Macro HW 11
The "new growth theory" focuses on the sources of technological change.
True
All of the following are indicators of a nation's standard of living
infant mortality rate life expectancy literacy rate
Roads, telephone lines, power facilities, and schools are examples of a nation's
infrastructure
Economic growth is an exponential process. what does this mean?
it means that small differences in sustained growth rates have significant effects on a nation's real income over long periods of time
All else constant, if a nation's potential output doubles in 36 years, its average annual growth rate is
approximately 2%
A sustained, long-term slow down in economic growth is called
secular stagnation
Data from most industrialized countries show that countries with high investment rates (as a percentage of GDP) tend to be countries
with high rates of economic growth
Which of the following is a flaw in Malthus' population theory?
His belief that any increase in income would boost population growth failed to take into account the fact that higher incomes increase this opportunity cost and therefore reduces the number of children people want
In 1798, An Essay on the Principle of Population was written by
Thomas Malthus
Economic growth occurs when
a nation's capacity to produce increases.
The determinants of economic growth include all of the following except
growth in money supply
If the rate of growth of output is 10% and the rate of growth of per capita real GDP is 6%, what is the rate of growth of population?
4
For economic growth to take place, we must consume more and save less.
False
During the industrial revolution, the United States saw increases in the demand for labor and increases in the supply of labor. The increase in real wages rose during this period is consistent with which of the following statements?
The rightward shift in the labor demand curve was greater than the rightward shift of the labor supply curve.
A VAT tax is said to encourage savings over consumption
True
In his An Essay on Population Growth, Thomas Malthus argued that population would increase at a geometric rate and the food supply at an arithmetic rate and that this disharmony would lead to forced return to subsistence-level conditions.
True
Increases in human capital will promote economic growth.
True
Market economies with legal systems that provide for the reliable protection of property rights and enforcement of contracts tend to promote economic growth.
True
When calculating the factors which have led to economic growth over the last century, technological change is calculated as:
a residual, inferrer as the leftover growth after accounting for the contributions of other factors
A curve that relates an economy's total output to the total amount of labor employed, holding all other determinants of output constant, is called
an aggregate production function
Which of the following statements concerning saving is true?
an increase in the rate of saving decreases gross domestic income by reducing current consumption but increases current and future gross domestic income through investment in capital goods.
The idea that economic growth often occurs due to the development of new industries and the elimination of older inefficient ones is referred to as
creative destruction
Towards the end of the twentieth century, some of the world's more affluent countries experience robust growth while others experienced growth slowdown or even stagnation. Which of the following is a reason for the divergent growth trend?
disparities in the rate of accumulation of human capital disparities in the employment rate differences in macroeconomics policymaking that allow producers to take a long-term view
Diminishing marginal returns occurs when
each additional unit of a variable factor adds less to total output than the previous unit, given constant quantities of other factors
Which of the following factors contribute to economic growth?
growth in physical capital an increase in the availability of natural resources an increase in the productivity of labor
The theory of economic growth focuses on the
growth of potential output over the long run, not on fluctuations in the level of economic activity in the short run.
Over the past century, the average household income in the United States
has increases in real terms
All of the following are sources of economic growth
increases in human capital an increase in the savings rate increases in physical capital
What is the fundamental argument in Malthus' An Essay on the Principle of Population?
population would increase at a geometric rate and the food supply at an arithmetic rate and that this disharmony would lead to forced return to subsistence-level conditions.
Economic growth is best measured by the increase in
potential output
Which of the following is not likely important in increasing long-run economic growth?
reduction in inequality
Investment in human capital
shifts the aggregate production function upward
A factor critical to economic growth is
technological change that increases labor productivity
What is the opportunity cost of allocating more and more resources to the production of capital goods?
the amount of consumption goods that could have been produced
Which of the following is prerequisite of successful market economies?
the existence and enforcement of property rights
In the long run, economic growth will lead to
the opportunity to produce more consumer goods the opportunity to produce more capital goods a higher material standard of living
Holding all else constant, a country's standard of living will rise if its
the rate of population growth is less than the rate of growth of real GDP
Which of the following is a cost of economic growth?
the sacrifice of current consumption
An increase in the capital stock would shift the production _____ and the long-run aggregate supply curve to the ______.
upward; right
The Malthusian population theory
was eventually dismissed for its pessimism and failure to take into account technological advances in agriculture and food production