Macroeconomics Module 19

An example of infrastructure is: A) New York City's public transportation system. B) corporate bonds. C) private equity firms. D) the water supply system, government bonds and corporate stock.

A) New York City's public transportation system

An example of a public good that encourages economic growth is public health services, such as vaccinations. A) True B) False

A) True

Most of the rapidly growing Asian nations, though poor, have increased their productivity by providing a very good basic education for their citizens. A) True B) False

A) True

Research and development is what we call spending to create and implement new technologies. A) True B) False

A) True

Factors contributing to differences in countries' growth rates include all EXCEPT: A) adherence to the rule of 70. B) differences in savings and investment rates. C) the amount of physical capital available. D) a lack of spending on infrastructure.

A) adherence to the rule of 70

The convergence hypothesis says that international differences in GDP per capita tend to: A) narrow over time. B) expand over time. C) remain steady over time. D) narrow and then expand over time.

A) narrow over time

Among the factors that are important for economic growth are: A) property rights. B) growth accounting. C) natural resources. D) convergence.

A) property rights

Suppose that South Korea is growing at 7% per year and is producing real GDP per capita of about $28,000, while Norway is growing at 3.5% per year and is producing real GDP per capita equal to $56,000. If all else stays equal, the real GDP per capita for these two countries will converge in: A) 40 years. B) 20 years. C) 10 years. D)4 years.

B) 20 years

The convergence hypothesis says that international differences in real GDP per capita tend to become greater over time. A) True B) False

B) False

To encourage an increase in economic growth rates, governments should increase regulation of the economy. A) True B) False

B) False

Investment spending: A) must be paid for by the consumption of domestic households. B) comes from either the savings from domestic households or the savings of foreign households. C) is paid for by capital outflows. D) must be paid for by government spending.

B) comes from either the savings from domestic households or the savings of foreign households

Conditional convergence suggests that poorer: A) countries are still catching up to richer countries. B) countries' GDP may not catch up to those of richer countries without changes in education and infrastructure. C) countries' growth rates are conditional on their ties to a richer country. D) countries' growth rates are conditional on their birth rates.

B) countries GDP may not catch up to those of richer countries without changes in education and infrastructure

When the government invests resources in a nation's educational system, the government is said to be investing in: A) private property. B) human capital. C) political stability. D) infrastructure.

B) human capital

Which is one reason for Latin America's lack of economic growth since 1920? A) The governments spent too much money on education. B) Latin American industries could not compete with all of the imported products. C) Savings and investment spending have been low because government policies have led to inflation, bank failures, and other disruptions. D) Latin America has very few natural resources.

C) Savings and investment spending have been low because government policies have led to inflation, bank failures, and other disruptions.

Which factor does NOT necessarily have to exist for convergence to occur between two countries? A) equal access to education B) equal access to infrastructure C) a common language between the two countries D) similar policies and institutions

C) a common language between the two countries

Which contributes to economic development? A) low saving and investment rates B) a command socialist economic system C) investment in infrastructure D)complete absence of government involvement

C) investment in infrastructure

Sweden has a real GDP per capita of $50,000, while Chile has a real GDP per capita of $250,000. If real GDP per capita in Sweden grows at a 2% rate and Chile's real GDP per capita grows at a 4% rate, how long will it take for real GDP per capita in the twonations to converge?A) 10 years B) 20 years C) 25 years D) 35 years

D) 35 years

Since 1975, East Asia's annual rate of GDP per capital growth has been A) 2%. B) 3%. C) 5%. D) 6%.

D) 6%

The convergence hypothesis fits the data only when the factors that affect growth are held equal across countries. These factors include all EXCEPT: A) education. B) infrastructure. C) favorable policies and institutions. D) GDP per capita.

D) GDP per capita

Latin American growth since the 1920s has been relatively slow due to all EXCEPT: A) a lack of savings to finance investment. B) a lack of a solid education system. C) a lack of political stability. D) U.S. intervention.

D) U.S. intervention

Until a quarter of a century ago, the land in the cerradoof Brazil was considered useless. All changed that conclusion EXCEPT: A) technological progress due to research and development. B) improved economic policies. C) additional physical capital. D) additional labor supply due to increases in the population.

D) additional labor supply due to increases in the population

All are potential reasons for the economic stagnation of Latin America during the last century EXCEPT: A) irresponsible government policies that fueled high levels of inflation. B) low rates of savings. C) lack of public support for education. D) excessively large flows of foreign investment.

D) excessively large flows of foreign investment

When the government invests in building roads, ports, and a reliable power grid, the government is investing in a nation's: A) private property. B) human capital. C) technological progress. D) infrastructure.

D) infrastructure

The East Asian countries have exhibited tremendous economic growth during the last 40 years because of all EXCEPT: A) a significant increase in physical capital per worker made possible by very high rate of saving. B) a significant increase in human capital made possible by very good basic education. C) a substantial achievement in technological progress. D) intervening governments with lots of regulations.

D) intervening governments with lots of regulations

Many impoverished nations struggle with diseases like malaria. How would a reduction or the elimination of malaria contribute to long-run economic growth?

We might consider a healthier population to be an improvement in the nation's infrastructure and in human capital, both of which increase long-term productivity. If the nation's public health system is better equipped to prevent and cure illnesses, its population can be more productive. A working adult who is healthier misses fewer days of work and is thus more productive. A healthier child misses fewer days of school and thus acquires a better education and is a more productive adult.