Chapter 46
Growth and Waste
MULTIPLE CHOICE
506. Annual growth in industrialized countries is usually measured in terms of
a. consumer spending.
b. new net investment
c. income distribution
d. real GDP
507. The money used to buy equipment and buildings is called
a. physical capital
b. human capital
c. financial capital.
d. depreciation.
508. The percentage of national income that flows into savings each year is
a. the average propensity to save
b. the rate of growth
c. the accumulated profits of businesses.
d. the government budget deficit.
509. What 2 things does the rate of growth of the economy depend on?
a. the amount saved out of national income and the amount invested.
b. the amount of GDP produced per dollar of investment and the rate of depreciation.
c. the amount saved out of national income and the amount of GDP produced per
investment dollar.
d. the amount saved out of national income and the rate of interest.
510. The assumption that all savings out of national income are channeled into investment each
year is called
a. the average propensity to consume
b. Sa
c. the Mellon Effect.
d. the Greenspan Rule
511. According to conservatives, what are the two ways to increase the rate of economic
growth?
a. increase savings and increase consumption.
b. increase savings and increase gross investment.
c. increase savings and increase the productivity of capital.
d. increase savings and reduce taxes on wealthy investors.
512. According to conservatives, which policy should government implement to encourage
economic growth?
a. cut taxes on low income individuals to increase consumer spending.
b. cut taxes on the middle class to encourage consumer spending and saving.
c. cut taxes on the wealthy who are more likely to save.
d. increase taxes on the middle class to discourage excess consumer spending.
513. According to conservatives, which of the following will be most likely to increase the
productivity of capital?
a. more research and development of new technology by government.
b. more research and development of new technology by business.
c. increasing the level of gross investment.
d. increasing the rate of depreciation.
514. The possibility that there would be sufficient money for investment from savings and a very
low rate of investment
a.
b. will not oc
c. has never occurred.
d. will occur if profit rates are too high.
515. A higher rate of national saving
a. is always a good thing.
b. is beneficial during an expansion at full employment.
c. is not helpful during a recession.
d. is beneficial as long as it is accompanied by increased consumer spending.
516. A high level of consumer spending
a. is always a good thing.
b. is especially beneficial during a recession.
c. is not helpful during an expansion at full employment.
d. is beneficial as long as it is accompanied by increased consumer saving.
517. A high rate of military spending by the government
a. is beneficial to the economy during a period of full employment.
b. tends to increase investment and consumer goods during a period of full employment.
c. will tend to put the economy into a recession.
d. will tend to reduce the rate of capital investment over a long period of time.
518. Between 1950 and 1999 the annual rate of GDP growth in the US
a. has been between 1 and 3%
b. has been at least 5%
c. has been between 3% and 5%
d. has been around 10% per year.
APPENDIX 46.1
Population and Growth
MULTIPLE CHOICE
519. The economist who argued that the future growth of population would outstrip the growth
of output was
a. Jean Baptiste Say
b. Adam Smith
c. Thomas Malthus
d. Karl Marx
520.
a. because it is so boring.
b. because of the depressing prediction that future economic growth would eventually lead
to starvation.
c. because of the depressing view that technology inevitably leads to resource depletion.
d. because of the depressing conclusion that human beings have unlimited wants.