PrQ27: Practice Quiz - Ch. 27: The Wealth of Nations and Economic Growth

Every year, 1.8 million children in poor countries die of diarrhea. What is most effective in preventing these deaths?

economic growth

Countries that have high per capita GDP tend to have:

high levels of human capital per worker. high levels of physical capital per worker. high levels of technology per worker. high levels of all three factors of production. Answer: high levels of all three factors of production.

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

human capital.

Increases in the level of political stability in a country tend to:

increase per capita GDP.

Which is considered an ultimate cause of economic growth?

institutions

India could be four times richer than it is today if it were to:

make its markets open and competitive.

A legal system that helps raise a nation's productivity is one that:

makes it easy for people to engage in contracts and to establish property rights.

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

per capita real GDP of a country.

A tractor is an example of:

physical capital.

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

raise people's incentives to build wealth.

Between 1978 and 1983, food production in China rose by 50% and 170 million people rose above the international poverty line. This occurred because of the:

return to private property rights in farming.

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 do.

Which are immediate causes of the wealth of nations?

technical knowledge and human capital

Figure: The Distribution of World Income Based on the data in the figure, living standards in the United States are about how many times higher than the world average?

3

Which statement is TRUE about economic growth?

A country can grow and become wealthy, never grow, or grow and then begin to stagnate.

Two countries that may be considered examples of growth miracles are:

South Korea and Japan.

Why does South Korea have a higher level of real GDP per capita than North Korea?

South Korea has a better system of incentives than North Korea.

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

There are few entrepreneurs.

Table: Growth Rates and Real GDP per Capita Country A Country B Country C Country D Real GDP per capita $5,000 $10,000 $15,000 $20,000 Economic growth rate 7% 6% 3% 2% Which country will reach a real GDP per capita of $80,000 the most quickly if the growth rates in the table are maintained?

country B

For most of recorded history, economic growth has been:

virtually nonexistent.