Question 1

The exponential growth in computing power is predicted by:

Accepted Answer

A)   Moore's law.
B)   Murphy's law.
C)   the Monroe Doctrine.
D)   Job's law.E) A) and B)
F) A) and C)

Question 2

When a country adds more capital to its existing stock:

Accepted Answer

A)   the additional productivity is less than the previous increases to productivity.
B)   the additional productivity is greater than the previous increases to productivity.
C)   it experiences rapidly increasing rates of growth.
D)   it experiences rapid declines in its level of income.E) B) and D)
F) B) and C)

Question 3

Convergence theory proposes that:

Accepted Answer

A)   poorer countries will grow faster than rich ones.
B)   rich countries will grow faster than poor ones.
C)   poor countries tend to stagnate.
D)   rich countries tend to maintain the gap in global development.E) C) and D)
F) A) and B)

Question 4

Which of the following statements is true regarding the basic idea behind convergence theory?

Accepted Answer

A)   Countries starting with low levels of income will tend to grow at much faster rates than those starting with high levels of income.
B)   Each additional unit of capital provides larger gains to countries with less economic development.
C)   It is also the same basic idea behind the catch-up effect.
D)   All of these are true.E) C) and D)
F) B) and D)

Question 5

_______ is generally hard to measure directly but can be reasonably estimated with the growth accounting equation.

Accepted Answer

A)   Technology
B)   Physical capital
C)   Labor
D)   LandE) All of the above
F) C) and D)

Question 6

Which of the following describes a prediction of convergence theory?

Accepted Answer

A)   Countries that differ in their rates of savings, population growth, and other features will still converge to the same growth rate, although not the same level of income.
B)   Countries that start out poor should initially grow faster than countries that start out rich, but both will eventually slow to the same growth rate.
C)   Poor countries are not generally expected to sustain a high growth rate and surpass existing rich countries.
D)   All of these are predictions of the convergence theory.E) B) and C)
F) None of the above

Question 7

Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 2 percent, the growth rate of capital is 2 percent, and α = 0.50, then the growth rate of technology can be estimated to be:

Accepted Answer

A)   4.25 percent.
B)   4 percent.
C)   3 percent.
D)   4.75 percent.E) C) and D)
F) None of the above

Question 8

Japan has one of the more educated workforces in the OECD and access to highly advanced technology. Which of the following statements is most likely true about Japan?

Accepted Answer

A)   It has a high rate of economic growth
B)   It has a high standard of living
C)   It is growing at a higher rate than neighboring countries
D)   None of these are likely true about Japan.E) None of the above
F) All of the above

Question 9

We can tell how much physical capital has been added to the economy by:

Accepted Answer

A)   considering both new investment and depreciation of capital.
B)   adding up the value of all tools, equipment, and structures that have ever been built.
C)   determining the working age population.
D)   tracking workplace education programs.E) None of the above
F) A) and D)

Question 10

A country's income:

Accepted Answer

A)   depends upon how productive its workers are.
B)   is difficult to measure given current macroeconomic data.
C)   is likely to increase if the country experiences high rates of inflation.
D)   does not change that often.E) B) and C)
F) C) and D)

Question 11

The table shown displays GDP growth rates and GDP per capita values for different countries.  Which country has the highest level of income?

Accepted Answer

A)   China
B)   Ghana
C)   Italy
D)   United StatesE) B) and C)
F) B) and D)

Question 12

Which of the following is an example of physical capital?

Accepted Answer

A)   A combine harvester
B)   A bank loan
C)   Seeds
D)   A treeE) B) and D)
F) A) and D)

Question 13

Domestic savings:

Accepted Answer

A)   is equal to domestic income minus consumption spending.
B)   comes from private households spending less than they earn.
C)   occurs when government revenues exceed noncapital expenditures.
D)   All of these are true.E) C) and D)
F) B) and D)

Question 14

Which of the following is not an example of a renewable resource?

Accepted Answer

A)   Hydroelectric power
B)   Sunlight
C)   Wind
D)   All of these are renewable resources.E) A) and D)
F) None of the above

Question 15

In a given year, suppose the nominal GDP growth rate is 7 percent, the inflation rate is 2 percent, and the population growth rate is 1.2 percent. What is the real GDP per capita growth rate?

Accepted Answer

A)   3.8 percent
B)   5.0 percent
C)   5.8 percent
D)   7.0 percentE) A) and D)
F) B) and C)

Question 16

Foreign direct investment occurs when a firm:

Accepted Answer

A)   runs part of its operation abroad or invests in another company abroad.
B)   runs its operation domestically and sells its product abroad.
C)   sends workers to another country for training.
D)   imports intermediate goods from international producers.E) A) and B)
F) None of the above

Question 17

If a country devotes its resources to acquiring more physical capital, it will:

Accepted Answer

A)   increase its productivity.
B)   decrease its current consumption.
C)   decrease its output per person in the short-term.
D)   All of these are true.E) A) and D)
F) None of the above

Question 18

Which of the following would not be considered physical capital?

Accepted Answer

A)   An optical lens
B)   A trained physicist
C)   A spotlight
D)   A clipboardE) A) and B)
F) A) and C)

Question 19

Which of the following is an example of human capital?

Accepted Answer

A)   An office chair
B)   A training session on Microsoft Excel
C)   Microsoft Excel software
D)   All of these are examples of human capital.E) A) and B)
F) None of the above

Question 20

Many governments actively work to _______ foreign direct investment in an effort to _______.

Accepted Answer

A)   attract; build up their capital stock when domestic savings aren't sufficient
B)   attract; transfer human capital to local managers when foreign companies invest in local firms
C)   discourage; encourage citizens to invest in their own economy
D)   discourage; avoid "crowding out"E) B) and C)
F) B) and D)

Exam 10: Economicgrowth

Japan has one of the more educated workforces in the OECD and access to highly advanced technology. Which of the following statements is most likely true about Japan?

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The table shown displays GDP growth rates and GDP per capita values for different countries. Which country has the highest level of income?

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Which of the following describes a prediction of convergence theory?

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Which of the following is an example of human capital?

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If a country devotes its resources to acquiring more physical capital, it will:

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Which of the following would not be considered physical capital?

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Many governments actively work to _______ foreign direct investment in an effort to _______.

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Which of the following is an example of physical capital?

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Foreign direct investment occurs when a firm:

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_______ is generally hard to measure directly but can be reasonably estimated with the growth accounting equation.

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In a given year, suppose the nominal GDP growth rate is 7 percent, the inflation rate is 2 percent, and the population growth rate is 1.2 percent. What is the real GDP per capita growth rate?

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A country's income:

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Which of the following statements is true regarding the basic idea behind convergence theory?

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Which of the following is not an example of a renewable resource?

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We can tell how much physical capital has been added to the economy by:

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Convergence theory proposes that:

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Domestic savings:

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The exponential growth in computing power is predicted by:

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When a country adds more capital to its existing stock:

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Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 2 percent, the growth rate of capital is 2 percent, and α = 0.50, then the growth rate of technology can be estimated to be:

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Many governments actively work to _ foreign direct investment in an effort to _.

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