econ test3 chp810

Explain​ why, other things remaining the​ same, a country with a​ well-educated population has a faster economic growth rate than a country that has a poorly educated population

A country with a​ well-educated population has more human resources to invest in expanding human​ capital, which can develop new and more productive technologies. A​ well-educated population has more skills and greater labor productivity than a poorly educated population. A​ well-educated population can contribute to the research and development that create new technology.

The standard of living in Asian economies has increased in the last decade by so much more than the increase in the standard of living in the United States because​ ______.

Asian economies have higher saving rates than the United States Saving finances​ investment, which brings capital accumulation and stimulates economic growth and a higher standard of living. The Asian economies have higher saving rates than the United​ States, which increases their economic growth and their standard of living at a faster rate than in the United States.

Classical growth theory​ ______

Classical growth theory is the theory that the clash between an exploding population and limited resources will eventually bring economic growth to an end.

What does classical growth theory say will eventually end economic​ growth?

Classical growth theory predicts that a population explosion that leads to a fall in labor productivity and the return of real GDP per person to the subsistence level will eventually end economic growth.

Classical macroeconomics predicted that the Great Depression​ _______.

Classical macroeconomics predicted that the Great Depression would eventually end but offered no method for ending it more quickly.

As a​ result of minimum wage rate raise, _______.

Firms will be more likely to retain employees with job​ experience, so​ part-time workers,​ low-skilled workers, and youth workers with job experience may gain. But teenagers with no experience will find it difficult to get jobs.

​______ is an example of a place where there is economic freedom and rapid economic growth but not democracy.

Hong Kong is a good example of a place with little democracy but a lot of economic freedom long dash —and a lot of economic growth

When the labor force participation rate of Athabasca increases, employment ____________

Increases. If the labor force participation rate of Athabasca increases, the supply of labor also inc which inc employment

_______ published The General Theory of​ Employment, Interest, and Money in​ _______.

John Maynard Keynes published The General Theory of​ Employment, Interest, and Money in 1936.

John Maynard Keynes theory was that​ _____

Keynes' theory was that depression and high unemployment occur when households​ don't spend enough on consumption goods and services and businesses​ don't spend enough investing in new capital. So too little private spending is the cause of depression​ (and recession)

Loanable funds are used to finance​ ______.

Loanable funds are used to finance business​ investment, a government budget​ deficit, and international investment or lending.

Loanable funds come from ​ ______.

Loanable funds come from private​ saving, a government budget​ surplus, and international borrowing.

According to​ Malthusians, _______.

Malthus is one of the economists closely associated with classical growth theory. Malthusians following the teaching of Malthus. Malthusians believe that if​ today's global population reaches 11 billion by​ 2200, we will return to a primitive standard of living

Which of the following plays a role in new growth​ theory?

New growth theory is the theory that our unlimited wants will lead us to ever greater productivity and perpetual economic growth. Two facts that play a key role in the new growth theory​ are: 1. Many people can use discoveries at the same time 2. Physical activities can be replicated.

Is economic freedom the same as​ democracy?

No. Economic freedom does not have to occur in a democracy Economic freedom is a condition in which people are able to make personal​ choices, their private property is​ protected, and they are free to buy and sell in markets.

Consider potential​ GDP, and then choose the statement that is correct.

Real GDP fluctuates around potential​ GDP, and on the average over the business​ cycle, real GDP equals potential GDP.

Much of Africa experiences slow economic growth because it lacks​ ______.

Some African countries experience slow economic growth because they lack the preconditions for economic​ growth: economic​ freedom, property​ rights, and markets. People in these countries have little incentive to specialize and trade or to accumulate physical or human capital.

Consider household​ saving, and then choose the correct statement.

The greater a​ household's wealth, other things remaining the​ same, the less it saves today.

The​ ______ growth theory best corresponds to the explanation given by Mr. Greenspan because Mr.​ Greenspan's explanation shows​ ______.

The new growth theory best corresponds to the explanation given by Mr. Greenspan. New growth theory sees the economy as a perpetual motion machine.

The preconditions for economic growth are​ ______.

The preconditions for economic growth are economic​ freedom, private property​ rights, and markets.

According to​ Keynes, _______.

Too little private spending is the cause of depression and recession. ​Keynes' theory was that depression and high unemployment occur when households​ don't spend enough on consumption goods and services and businesses​ don't spend enough investing in new capital.

Classical Macroeconomics

______ macroeconomics is the view that the market economy works​ well, that aggregate fluctuations are a natural consequence of an expanding​ economy, and that government intervention cannot improve the efficiency of the market economy

The interest rate on a financial asset​ ______.

a fall as the price of the asset rises Because the interest rate is a percentage of the price of an​ asset, if the asset price​ rises, other things remaining the​ same, the interest rate falls.

The amount of​ job-search unemployment increases when​ ______.

a prolonged structural slump occurs. Job search is the activity of looking for an acceptable job. A structural slump is a condition in which some industries and even regions contract while other industries and regions flourish. When these events​ occur, labor turnover is high and job search increases

Growth in physical capital depends most directly upon the

amount of saving and investment.

All of the following increase labor productivity except ​______.

an increase in consumption. An increase in consumption decreases saving and decreases investment in physical capital. The amount of capital per worker​ decreases, which decreases labor productivity

A reason for an increase in labor productivity growth is

an increase in peoples human capitol

Which of the following events increases the amount of​ job-rationing unemployment?

an increase in the efficiency wage rate. An increase in the efficiency wage rate increases​ job-rationing unemployment. Job rationing is a situation that arises when the real wage rate is above the​ full-employment equilibrium level. And an efficient wage is a real wage rate that is set above the​ full-employment equilibrium wage rate to induce greater work effor

Over​ time, ______.

both the demand for loanable funds and the supply of loanable funds trend​ upward, but the real interest rate has no trend

The U.S. saving rate increased from minus −0.1 percent in 2011 to 2.0 percent in 2012 to 2.4 percent in​ 2013, to 2.9 percent in​ 2014, and to 3.0 percent in 2015. A negative saving rate occurs if​ ______

consumption expenditure exceeds disposable income

Comparing the 1960s to the more recent​ decades, labor productivity growth​ _______ than in subsequent decades.

due to physical capital and human capital growth was greater in the 1960s

a negative saving rate might be something to worry about because​ ______. U.S. saving might be increased by​ ______

eventually households must repay their​ borrowing; decreasing taxes on interest income

According to classical growth​ theory, when real GDP per person​ ______, the population grows.

exceeds the subsistence level According to classical growth​ theory, when labor productivity rises and lifts real GDP per person above the subsistence​ level, which is the minimum real income needed to maintain​ life, a population explosion occurs.

Other things remaining the​ same, a country or region that adopts free international trade​ (for example, Hong​ Kong) has a faster economic growth rate than a country that restricts international trade​ (for example,​ Myanmar) because free international trade​ ______.

extracts all the available gains from specialization and trade

Classical macroeconomics​ _______.

fell into disrepute during the Great​ Depression, when many people believed the capitalism​, the political system of private​ ownership, free​ markets, and democratic political​ institutions, could not survive and began to advocate socialism​, a political system based on state ownership of capital and central economic planning.

Increases in human capital can come

from formal education and on-the-job learning

Canada can achieve faster economic growth by​ ______.

having labor markets that send messages to workers that create incentives to train in fields that are experiencing growth. Canada can achieve faster growth by having flexible labor markets. Flexible labor markets create incentives to workers that encourage them to train in fields that are experiencing growth

With low unemployment​ benefits, the opportunity cost of job search is​ ______, so a person is likely to​ ______.

high; accept a job that is found quickly The opportunity cost of job search influences the length of time that an unemployed person spends searching for a job. With low unemployment​ benefits, the opportunity cost of job search is​ high, and a person is likely to accept a job that is found quickly

U.S. labor market openings and hirings are​ _______ in August 2010 than in August 2009. Everything else remaining the​ same, if hiring picks​ up, employment​ _______.

higher; increase The news clip tells us that job openings increased 33 percent in the year ended August 2010 and that hirings increased 4 percent during the same period. When other things remain the​ same, the hiring of employees increases employment.

When the minimum wage rate is​ raised, firms will​ ______.

hire only those workers who can produce output is worth the value of the new minimum wage they will earn. Firms want to hire only those workers who can produce output that is worth the value of the new minimum wage. These workers will include workers with job experience but other might also be hired.

First​ Call, Inc. is a wireless service provider. First Call expects its profit to double next year. If other things remain the​ same, explain how this increase in expected profit influences First​ Call's demand for loanable funds. This increase increase in expected profit​ ______ the demand for loanable funds and brings​ ______ the demand for loanable funds curve.

increase; a rightward shift of

When the labor force participation rate of Athabasca increases​, potential GDP​ ______, and the real wage rate​ ______.

increase; decrease

Close to 100 percent of​ Canada's unemployed receive generous benefits compared to 38 percent in the United States. If the United States adopted the level of unemployment benefits that Canada​ has, we would expect the U.S. natural unemployment rate to​ ______ and U.S. potential GDP to​ ______.

increase; decrease Canadian unemployment benefits are available to all the unemployed. In the United States only 38 percent of the unemployed receive benefits. If the United States adopted the level of unemployment benefits that Canada​ has, we would expect U.S. job search to increase and the U.S. natural unemployment rate to increase. When the natural unemployment rate​ increases, the quantity of labor at full employment​ decreases, and potential GDP

The supply of loanable funds increases when disposable​ income______ or wealth​ ______.

increase; decreases

If hiring picks​ up, real GDP​ ________ and potential GDP​ ________.

increase; does not change When more people are​ working, real GDP increases. But potential GDP is the quantity of real GDP that the economy can produce when the labor market is at full employment. In​ 2010, the labor market was below full​ employment, so the real GDP produced was less than potential GDP. The increased employment changed real GDP but not potential GDP.

The natural unemployment rate​ _______.

increases if unemployment benefits become more generous. If unemployment benefits become more​ generous, people are likely to spend more time searching for the ideal job. Unemployment as a result of job search​ increases, and the natural unemployment rate rises

Sustained increases in real GDP per person depend on

increases in labor productivity

A government budget surplus​ _______.

increases the supply of loanable funds The government enters the loanable funds market when it has a budget surplus. A government budget surplus increases the supply of loanable funds

An increasing number of Chinese citizens who are educated in the United States are returning to China to work. This development​ ______ economic growth in China because​ ______.

increases; it increases human capital When Chinese citizens are educated in the United​ States, it increases their human capital. So human capital in China increases when the student returns to China. And an increase in the growth rate of human capital increases economic growth.

Economic freedom is crucial for achieving economic growth because​ ______.

it allows people to make choices and gives the incentive to​ save, invest, expand human​ capital, and discover and apply new technologies Economic freedom encourages​ saving, encourages research and​ development, encourages international​ trade, and encourages the improvement of the quality of education. Economic freedom allows people to make choices and gives them the incentives to pursue​ growth-producing activities.

If the stock of physical capital​ (that is​ machinery, equipment,​ etc.) and human capital remain the same and the population​ increases, then

labor productivity will decrease

An increase in disposable​ income, other things remaining the​ same, ______ the equilibrium real interest rate and​ ______ the equilibrium quantity of loanable funds.

lower; increaes

A government budget surplus​ ______ the real interest rate and​ ______ investment.

lowers; increases

Keynesian

macroeconomics is the view that the market economy is inherently unstable and needs active government intervention to achieve full employment and sustained economic growth

According to classical​ macroeconomics, ______.

no remedy by government can improve on the performance of the market. Classical macroeconomics is the view that the market economy works​ well, that aggregate fluctuations are a natural consequence of an expanding​ economy, and that government intervention cannot improve the efficiency of the market economy.

According to new growth​ theory, ______.

our unlimited wants will lead us to ever greater productivity and perpetual economic growth. Real GDP per person grows because of the choices people make in the pursuit of profit.

If governments in Africa​ _______ they will encourage economic growth and raise the standard of living.

protect private property Economic freedom is a fundamental precondition for creating the incentives that lead to economic growth.

An increase in expected​ profit, other things remaining the​ same, ______ the equilibrium real interest rate and​ ______ the equilibrium quantity of loanable funds.

raises; increases An increase in expected​ profit, other things remaining the​ same, increases the demand for loanable funds. The demand curve for loanable funds shifts rightward. The equilibrium real interest rate rises and the equilibrium quantity of loanable funds increases.

Government controls that if removed might spur​ India's growth rate to a sustained 10 percent a year include​ ______.

regulation that decreases foreign investment

Labor productivity growth depends on

saving and investment increases in human capital technological growth

in the year to April​ 2016, the U.S. budget deficit increased to​ $511 billion, up from​ $460 billion a year earlier. ​Source: The Wall Street Journal​, May​ 11, 2016 Explain the effect of a large federal deficit and debt on economic growth. A large federal deficit​ _______.

slows the growth of capital stock and labor​ productivity, and slows real GDP growth

The three types of financial markets are​ ______.

stock​ markets, bond​ markets, and loans markets

Property rights encourage economic growth by​ ______.

strengthening the incentive to​ work, save,​ invest, and accumulate human capital Property rights encourage economic growth because when clearly established and​ enforced, they provide people with the incentive to​ work, save,​ invest, and accumulate human capital. Property rights are the social arrangements that govern the protection of private property.

When unemployment benefits​ increase, the​ ______.

supply of labor decreases, and potential GDP decreases as a movement occurs down along the production function. Unemployment benefits lower the cost of searching for a job and encourage unemployed workers to take longer to find the best job available. The result is a decrease in the supply of labor. When the supply of labor​ decreases, the​ full-employment quantity of labor decreases and a movement occurs down along the production function. Potential GDP decreases.

Job rationing creates a​ ______.

surplus of labor. Job rationing is a situation that arises when the real wage rate is above the​ full-employment equilibrium level. When the real wage rate is above the​ full-employment equilibrium​ level, the quantity of labor supplied exceeds the quantity of labor demanded.

Financial capital is​ _______.

the funds used to buy physical capital

Crowding out occurs when​ _______.

the government budget is in deficit and the real interest rate rises. The increase in the real interest rate crowds out investment.

The U.S. saving rate increased from minus −0.1 percent in 2011 to 2.0 percent in 2012 to 2.4 percent in​ 2013, to 2.9 percent in​ 2014, and to 3.0 percent in 2015. The U.S. saving rate might have increased because​ ______. The increase in the saving rate will​ ______ the supply of loanable funds

the stock market crash and financial market turmoil decreased wealth and expected future​ income; increase

Markets are a necessary precondition for economic growth because​ ______.

they create incentive to save and invest Economic freedom requires free markets. Buyers and sellers get information and do business with each other in markets. And market prices send signals to buyers and sellers that create incentives to increase or decrease the quantities demanded and supplied.

High taxes might hold back economic growth because​ ______. U.S. tax laws that​ ______ would encourage faster economic growth.

they discourage​ saving; lower tax rates on​ firms' profits Taxes on saving discourage saving. Saving finances​ investment, which brings capital accumulation and economic growth. So a high tax on saving can hold back economic growth. A lower tax rate on​ firms' profits would give firms incentives to invest in new capital and develop new​ technology, both of which would spur economic growth

The time spent on job search falls when​ ______

unemployment benefits decreases. The time spent on job search falls when unemployment benefits decrease because the opportunity cost of job search influences the length of time that an unemployed person spends searching for a job. With low unemployment​ benefits, the opportunity cost of job search is high and a person is likely to accept a job that is found quickly

U.S. potential GDP is the value of the goods and services produced in the United States​ _______.

when the U.S economy is a full employment Potential GDP is the value of real GDP produced when all the​ economy's factors of production long dash —​labor, ​capital, land, and entrepreneurial ability long dash —are fully employed

The Chinese government​ ______ be wise to adopt policies that encourage more Chinese students to return to China when they have completed their studies because​ ______.

would; China would benefit from the increase in human​ capital, which could lead to more research and development and greater economic growth The Chinese government would be wise to adopt policies that encourage more Chinese students to return to China when they have completed their studies because these students will bring with them human​ capital, which can be used in research and development. And an increase in human​ capital, research, and development leads to economic growth.

A decrease in wealth will​ ______ the supply of loanable funds and​ ______.

​increase; and shift the supply of loanable funds curve rightward in wealth will increase the supply of loanable funds. When the supply of loanable funds​ increases, the supply of loanable funds curve shifts rightwar

An increase in disposable income will​ ______ the supply of loanable funds and the adoption of new technology will​ ______ the demand for loanable funds. The equilibrium real interest rate​ ______

​increase; increase; might​ rise, fall, or stay the same

What were the sources of labor productivity growth in the U.S. economy during the fifty years since​ 1960? How did the 1960s differ from the more recent​ decades? During the fifty years since​ 1960, the sources of labor productivity growth include​ ______

​plastics, the​ laser, and the computer during the 1960s During the​ 1960s, plastics, the​ laser, and the computer were among the technological advances that brought extraordinary labor productivity growth.

A government budget deficit ​ ______ the real interest rate and​ ______ investment.

​raises; crowds out A government budget deficit increases the demand for loanable funds. The demand for loanable funds curve shifts rightward. The real interest rate rises and investment decreases.