Macro econ ch 27

If the US per capita GDP is $50,000 and grows at 5% per year, what will the US per capita GDP be in 70 years?

$1.6 million

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

$200,000

If US per capita GDP is $50,000 and grows 3% per year, what will the per capita GDP be in 70 years?

$400,000

If a country's real GDP per capita in 1950 was $10,000, and it grew to $20,000 by year 2000, then the country's annual growth rate during this period would have been approximately:

1.4%

If you received a constant annual rate of return of 7% on an investment of $10,000, how many years will it take before you have $200,000?

10 years

If the average annual growth rate of a country increases from 2% to 3% how much faster will its GDP double?

11 2/3 years faster

Suppose a country's annual growth rate of real GDP per capita is approximately 2%. By which year would the country double its real GDP per capita from $10,000 in 1950 to $20,000?

1985

If real GDP per capita in the United States is currently $50,000 and grows at 2.5% per year, it will take approximately how many years to reach $200,000?

56 years

Suppose economies A and B have the same initial level of GDP per capita at $15,000, and each economy begins with a constant growth rate of 1% per year. (Neither country has good institutions for economic growth at first.) Then Country A enters an era of political stability, establishes property rights, and installs incentives for entrepreneurship. Country A's economic growth rate consequently improves to 5%. Assuming population growth rates remain unaffected, how much longer will it take Country B to double its per capita GDP level compared to Country A?

56 years

Suppose a country's real GDP per capita was $9,000 in 1990, and it grew to $18,000 by 2000. What is the annual growth rate of the country's real GDP per capita during this period?

7%

Roughly what percent of the world's population live in the countries with per capita GDP lower than the average world per capita GDP?

80%

Which statement is true about economic growth?

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

If the GDP of country X is 4 times the GDP of country X remains constant while the GDP of country Y grows at a rate of 7% per year, which of the following statements is true?

Country Y's GDP will be equal to country X's GDP in 20 years.

Which statement best describes the economic growth patterns in the world since World War II?

Japan and South Korea experienced rapid growth while Argentina and Nigeria experienced slow growth.

Why did so many farmers and workers starve under "The Great Leap Forward'?

The incentive to work hard was low since the rewards were so minimal.

Which scenario has the greatest potential for free riding?

a system in which work effort and pay are not connected

Which of the following would be most effective in reducing "free riding" in a communal farming system?

assigning property rights

Around the world, about one _____ people have incomes of less than $2 per day.

billion

The most promising idea for creating a gross miracle in a country is:

changing the institutions in the country.

Which is NOT likely a cause of economic growth among countries around the world?

communal resources

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

decrease per capita GDP.

Which of the following is an ultimate cause of economic growth among countries around the world?

geography

Countries that have high per capita GDP tend to have:

high levels of all three levels of production.

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

increasing technological knowledge

High-income economies generally have _____ that incentivize individuals' self interest by using _______.

institutions; profit-seeking motives.

Which of the following is(are) NOT an institution of economic growth?

labor unions

Which is NOT an example of an institution that creates incentives aligning self-interest with the interest of society?

low inflation

Which is NOT an example of physical capital?

money

Property rights are important institutions for encouraging investment because:

people won't invest if they feel their property is at risk and that they may not realize a return on their investment.

Which is considered an immediate cause of economic growth?

physical capital

For most of recorded human history, real GDP per capita has:

remained about the same

Property rights encourage:

saving and investment in both physical and human capital.

A country that has enforceable property rights, a noncorrupt political system, abundant factors of production, and a change in leadership and form of government every few years should suspect that economic growth will be ____ because of _____.

slow; of uncertainty due to an unstable political system.

Which is NOT an important institution of growth?

strong regulation of religious belief.

Which are immediate causes of wealth of nations?

technical knowledge and human capital

A developing country could buy (or be given) _____ and _____ more easily than_____.

technological knowledge; physical capital; human capital

The key reason for China's growth miracle beginning in the 1970s was:

the assignment of private property rights

When an economic system changes from using a collective property rights system to something closer to private property rights, the immediate effect is:

to increase investment, work effort, and productivity.

Institutions and incentives are _____ causes, and factors of production are ______ causes of the wealth of nations.

ultimate; immediate

History has shown that when collective property rights are converted to private property rights:

work effort, investment, and productivity all increase.