Economic Growth *** Chapter 7

Institutions of Economic Growth

Property rights Honest government Political stability A dependable legal system Competitive and open markets

A country increases its technological knowledge by engaging in:

R&D

When industries are limited by the size of the domestic market, opening trade to the world markets will likely lead to _____ and _____ real GDP per capita in the domestic country.

economies of scale; increase

physical capital

economists mean tools in the broadest sense: pencils, desks, computers, hammers, shovels, tractors, cell phones, factories, roads, and bridges. More and better tools make workers more productive.

A business that pays for its workers to attend a technical college is increasing its:

human capital.

Which would be most effective in ensuring sustained long-term economic growth?

increasing technological knowledge

Which of the following defines the "rules of the game" that structure economic incentives?

institutions

The United States and Western European countries began to experience accelerated economic growth during which century?

nineteenth

When economists speak of "long-run economic growth," they mean increasing the:

per capita real GDP of a country.

One measure of student output is number of completed math problems produced. Using pen and paper only, a student can complete 50 math problems in 2 hours. Using pen, paper, and a calculator, the same student can complete 100 math problems in 2 hours. (The student is already familiar with, and knows how to use, the calculator.) This scenario illustrates the use of which factor of production?

physical capital

Factors of production that contribute to growth in per capita GDP include:

physical capital, skilled labor, and technological know-how.

Which of the following has the greatest potential for solving free-rider problems?

property rights

The main reason for the influence of institutions on the wealth of nations is that good institutions:

raise people's incentives to build wealth.

One of the best explanations for why some countries are rich and others are poor is that:

rich countries organize their factors of production more efficiently than poor countries.

Over the past 200 years, economic growth in the United States has been:

slow and consistent.

Rule of 70

70/% = numb. of yrs it would take to 2x

If U.S. per capita GDP is $50,000 and grows at 2% per year, what will U.S. per capita GDP be in 70 years?

$200,000

If real GDP per capita in a country was $14,000 in year 1 and $14,140 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

1%

Technological capital

Ability to interact with and transform the world--scientific know-how etc.

Human Capital

Brain power etc.

Which statement best describes the cross-country evidence on the relationship between a nation's GDP per capita and standard measures of societal well-being?

GDP per capita is positively related to measures of societal well-being.

What is a result of a high level of government corruption?

There are few entrepreneurs.

Which is NOT an institution that leads to sustained long-term economic growth?

a more equal income distribution

For most of recorded human history, long-run economic growth was:

almost nonexistent.

Wealthier nations tend to have:

better educational opportunities.