AP Macroeconomics Reading Module 39

One of the most important types of infrastructure that government can provide is

basic health measures such as a clean water supply and disease control.

A negative externality

is a cost that individuals or firms impose on others without having to offer compensation.

Economists mostly agree that the problem of climate change should involve government action in the form of market-based incentives such as

a carbon tax or a cap and trade system.

Greenhouse gas emission is an example of

a negative externality.

Economies with higher growth rates tend to be those that have

a stable government that protects property rights.

When the government invests in building roads, ports, and a reliable power grid, the government is investing in a nation's _____.

infrastructure

An action that would hinder growth would be

the lack of government oversight for property rights.

Long-run economic growth is

higher in countries when it has a strong rule of law and political stability.

When the government invests resources in a nation's educational system, the government is said to be investing in

human capital.

Long-run economic growth will be sustainable

if it can continue in spite of the limited supply of natural resources and the impact of growth on environment.

Roads, telephone lines, power facilities, and schools are examples of a nation's

infrastructure

The biggest global environment issue is

the impact of fossil-fuel consumption on the world's climate.

Use the 'Technological Progress and Productivity Growth' Figure 39-1. Which of the following moves would have been most likely to result from an increase in domestic savings? http://econ.site44.com/aall/macro/all_M/f39-1.png

A to B

Use the 'Technological Progress and Productivity Growth' Figure 39-1. Which of the following moves would be most likely to result over time from excessive government intervention that results in a decline in property rights? http://econ.site44.com/aall/macro/all_M/f39-1.png

C to B

The idea that relatively poor nations should have higher rates of growth of real GDP per capita than relatively rich nations is known as the _____.

convergence hypothesis

Economists believe that the best way to stimulate investment in physical capital is to encourage

higher rates of national savings.

If there is an increase in physical capital per worker (all other factors remaining unchanged., then this is best indicated by a move from http://econ.site44.com/aall/macro/all_M/f38-2.png

A to B.

Use the 'Technological Progress and Productivity Growth' Figure 39-1. Which of the following moves would be most likely to result from an increase in the quality (as well as quantity) of government spending on education? http://econ.site44.com/aall/macro/all_M/f39-1.png

B to C

Use the 'Technological Progress and Productivity Growth' Figure 39-1. Which of the following moves would be most likely to result from an increase in the quality (as well as quantity) of public health measures? http://econ.site44.com/aall/macro/all_M/f39-1.png

B to C

Use the 'Technological Progress and Productivity Growth' Figure 39-1. Which of the following moves could have resulted from an increase in foreign investment spending? http://econ.site44.com/aall/macro/all_M/f39-1.png

both A to B and B to C

The convergence hypothesis says that

differences in real GDP per capita among countries tend to narrow over time.

As a limit to economic growth, environmental problems are more difficult to solve than resource problems because

environmental problems don't automatically provide incentives for changed behavior.

Long-run growth is sustainable if

it can continue in the face of limited natural resources and the impact of growth on the environment.

The convergence hypothesis says that international differences in GDP per capita tend to

narrow over time.

Many economists agree that environmental damage from economic growth

occurs, but can be contained with market-based incentives and concerted government action.

Among the public goods important for economic growth are

political stability.

Technological progress is advanced through

research and development

An example of infrastructure is/are

the water supply system