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114. Outward-oriented policies
a.
allow countries to take advantage of gains from trade.
b.
have generally led to high growth for the countries that pursued them.
c.
receive widespread support from economists.
d.
All of the above are correct.
115. When a country removes trade barriers and imports appliances and exports engineering services,
a.
its growth slows.
b.
its productivity decreases.
c.
it is essentially transforming engineering services into appliances.
d.
its economic well-being decreases while that of the country that sells appliances increases.
116. Suppose a country increases trade restrictions. This country would be pursing an
a.
inward policy, which most economists believe has beneficial effects on the economy.
b.
inward policy, which most economists believe has adverse effects on the economy.
c.
outward policy, which most economists believe has beneficial effects on the economy.
d.
outward policy, which most economists believe has adverse effects on the economy.
117. A country with a relatively low level of real GDP per person is considering adopting two policies to promote
economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of
these policies do most economists say promote growth?
a.
both the first and the second
b.
the first but not the second
c.
the second but not the first
d.
neither the first nor the second
118. National defense and knowledge are generally considered to be
a.
private goods.
b.
public goods.
c.
proprietary goods.
d.
societal goods.
119. Patents turn new ideas into
a.
public goods, and increase the incentive to engage in research.
b.
public goods, but decrease the incentive to engage in research.
c.
private goods, and increase the incentive to engage in research.
d.
private goods, but decrease the incentive to engage in research.
120. Inventors often obtain patents on new products and processes, thereby turning new ideas into
a.
private goods and increasing the incentive to engage in research.
b.
private goods but decreasing the incentive to engage in research.
c.
public goods and increasing the incentive to engage in research.
d.
public goods but decreasing the incentive to engage in research.
121. Electronics firms may be able to get patents on their ideas. Doing so makes their ideas
a.
private goods rather than public goods. This gives people more incentive to engage in research.
b.
private goods rather than public goods. This gives people less incentive to engage in research.
c.
public goods rather than private goods. This gives people more incentive to engage in research.
d.
public goods rather than private goods. This gives people more incentive to engage in private research.
122. Once an idea enters society's pool of knowledge, the idea becomes a
a.
societal good.
b.
private good.
c.
public good.
d.
proprietary good.
123. In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once
this idea was thought of, other people used it. This illustrates that knowledge is generally a
a.
public good.
b.
societal good.
c.
private good.
d.
normal good.
124. In the 19th century John Deere took out a patent on a newly designed plow that incorporated steel to make plowing
faster. Many farmers bought plows from his company and he made millions. This example shows that patents turn an idea
into a
a.
public good.
b.
societal good.
c.
private good.
d.
normal good.
125. A rapid increase in the number of workers, other things the same, is likely in the short term to
a.
raise real GDP per person, but decrease real GDP.
b.
decrease both real GDP and real GDP per person.
c.
raise both real GDP and real GDP per person.
d.
raise real GDP, but decrease real GDP per person.
126. If the best educated and most skilled persons leave a country, then in the short term this country’s human capital per
worker
a.
and physical capital per worker will increase.
b.
and physical capital per worker will decrease.
c.
will increase but physical capital per worker will decrease.
d.
will decrease but physical capital per worker will increase.
127. Because of its effect on the amount of capital per worker, in the short term an increase in the working population is
likely to
a.
raise productivity. Other things the same, this increase will be larger in a poor country.
b.
raise productivity. Other things the same, this increase will be larger in a rich country.
c.
reduce productivity. Other things the same, this decrease will be larger in a poor country.
d.
reduce productivity. Other things the same, this decrease will be larger in a rich country.
128. Other things the same, an increase in population growth
a.
increases capital per worker. Further, there is some evidence that a higher population growth rate may increase
the pace of technological progress.
b.
increases capital per worker. However, there is some evidence that a higher population growth rate may
decrease the pace of technological progress.
c.
decreases capital per worker. Further, there is some evidence that a higher population growth rate may
decrease the pace of technological progress.
d.
decreases capital per worker. However, there is some evidence that a higher population growth rate may
increase the pace of technological progress.
129. If over a short time there is an increase in the number of people retired and a decrease in the number of people
working, then productivity
a.
and real GDP per person rise.
b.
rises but real GDP per person falls.
c.
falls and real GDP per person rises.
d.
and real GDP per person fall.
130. If over a short time a large number of teenagers become old enough to find employment and a much smaller number
of people retire, then productivity
a.
and real GDP per person rise.
b.
rises but real GDP per person falls.
c.
falls but real GDP per person rises.
d.
and real GDP per person fall.
131. In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the population by
about a third. Assuming diminishing returns, the decrease in population should have
a.
increased productivity and real GDP per person.
b.
increased productivity but decreased real GDP per person.
c.
increased real GDP per person, but decreased productivity.
d.
decreased productivity and real GDP per person.
132. Which of the following is not correct?
a.
China allows only one child per family and couples that violate this rule are subject to substantial fines.
b.
In developed countries, population growth is consistently about 3 percent per year; in developing countries it
is consistently about 5 percent per year.
c.
Educational attainment tends to be lowest in countries with the highest population growth.
d.
Economists generally believe that a country that decreases a high population growth rate can increase its
economic growth rate.
133. Which of the following countries achieved higher economic growth, in part by mandating a reduction in population
growth?
a.
Great Britain
b.
China
c.
Australia
d.
France
134. Malthus predicted that the power of population
a.
was greater than the power of the earth to produce subsistence. His forecast was on the mark.
b.
was greater than the power of the earth to produce subsistence. His forecast was off the mark.
c.
was less than the power of the earth to produce subsistence. His forecast was on the mark.
d.
was less than the power of the earth to produce subsistence. His forecast was off the mark.
135. Rapid population growth
a.
was hailed by Thomas Robert Malthus as the key to future economic growth.
b.
tends to lead to higher levels of educational attainment.
c.
is the main reason that less developed nations are poor.
d.
may depress economic prosperity by reducing the amount of capital which each worker has to work with.
136. Thomas Malthus’s predictions turned out to be wrong due to
a.
technological advances such as those during the Industrial Revolution.
b.
smaller populations now than in the time of Malthus.
c.
the effects of brain-drain.
d.
unlimited natural resources.
137. Which of the following is an observation made by economist Michael Kremer?
a.
World growth rates increased as the population increased.
b.
Technological progress allows for increasing population because of advances in agriculture.
c.
World population is growing so rapidly that soon it will outstrip natural resources and our standard of living
will decline.
d.
All of the above are observations made by Kremer.
138. Which of the following is correct?
a.
If developing countries limit career and educational opportunities for women, birth rates are likely to be lower.
b.
Growth rates in developed and developing countries are nearly the same.
c.
Historically, in periods where the rate of population growth was high, so was the rate of growth in world real
GDP per person.
d.
None of the above is correct.
139. Which of the following is true?
a.
Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per
person could continue. Malthus argued that increasing population would outstrip agricultural production.
b.
Kremer argued that increases in population would reduce the amount of human and physical capital per
worker so that eventually the standard of living would decline. Malthus argued that increases in technology
would allow increased output growth so that even with population growth, society would enjoy a higher
standard of living.
c.
Malthus argued that with greater population, society would generate more ideas so that growth of real GDP
per person could continue. Kremer argued that increasing population would outstrip agricultural production.
d.
Malthus argued that increases in population would reduce the amount of human and physical capital per
worker so that eventually the standard of living would decline. Kremer argued that increases in technology
would allow increased output growth so that even with population growth, society would enjoy a higher
standard of living.
140. An increase in a country’s population may contribute to the rate of technological progress because a larger
population
a.
forces the capital stock to be spread more thinly.
b.
forces natural resources to be spread more thinly.
c.
brings with it more scientists, inventors, and engineers.
d.
brings with it more favorable recognition from other countries.
141. Over extended periods of time, population growth
a.
has no effect on the standard of living.
b.
has uncertain effects on the standard of living.
c.
clearly raises the standard of living.
d.
clearly lowers the standard of living.
142. Other things the same, higher population growth
a.
raises the amount of physical capital per worker and there is some evidence that it raises the pace of
technological progress.
b.
raises the amount of physical capital per worker, but there is some evidence that it reduces the pace of
technological progress.
c.
reduces the amount of physical capital per worker, but there is some evidence that it raises the pace of
technological progress.
d.
reduces the amount of physical capital per worker and there is some evidence that it reduces the pace of
technological progress.
143. On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth.
Which of the following is not one of these conclusions?
a.
A relatively simple way to increase growth rates permanently is to increase a country's saving rate.
b.
Growth is generally inhibited rather than promoted by policies like protective tariffs.
c.
Well-established property rights that are enforced by fair and efficient courts are important to economic
growth.
d.
Countries with few domestic natural resources still have opportunities for economic growth.
144. Which of the following provide benefits to society at large and not just to the person(s) who pursues it?
a.
both technological knowledge that is a public good and education
b.
technological knowledge that is a public good, but not education
c.
education, but not technological knowledge that is a public good
d.
neither education, nor technological knowledge that is a public good
145. All else equal, which of the following would tend to cause real GDP per person to rise?
a.
a change from outward-oriented policies to inward-oriented policies
b.
an increase in investment in human capital
c.
a weakening of property rights
d.
All of the above are correct.
146. All else equal, which of the following would tend to cause real GDP per person to rise?
a.
a change from inward-oriented policies to outward-oriented policies
b.
an increase in investment in human capital
c.
strengthening of property rights.
d.
All of the above are correct.
147. Which of the following statements is not correct?
a.
The catch-up effect is based on the assumption of diminishing returns to capital.
b.
Investment in poor countries by citizens of rich countries is one way poor countries can learn new
technologies.
c.
Malthus argued that charity and government aid was an effective way to reduce poverty.
d.
Peace and justice are keys to growth.
148. Senator Smith says that in order to help poor countries develop, the United States should: 1. Prevent U.S.
corporations from investing in poor countries because they take profits that the poor countries should have; 2. Not import
goods from poor countries that use child labor; 3. Work to promote political stability in poor countries; and 4. Reduce
poor countries’ reliance on market forces in their economies. How many of these ideas are likely to help poor countries
grow?
a.
1
b.
2
c.
3
d.
4
149. Senator Noitall says that in order to help poor countries develop, the United States should: 1. Encourage poor
countries to allow U.S. and other foreign firms to build and operate businesses in their country; 2. Reduce or eliminate
subsidies to U.S. producers when poor countries have a comparative advantage producing goods the U.S. subsidizes; 3.
Work to promote political stability in poor countries; and 4. Reduce poor countries reliance on market forces in their
economies. How many of these ideas are likely to help poor countries grow?
a.
1
b.
2
c.
3
d.
4
150. The president of a poor country has announced that he will implement the following measures that he claims are
designed to increase growth: 1. Reduce corruption in the legal system; 2. Reduce reliance on market forces because they
allocate goods and services in an unfair manner; 3. Restrict investment in domestic industries by foreigners because they
take some of the profits out of the country; 4. Encourage trade with neighboring countries; and 5. Increase the fraction of
GDP devoted to consumption. How many of these measures will have a positive effect on growth?
a.
1
b.
2
c.
3
d.
4
151. The Economic Development Minister of a country has a list of things she thinks may explain her country's low
growth of real GDP per person relative to other countries. She asks you to pick the one you think most likely explains her
country's low growth. Which of the following contributes to low growth?
a.
poorly enforced property rights
b.
outward-oriented trade policies
c.
policies that permit foreign investment
d.
All of the above are correct.
152. Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following
could explain the failure of a poor country to catch up?
a.
The poor country has outward-oriented trade policies.
b.
The poor country allows foreign direct investment.
c.
The poor country has poorly developed property rights.
d.
All of the above are correct.
153. Which of the following is correct?
a.
There is no debate about the effects of higher population growth on economic growth.
b.
Natural resources clearly place limits on growth; there is simply no way to reduce either the amount or type of
natural resources needed to produce goods.
c.
How much an increase in capital increases a country’s output is independent of that country’s current level of
capital.
d.
Economists argue that outward rather than inward policies are likely to promote economic growth.
154. Which of the following public policies would be least likely to result in more rapid economic growth for a poor or
developing country?
a.
policies designed to promote economic development in coastal areas
b.
policies designed to foster strict enforcement of property rights
c.
policies designed to foster free trade
d.
inward-oriented policies
155. Other things equal, the likelihood that a country will experience a relatively-high level of income is greater if the
country
a.
pursues inward-oriented policies.
b.
has natural seaports.
c.
minimizes the role of the courts in its economy.
d.
enacts policies to encourage consumption and discourage saving.
156. According to Michael Kremer, at which population should technological progress be most rapid?
a.
100 million
b.
500 million
c.
1 billion
d.
7.4 billion
157. A policy that increases saving
a.
will worsen economic growth, but improve health outcomes.
b.
will worsen economic growth and health outcomes.
c.
will improve economic growth, but worsen health outcomes.
d.
will improve economic growth and health outcomes.
158. Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following
could explain the failure of a poor country to catch up?
a.
The poor country has a health epidemic such as the Zika virus
b.
The poor country imposes heavy tariffs to protect infant industries
c.
The poor country has many corrupt officials
d.
All of the above
159. Which of the following was NOT a result of the BRAC anti-poverty program in Bangladesh?
a.
Improved mental health
b.
Higher income levels a year after the program ended
c.
Improved female empowerment
d.
Large increases in income of over 10 percent
160. The BRAC anti-poverty program in Bangladesh gave poor families training on how to raise livestock, a savings
account, and help with their physical and mental health. These policies can potentially improve economic growth by
increasing
a.
education, savings, and human capital, respectively.
b.
physical capital, savings, and natural resources, respectively.
c.
property rights, research and development, and human capital, respectively.
d.
education, research and development, and natural resources, respectively.
