d) decreases, since the marginal returns to R&D fall when more countries are wealthier.

B

The expenditure approach to calculating GDP states that GDP is equal to: a) investment + wages + rent + profit b) wages +rent + interest +profit c) consumption + investment +government spending + net exports d) investment + profit

C

According to Hans Rosling, in 2009 the world's poorest country (which he attributes to being stuck in civil war) was:

Congo

If a country has 5% real GDP growth and 5% population growth, how much per capita real GDP growth does it have? a) 2.5% b) 5% c) 10% d) 0%

D

According to the Solow model, a greater investment rate leads to a) more capital and more output. b) less capital and more output. c) less capital and less output. d) more capital and less output.

a

At an average growth rate of 4 percent, how long would it take for an economy to double its GDP? a) 17.5 years b) 70 years c) 50 years d) 25 years

a

Conditional convergence implies that there is ______ relationship between real GDP per capita and subsequent growth. a) a negative b) a positive c) a vertical d) no

a

For most of recorded human history, real GDP per capita has a) remained steady. b) increased at a rapid rate. c) fallen at a modest rate.

a

GDP calculations are performed by the a) Bureau of Economic Analysis. b) U.S. military. c) International Monetary Fund. d) U.S. consumer bureau.

a

If U.S. per capita GDP is $50,000 and grows at 2 percent per year, what will U.S. per capita GDP be in 70 years? a) $200,000 b) $400,000 c) $100,000 d) $800,000

a

If two countries have the same steady-state levels of output, the country that is ______ today will eventually ______ in per capita output. a) poorer; catch up b) poorer; lag behind c) richer; be further ahead d) richer; fall behind

a

In the Solow model production function, Y = F(A, K, eL), K stands for a) capital. b) Keynes. c) consumption. d) kurtosis.

a

Marginal product of capital is ______ in China relative to marginal product of capital in developed economies. a) high b) zero c) low d) moderate

a

Technological knowledge is the a) knowledge about how the world works that is used to produce goods and services. b) productive knowledge and skills that workers acquire through education, training, and experience. c) growth rate of real GDP per capita. d) stock of tools including machines, structures, and equipment.

a

The GDP deflator is equal to a) (nominal GDP/real GDP) × 100. b) (real GDP - nominal GDP) × 100. c) nominal GDP × real GDP) × 100. d) (real GDP × nominal GDP) × 100.

a

The Solow model predicts that a country will grow more rapidly the a) further its capital stock is below its steady-state value. b) further its capital stock is above its steady-state value. c) closer its capital stock is above its steady-state value. d) closer its capital stock is below its steady-state value.

a

The level of capital stock increases when investment in capital is a) greater than depreciation. b) greater than investment in human capital. c) greater than personal consumption. d) less than depreciation.

a

The national spending approach to calculating GDP states that GDP is equal to a) consumption + investment + government spending + net exports. b) investment + profit. c) wages + rent + interest + profit. d) investment + wages + rent + profit.

a

When GDP per capita goes up by 10 percent a) total income per person goes up by 10 percent, but the distribution may vary. b) the average (median) person's income also goes up by 10 percent. c) everyone's income goes up by 10 percent. d) no one's income goes up by 10 percent.

a

A tracker, built in 2001 and still operated today is a) part of today's national wealth and GDP. b) part of today's national wealth but not part of today's GDP. c) not part of today's national wealth or today's GDP. d) part of today's GDP but not part of today's national wealth.

b

According to the rule of 70, a country with an annual growth of 10 percent in GDP will double its GDP a) in 10 years. b) in 7 years. c) within 1 year. d) in 70 years.

b

Diminishing returns to hammers indicates that a) additional output may be produced with fewer hammers. b) having more hammers leads to more output but at a decreasing rate. c) having more hammers leads to increases in output only if there are corresponding increases in technology (i.e., new ways of using hammers). d) having more hammers does not always lead to more output.

b

Government has a role in subsidizing research and development when a) the beneficiaries are below the poverty line. b) the spillovers are large. c) it can more efficiently allocate resources. d) it can increase tax revenue.

b

If the average annual growth rate of a country increases from 2 percent to 3 percent, how much faster will GDP double? a) 17 years faster b) 11 2/3 years faster c) 10 years faster d) 25 years faster

b

Research and development of new ideas that lead to spillover effects tend to be a) overprovided in markets. b) underprovided in markets. c) produced only with the help of patents or other government subsidies. d) rivalrous in the market.

b

The GDP deflator is equal to a) (nominal GDP × real GDP) × 100. b) (nominal GDP/real GDP) × 100. c) (real GDP × nominal GDP) × 100. d) (real GDP - nominal GDP) × 100.

b

The optimal private investment in R&D would likely be __________ the optimal social investment. a) the same as b) less than c) half of d) greater than

b

The true rate of growth of GDP is measured as increases in a) prices only, because only increases in production are true increases in the standard of living. b) production rather than prices, because only increases in production are true increases in the standard of living. c) prices of consumer goods, because only increases prices of consumer goods are true increases in the standard of living. d) prices rather than production, because only increases in production are true increases in the standard of living.

b

Which of the following would help a country develop from catch-up growth to cutting-edge growth? a) limiting domestic savings b) spillovers from idea production c) abolishing the system of patents and copyrights d) a well-functioning market system

b

A tracker, built in 2001 and still operated today is a) part of today's GDP but not part of today's national wealth. b) not part of today's national wealth or today's GDP. c) part of today's national wealth but not part of today's GDP. d) part of today's national wealth and GDP.

c

At an annual growth rate of 3.5 percent, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country? a) 10 years b) 15 years c) 20 years d) 5 years

c

GDP per capita is a) the market value of all final goods and services produced by a country's permanent residents, wherever located, in a year. b) the market value of all final goods and services produced within a country in a year. c) the market value of all final goods and services produced within a country in a year divided by population. d) a significant, widespread decline in real income and employment.

c

If gamma decreases in the Solow model, other things held constant, then capital growth a) changes indeterminately. b) increases. c) decreases. d) remains constant.

c

If government legislation requires businesses to switch to a different method of production that generates 50 percent fewer greenhouse gas emissions, compliance to this policy (assuming no other changes) can be illustrated in the Solow model by ______ the aggregate production function that leads to a ______ level of real GDP per person. a) a movement to the left on; higher b) a movement to the right on; higher c) a shift down of; lower d) a shift up of; higher

c

If investment is less than depreciation, then the capital stock a) changes indeterminately. b) remains constant. c) decreases. d) increases.

c

If we want to compare GDP over time, we should always look at a) GNP. b) nominal GDP. c) real GDP. d) GDP growth.

c

In a steady state the level of investment a) could be equal to, greater than, or less than depreciation. b) is less than depreciation. c) is equal to depreciation. d) exceeds depreciation.

c

Many economists are optimistic about the future of economic growth, mostly because a) growing populations mean a higher labor supply and thus higher levels of output. b) people are becoming wealthier worldwide. c) increasing populations worldwide mean added incentives for research and development. d) falling populations worldwide mean higher GDP per capita.

c

Recently (as of 2010), GDP per capita in the United States was approximately a) $60,000 b) $35,000 c) $46,000 d) $54,000

c

Which of the following is the factor income approach to GDP? a) Y = wages + rent + interest. b) Y = wages + profit. c) Y = wages + rent + interest + profit. d) Y = wages + rent + profit.

c

A production function can be used to express the relationship between ______ and GDP. a) productivity b) economic growth rate c) GDP per capita d) the factors of production

d

According to the Solow model, a greater investment rate leads to a) less capital and less output. b) more capital and less output. c) less capital and more output. d) more capital and more output.

d

According to the Solow model, a greater investment rate leads to a) volatility in steady-state output. b) a decrease in steady-state output. c) no change in steady-state output. d) an increase in steady-state output.

d

Capital growth is the difference between a) appreciation and depreciation. b) investment and economic growth. c) depreciation and economic growth. d) investment and depreciation.

d

Given the GDP at the end of both 2004 and 2005, the percentage change is computed as a) (GDP 2005 - GDP 2004) divided by GDP 2005. b) (GDP 2005 - GDP 2005) divided by GDP 2004. c) (GDP 2004 - GDP 2004) divided by GDP 2004. d) (GDP 2005 - GDP 2004) divided by GDP 2004.

d

The logic of diminishing returns means that a) eventually capital will cease growing even though output is still growing. b) eventually output will cease growing even though capital is still growing. c) capital and output will continually grow but at a diminishing rate. d) eventually capital and output will cease growing.

d

The production function is a mathematical function that shows a) how various inputs are produced. b) the most cost efficient means of producing output. c) the most efficient level of output produced in an economy. d) the relationship between inputs and the quantity of output produced.

d

The production function is a mathematical function that shows a) the most efficient level of output produced in an economy. b) the most cost efficient means of producing output. c) how various inputs are produced. d) the relationship between inputs and the quantity of output produced.

d

Which of the following explains why GDP does not include the sale of a previously owned home? a) No taxes are levied. b) They often cost less. c) This maintains constant quality. d) This prevents double counting.

d

According to Matt Ridley, ideas are combined and recombined to produce new innovations primarily through:

exchange

With possible spillover of ideas, will there be too much or too little investment in R&D?

too little

Long-run economic growth cannot be due to capital growth alone because economic growth is ___ at the steady state of capital

zero