Chapter 8: Economic Growth
which of the following is a public investment in infrastructure?
a city builds a new water plant
if the capital stock _________ and the quantity of labor decreases, labor productivity will probably _________.
remains fixed; increase
the expansion of total output relative to population results in _____ real wages and income and _________ standards of living
rising; higher
the number of years for a variable to double equals 70 divided by its annual growth rate is called the:
rule of 70
__________ advancement and capital investment are related because both promote further economic investment in new machinery and equipment
technological
conveyer belts, personal computers, wireless communication and containerized shipping are all example of:
technological advance
which of the following five factors of productivity growth helps to promote the development of new forms of business organization?
technological advance
under the rule of 70, if the GDP per capita growth rate in the US in 2.3%,standards of living double every:
70/2.3=30.43 years
using the rule of 70, how may years would it take for a person's income to double if he/she were to experience a 2% increase in income each year
70/2= 35
select the statements that summarize how firms can increase productivity using economies of scale.
- as firms expand their size and output, they can use more productive equipment - as firms expand their size and output they are better able to recoup investments in new production methods and products - as firms expand their size and output they can employ more productive methods of delivery
Which of the following are used by economists to define and measure economic growth?
-an increase in real GDP per capita occurring over some time period -an increase in real GDP occurring over some time period
two ways in which the rule of 70 may be applicable are:
-estimating how long it will take the price level to double at various percentage rates of inflation. -estimating how tong it will take savings accounts to double various interest rates.
select the statements that describe the effect of liberalized international trade.
-improved allocation of resources -increased labor productivity -expanded real output
what are the three reasons real GDP per capita does not fully account for the growth of an economy
-it does not account for improved products and services it does not account for added leisure time -it does not measure the effects of the environment
growth is an important economic goal because:
-it increases standards of living -it increases a society's ability to resolve socioeconomic problem -it increases real wages and incomes
which of the following statements summarizes how the social-cultural-political environment of the US has encouraged economic growth?
-no social or moral taboos on production -wealth creation is accepted as a desirable goal -positive attitude toward risk taking -stable political system -economic and political freedom -positive attitude toward work
which of the following are growth-promoting institutional structures
-strong property rights -patents and copyrights -efficient financial institutions -literacy and widespread education -free trade -a competitive market system
select some examples of infrastructure
-water supply system -roads and bridges
suppose the annual growth rate of GDP in the US is 4%. the GDP in the US will double in
17.5 years
economic growth is calculated as:
a percentage rate of growth per quarter or per year
today's poor countries can catch up or even pass today's rich leader countries by:
adopting existing technology from rich leader countries
When an economy uses its resources to maximize people's well-being by producing a specific mix of goods and services, it is called __________ efficiency
allocative
economic growth lessen the burden of scarcity by:
allowing more current consumption while also increasing the capacity to produce more in the future
an important source of increasing labor productivity is _______.
an increase in the ratio of capital to labor
real economic growth can be misleading when _____________
annual population growth exceeds that of real GDP
the five factors that, together appear to explain changes in productivity growth rate are technological advance, quantity of ___________ per worker, education and training, economies of scale, and ____________ allocation.
capital; resource
increased private investment in infrastructure would:
cause an increase in economic growth
modern economic growth has significantly increased the standard of living as well as __________, social, and political arrangements
cultural
the purchase of the economy's expanding goods and services by households, businesses, and the government is known as the _________ factor
demand
reduction in per-unit production costs that result from increases in output levels are called
economies of scale
the two types on investment in human capital are on-the-job training and formal ____________
education
one measure of the nation's quality of labor is
educational attainment
when compounded over many years, an apparently small difference in the rate of growth become:
highly significant
which of the following factors of productivity growth account for workers moving over time from low-productivity to high-productivity employment?
improved resource allocation
a nation's economic growth from one year to the next depends on its:
increase in labor inputs and increase in labor productivity
the growth of real GDP is a useful measure for the expansion of ______ preeminence while the real GDP per capita is a useful measure for _______ standards
political; living
increases in capital are important to productivity growth because:
increases in the quantity and quality of capital make workers more productive
Which of the following statements is true?
investment in both private and public capital is conducive to economic growth and higher productivity
human capital refers to :
investments in education and training
generally, technological advance is generated by the discovery of new ________, which allows _________ to be combined in improved ways to increase output
knowledge; resources
a decline in the discrimination against women and minorities has resulted in:
more women and minorities in higher-productivity jobs
When an economy uses its resources in the least costly way to produce goods and services. It is called:
productive efficiency
Real GDP divided by the size of population is called:
real GDP per capita
which of the following statements best summarizes the real economic growth per capita in the US between 1950 and 2015
real GDP per capita rose more than threefold
which of the following statements best summarizes the growth in real GDP in the US between 1950 and 2015?
real GDP rose more than sevenfold
economic growth will ________ the burden of scarcity
reduce
economists pay attention to small changes in economic growth because small changes in economic growth can make a big difference in the living ____________ of a country
standards
human capital refers to:
the improvement in labor created by education and knowledge that is embodied in the work force
bestowing onto inventors and innovators a high level of prestige and respect in society will encourage ___________
wealth creation
the supply factors that are apart of the "determinants" of economic growth include increasing the quality and quantity of natural and human resources, increasing the stock of capital, and improvements in _____________
technology
true or false: countries that experienced economic growth earlier than other countries, have lower average incomes today
false
true or false: countries that experienced growth more recently will never be able to escape poverty
false
the method used to identify the contribution to economic growth from increased capital, labor, and technological progress is known as:
growth accounting
which of the following is not an investment is human capital?
local company replaces its clerks's typewrites with PC
ideally, a nation acquires funds for investment spending on plant and equipment by ________ income
saving
one way that the government can encourage long-term economic growth is by encouraging:
savings and investment
when households, businesses, and the government purchase the economy's expanding output, resources remain fully employed and there are no:
unplanned increases in inventory
Americans' positive attitude toward ________ and risk taking results in a supply of willing workers and innovation entrepreneurs.
work
workers today are more productive than workers in the past because:
workers now have more physical capital embodying better technology with witch to work