CH 6

Which of the following factors contribute to economic growth?

. an increase in the proportion of the population that is college educated

A country will roughly double its GDP in twenty years if its annual growth rate is:

3.5%

Assuming a country's economy maintains an 8% rate of growth; young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________

30

Increased investment alone will guarantee economic growth. A. This is a true statement, because growth occurs only with savings. B. This is a true statement, because money is the only resource needed for growth. C. This is a false statement, because an economy must rely on capital injections from abroad. D. This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

D

Investment in human capital: A. is of minor importance to economic growth. B. can be acquired through on-the-job training. C. is an important source of economic growth. D. is characterized by both b) and c).

D

A nation's prosperity is sometimes measured in terms of ___________.

GDP per capita

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

GDP per capita

Which of the following is correct? A. An increase in the quantity of labor always leads to economic growth. B. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. C. A decrease in the productivity of labor leads to economic growth. D. Third World countries are rich in human capital

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

___________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

The Industrial Revolution

Technological Change

a combination of invention and innovation

In macroeconomics, the connection from inputs to outputs for the entire economy is called ____________.

an aggregate production function

Capital Deepening

an increase by society in the average level of physical and/or human capital per person.

When society has a higher level of capital per person, it is called ______________.

capital deepening

Which of the government policies below is most unlikely to encourage per capita economic growth?

high taxes on companies that spend a lot on capital formation

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

Country Alpha and Country Beta initially have the same real GDP per capita. Country Alpha experiences no economic growth, while Country Beta grows at a sustained rate of 5 percent. In 14 years, Country Alpha's GDP will be approximately _________ that of Country Beta.

one-half

Convergence

pattern in which economies with low per capita incomes grow faster than economies with high per capita incomes

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy.

productivity

The value of what is produced per worker, or per hour worked, is called ____________

productivity

To achieve a high standard of living, a nation should:

promote economic growth

Economists typically measure economic growth by tracking:

real GDP per capita.

Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.

technology

Human Capital

the accumulated skills and education of workers.

Which of the following is unlikely to affect the rate of economic growth?

the level of government spending

Modern Economic Growth

the period of rapid economic growth from 1870 onward.

Physical Capital

the plant and equipment used by firms in production; this includes infrastructure.

Rule of Law

the process of enacting laws that protect individual and entity rights to use their property as they see fit. Laws must be clear, public, fair, and enforced, and applicable to all members of society

Production Function

the process whereby a firm turns economic inputs like labor, machinery, and raw materials into outputs like goods and services used by consumers.

Aggregate Production Function

the process whereby an economy as a whole turns economic inputs such as human capital, physical capital, and technology into output measured as GDP per capita.

Contractual Rights

the rights of individuals to enter into agreements with others regarding the use of their property providing recourse through the legal system in the event of noncompliance.

Labor Productivity

the value of what is produced per worker, or per hour worked (sometimes called worker productivity).