LC27: LearningCurve - Ch. 27: The Wealth of Nations and Economic Growth
According to the rule of 70, if GDP per capita grows at an annual rate of 4%, then it will double in approximately _____ years.
17.5 Reason: 70 ÷ 4 = 17.5.
If the growth rate of real GDP in the United States is 3%, how many years will it take to double?
approximately 23 years Reason: The rule of 70 states that if the annual growth rate of a variable is x%, then the doubling time is (70 ÷ x) years, so (70 ÷ 3) equals 23.33 years.
If per capita GDP is $1,000 and government officials want to increase it to $8,000 within 21 years, at what approximate rate does it have to grow?
10% Reason: Getting from $1,000 to $8,000 requires doubling three times. To do this in 21 years, it must double every 7 years. 70 ÷ x = 7 gives x = 10%.
According to the rule of 70, if GDP per capita grows at an annual rate of _____, then it will double in approximately 17.5 years.
4% Reason: 70 ÷ 4 = 17.5.
According to the rule of 70, if GDP per capita grows at an annual rate of 10%, then it will double in approximately _____ years.
7 Reason: 70 ÷ 10 = 7.
Which of the following statements is (are) TRUE? I. For most of human history, people were rich and there was economic growth. II. Japan is an example of a growth miracle. III. Despite being a relatively recent phenomenon, economic growth has quickly transformed the world.
II and III only Reason: Economic growth is a relatively recent phenomenon, and Japan is listed as an example of a growth miracle.
Which of the following statements is (are) TRUE? I. The rule of 70 states that if the annual growth rate of GDP per capita is x%, it will take (70 ÷ x) years for it to triple. II. For most of recorded human history, there was no long-run growth in real per capita GDP. III. Economic growth refers to the growth rate of nominal per capita GDP.
II only Reason: For most of recorded human history, there was no long-run growth in real per capita GDP.
Which of the following statements demonstrates the importance of competitive and open markets as an institution to promote economic growth?
If India used the human and physical capital that it has as efficiently as the United States uses its capital, it would be four times richer than it is today.
Imagine that a nation has imported a large quantity of combines and tractors to use in its farming industry. What impact would this have on economic growth?
There would be an increase in economic growth as the physical capital has increased, which would lead to greater productivity.
The advantages of large-scale production that reduce average cost as quantity increases are defined as:
economies of scale.
One study estimates that if India used the human and physical capital that it has as efficiently as the United States uses its capital, it would be four times richer than it is today. This demonstrates the importance of competitive and open _____ as an institution.
markets
