23) One possible way of achieving faster economic growth is to
A) regulate the amount of international trade and limit it so that not too much occurs.
B) limit research and development because research and development does not contribute
anything to today’s production.
C) assign the government ownership of all capital.
D) protect property rights and free markets.
E) tax saving so that people spend more and irms’ proits are higher.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
24) Which of the following are important for countries to promote with property rights and
incentives if economic growth is to occur?
i. specialization
ii. saving and investment
iii. increases in human capital
iv. discovery of new technology
A) i, ii, iii and iv.
B) ii and iii.
C) iii and iv.
D) ii and iv.
E) i, ii and iv only.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
25) One way to achieve faster growth in GDP per person is to increase the
A) number of women working in the home rather than in the workforce.
B) growth rate of the quantity of money.
C) growth rate of human capital.
D) growth rate of the population.
E) limits on international trade in order to keep more of total spending on domestically
produced goods.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
61
26) The following government policies will help achieve faster economic growth EXCEPT
A) discouraging saving and encouraging spending.
B) encouraging research and development.
C) establishing and protecting property rights.
D) improving the quality of education.
E) increasing saving.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
27) If Turkey wants to promote faster economic growth, it will need to
A) promote incentive systems to encourage saving, research and development, increased
trade and improved education.
B) restrict economic freedom so the government has better control of markets.
C) restrict international trade to protects its own workers.
D) promote government intervention to help markets determine incentives.
E) restrict property rights so that individuals can better share inventions.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
28) Retirement savings accounts, such as IRAs, help increase economic growth because
A) people have an incentive to work harder and longer hours to save for the future.
B) they keep the interest rates high.
C) savings inances investment.
D) government invests them.
E) they encourage international trade.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
62
29) One possible way of achieving faster economic growth is to
A) encourage saving.
B) protect the economy from international trade.
C) limit investment because investment adds nothing to production today.
D) eliminate property rights because they prevent people from using other people’s ideas.
E) tax saving so that people spend more and businesses make more proit.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
30) East Asian economies have grown
A) rapidly because of high saving rates.
B) rapidly despite a lack of property rights.
C) slowly because of a lack of property rights.
D) slowly because of low saving rates.
E) rapidly because they virtually eliminated international trade.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
31) One of the possible roles governments can play in sponsoring growth is to
A) provide tax incentives to encourage saving.
B) own more of the nation’s resources in order to put them to use.
C) close the nation to trade in order to protect its domestic producers.
D) make decisions for its citizens as to the most suitable job.
E) limit the use of property rights in order to decrease the harm they create.
Skill: Level 3: Using models
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
63
32) Many economists argue that an incentive to save is
A) high income tax rates.
B) a tax on consumption rather than on income.
C) a tax on income rather than a tax on consumption.
D) greater government regulation of the banking and securities industries.
E) strengthening the property rights that savers have to the physical capital they purchase.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
33) One possible way of achieving faster economic growth is to
B) limit international trade to only a few countries so that the nation is not hurt by too
much trade.
C) encourage research and development.
D) limit schooling in order to have more people in the labor force, producing goods and
services.
E) promote tax saving so that people spend more and businesses’ proits are larger.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
34) One possible way of achieving faster economic growth is to
A) limit international trade.
B) encourage international trade.
C) limit research and development and concentrate on production of goods and services.
E) let the government decide what research and development should be undertaken.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
64
35) Encouraging international trade will
A) slow economic growth when a country is forced to specialize and trade with other
countries.
B) slow economic growth as many workers lose their jobs to foreign workers.
C) speed economic growth as workers diversify their knowledge and limit trade.
D) speed economic growth as workers specialize and trade with others.
E) speed economic growth because international trade limits the harm done by property
rights.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
36) The fastest growing nations today
A) are not saving but instead are investing.
B) have erected many trade barriers to protect domestic irms.
C) have the fastest growing exports and imports.
D) have non-democratic political systems.
E) have the government directing all their research and development.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
37) China’s growth rate has ________ that of most other countries, ________.
A) topped; but its real GDP per person is still lower than other industrialized countries
B) lagged behind; and its real GDP is close to other Asian economies
C) lagged behind; but its real GDP per person is higher than other Asian economies
D) topped: but its real GDP per person declined in 2008-09
E) equalled; and its real GDP per person declined in 2008-09
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
65
38) Governments should promote education because education contributes to the nation’s
A) employment.
B) free markets.
C) economic growth potential.
D) international trade.
E) protection of property rights.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
39) Brian is running for state senator and if elected, pledges to improve economic growth.
His plan for economic growth includes increasing spending on public education and
providing tax incentives to encourage improved private education. His plan is likely to
A) slow economic growth because it includes a provision for private education.
B) have no efect on economic growth because property rights are not changed.
C) speed economic growth as the quality of resources improve.
D) fail because the provision for private education limits government involvement in
education.
E) have no efect on economic growth because government spending cannot afect the
economic growth rate.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
40) If Kenya institutes policies that support economic freedom and growth, it is likely that
Kenya will
A) immediately reap the beneits of double digit increase in economic growth.
B) immediately reap the beneits of a 4 percent to 6 percent increase in economic growth.
C) slowly reap the beneits of economic growth as the economy grows over time.
D) lose control of the economy and plunge into a long recession.
E) sufer from too much competition within its economy.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
66
41) Which of the following is NOT a necessary precondition for economic growth?
A) economic freedom
B) democracy
C) property rights
D) free markets
E) ALL of the above are necessary preconditions.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
42) Which of the following characteristics is a precondition for economic growth?
i. economic freedom
ii. free markets
iii. active government policy to discourage saving
A) i only
B) ii only
C) iii only
D) Both i and ii
E) Both ii and iii
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
43) Economic freedom means that
A) irms are regulated by the government.
B) some goods and services are free.
C) people are able to make personal choices and their property is protected.
D) the rule of law does not apply.
E) the nation’s government is a democracy.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
67
44) Property rights protect
A) only the rights to physical property.
B) only the rights to inancial property.
C) all rights except rights to intellectual property.
D) rights to physical property, inancial property, and intellectual property.
E) the government’s right to impose taxes.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
45) Activities that encourage faster growth are
A) high levels of saving and investment in human capital.
B) high levels of consumption and low levels of savings.
C) taxes on saving that serve to encourage more spending and less saving.
D) imposing trade barriers to limit international trade and thereby protect national
industries.
E) limiting property rights so that everyone can use any invention.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
46) Which of the following statements is FALSE?
A) Saving helps create economic growth.
B) Improvements in quality of education are important for economic growth.
C) Free international trade helps create economic growth.
D) Faster population growth is the key to growth in real GDP per person.
E) Economic freedom requires property rights.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
68
47) In order to increase economic growth, a government can
A) discourage research and development.
B) decrease funding on education.
C) discourage specialization and trade.
D) establish property rights and a legal system.
E) tax saving in order to encourage more spending.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
48) Saving
A) slows growth because it decreases consumption.
B) inances investment which brings capital accumulation.
C) has no impact on economic growth.
D) is very low in most East Asian nations.
E) is important for a country to gain the beneits of international trade.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
49) A government policy that taxes saving in order to discourage saving and encourage
spending will
A) slow economic growth.
B) speed economic growth.
C) create a greater incentive for people to specialize.
D) strengthen people’s property rights.
E) increase the growth rate of capital.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
69
50) The fastest growing nations today are those with
A) barriers that signiicantly limit international trade.
B) the fastest growing exports and imports.
C) government intervention in markets to ensure high prices.
D) few funds spent on research and development.
E) the least saving.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
51) Economic growth is enhanced by
A) free international trade.
B) limiting international trade so that the domestic economy can prosper.
C) discouraging saving, because increased saving means less spending.
D) ignoring incentive systems.
E) increasing welfare payments to the poor so they can aford to buy goods.
Skill: Level 1: Deinition
Section: Checkpoint 9.4
Status: Old
AACSB: Relective thinking
9.5 Integrative Questions
1) Economic growth in Cuba has been slow. What can best explain the slow growth?
A) lack of economic resources
B) lack of incentive mechanisms and economic freedom
C) labor productivity is low.
D) a non-democratic form of government
E) too much competition within the economy
Skill: Level 4: Applying models
Section: Integrative
Status: Old
AACSB: Relective thinking
70