9) The study of factors that contribute to the economic development of a country is
A) population growth economics.
B) development economics.
C) the theory of technological advancements.
D) the new technology theory.
10) As more economic development occurs
A) technological progress slows.
B) capital accumulation decreases.
C) the population growth rate decreases.
D) the population growth rate increases.
11) Which of the following is NOT a stage of development that modern rich nations have gone
through?
A) service stage
B) agricultural stage
C) manufacturing stage
D) inflation stage
12) To raise economic development, developing countries should
A) focus on their comparative advantage.
B) focus on producing service goods.
C) produce goods that are capital intensive and not labor intensive.
D) not focus on economic growth.
13) To encourage economic development a country should do all of the following EXCEPT
A) invest in human capital.
B) limit the amount of imports allowed into the country.
C) allow creative destruction to run its course.
D) establish a system of property rights.
14) Creative destruction refers to
A) the destruction of the government system which limits economic growth.
B) the movement from an agricultural society to a service economy.
C) the mechanism for establishing property rights.
D) the creation of new jobs and economic growth after destroying old jobs.
15) Trade between countries should be
A) encouraged for developed countries but not for developing countries.
B) encouraged for both developed and developing countries.
C) discouraged for developed countries but encouraged for developing countries.
D) discouraged for both developed and developing countries.
16) Which of the following factors will NOT increase economic development?
A) increasing the amount of education in the population
B) establishing a system of property rights
C) creative destruction where old jobs, companies and industries are destroyed
D) increasing the amount of protectionism
17) The term “creative destruction” refers to
A) the process by which immigrants build a new life in their country of destination.
B) the process by which new jobs are created and old ones destroyed.
C) the effects of population growth on the environment.
D) All of the above are correct.
18) An economy that is an active participant in international trade is
A) an egalitarian economy.
B) a closed economy.
C) an economy whose currency value fluctuates widely.
D) an open economy.
19) Research indicates that
A) countries with lower tariff rates experience higher rates of economic growth.
B) countries with lower tariff rates experience lower rates of economic growth.
C) there is no relationship between the level of tariff rates and economic growth.
D) countries with higher tariff rates experience higher rates of economic growth.
20) The concept of an open economy means that
A) imports should be limited while exports should be expanded.
B) a nation’s borders are open to flows of imports and exports.
C) exports should be controlled but imports should be allowed in without restriction.
D) imports and exports should be restricted.
21) Which one of the following is a key to economic development?
A) the removal of property rights
B) the preservation of established means of production
C) an educated population
D) a high level of protection against imported products
22) The study of development economics is to understand
A) why some products are successful in the market as soon as they are developed, whereas
others do not catch on for years.
B) why most of the patents on record have been given to men rather than to women.
C) why some countries are rich and others are poor.
D) the personality factors that lead people to become entrepreneurs.
23) Which one of the following is TRUE?
A) As a country becomes more prosperous, it experiences a higher birth rate.
B) Over the past century, the supply of food has grown more quickly than has the demand for
food.
C) Over the past century, the real price of food has risen, reflecting the pressure of population
growth on food supplies.
D) Over the next half-century, it is expected that population growth in industrially advanced
nations will outpace population growth in developing countries.
24) Which one of the following describes the current state of economic development in the
United States?
A) The United States is running out of natural resources, and therefore it will soon experience a
drop in the rate of economic growth.
B) Employment is declining in the manufacturing sector and growing in the service sector.
C) Employment is declining in the manufacturing sector and growing in the agricultural sector.
D) The lack of well-defined property rights in the United States means that entrepreneurs do not
expect to capture the benefits of innovations they bring to the marketplace.
25) Which one of the following is TRUE?
A) Investments in secondary education produce gains in the form of economic growth.
B) Secondary education does not boost economic growth in developing nations, because so much
of the workforce remains in agriculture.
C) New growth theory suggests that there is no connection between the level of education in a
country and its rate of economic growth.
D) New growth theory suggests that education benefits only those people who receive it, and not
the population as a whole.
26) Which one of the following is TRUE?
A) For every country that experiences an increase in its growth rate, there must be another
experiencing a decline.
B) Small changes in the annual growth rate amount to a measurable difference in the long-term
growth trend of a country.
C) Restricting imports will enhance a country’s economic growth.
D) A well-defined system of property rights benefits only the wealthy, and consequently it
produces income inequality that will stifle economic growth.
27) What can be expected to happen in a country that enacts trade barriers?
A) The rate of immigration will increase.
B) The rate of technological innovation will increase.
C) The rate of economic growth will decrease.
D) The rate of population growth will decrease.
28) Which of the following is NOT an obstacle to economic development?
A) lack of capital investment
B) political instability
C) corruption
D) a free market system
29) Which of the following is an obstacle to economic development?
A) poorly defined property rights
B) foreign direct investment
C) immigration
D) openness to trade
30) A reasonable estimate of the world’s population that lives on less than $1.5 per day is
A) 20 percent.
B) 40 percent.
C) 50 percent.
D) 80 percent.
31) Thomas Robert Malthus believed
A) that food supplies would always be more than sufficient to feed the world’s population.
B) that the world’s population would eventually exceed the amount food supplies can support.
C) that population growth was good for the world.
D) that population growth would eventually lead to an increase in the quality of life for
everyone.
32) According to many economists, as nations become wealthier, the average size of family
A) increases.
B) decreases.
C) does not change.
D) increases first and then decreases later.
33) When analyzing stages of economic development in the United States, it appears that we
have entered the “tertiary stage.” This is a stage marked by a shift toward
A) agriculture.
B) manufacturing.
C) services.
D) population increases.
34) Which of the following factors are considered by economists who study economic
development to be directly related to the rate of economic growth?
A) plentiful natural resources
B) openness to international trade
C) an educated population
D) All of the above are correct.
35) All of the following are keys to economic development EXCEPT
A) an educated workforce.
B) establishment of a system of property rights.
C) minimizing “creative destruction.”
D) open economies.
36) Which of the following factors would economists consider “key” to economic development?
A) expansionary monetary policy
B) establishing a system of property rights
C) policies that promote consumption expenditures by households
D) All of the above are correct.
37) Limiting protectionism means
A) reducing trade barriers.
B) reducing corruption.
C) reducing consumer fraud.
D) reducing political dishonesty.
38) Which of the following do development economists NOT recommend to nations seeking to
increase their rates of economic growth?
A) protecting home producers from international competition
B) letting creative destruction run its course
C) promoting increased education
D) promoting private property rights
39) An educated populace contributes to economic growth because
A) schools provide many jobs for teachers.
B) education allows workers to develop skills that increase their productive capabilities.
C) educated people are more likely to live in poverty.
D) educated people understand the importance of protectionism.
40) Institutions and laws, such as patent protection, that foster innovations lead to economic
growth because they
A) allow the government control of the innovations.
B) give confidence to inventors that they will profit from their innovation.
C) give confidence to consumers that the products they buy are safe.
D) give businesses loans to buy new machinery.
41) According to the United Nations, the largest expected growth in population for the coming
decades will occur on which continent?
A) Europe
B) South America
C) North America
D) Africa
42) It can be argued that Thomas Malthus’ An Essay on the Principle of Population statement
that population growth will always outstrip food production has been discredited due to
A) an increase in the world-wide farming population.
B) less world-wide food consumption.
C) improvement in technology of food production.
D) a reduction in resource scarcity.
43) Of the following, which best explains why Thomas Malthus was incorrect in his prediction
that population would outstrip food supplies?
A) Malthus failed to realize that that human population would increase considerably.
B) Malthus failed to recognize that economic growth is accompanied by smaller family sizes.
C) Malthus incorrectly believed that economic growth would reduce birthrates.
D) Malthus incorrectly predicted that modernization would increase the demand for children.
9.5 Are Developed Nations Stuck with Stagnant Growth Prospects?
1) A long period of very little or no economic growth is commonly known as
A) economic recession.
B) a business cycle.
C) deflation.
D) secular stagnation.
2) Secular stagnation refers to
A) small changes in real GDP growth over the business cycle.
B) negligible economic growth over a lengthy period.
C) alternate periods of high inflation and periods of high unemployment.
D) slower population growth than employment growth.
3) A country facing secular stagnation most likely experiences
A) high inflation.
B) small changes in economic output over time.
C) large increases in government spending.
D) very high population growth and private spending growth.
4) According to the text, European countries’ growth rates of real GDP per capita
A) decreased during each of the four decades beginning 1980.
B) remained constant during each of the four decades beginning 1980.
C) decreased in the first two decades after 1980 and then increased in the following two decades.
D) followed a random pattern during the four decades beginning 1980.
5) According to the text, a person born in the United State in 1960 would have observed
A) a 20 percent decrease in U.S. real GDP per capita by the end of 1980.
B) an 80 percent increase in U.S. real GDP per capita by the end of 1980.
C) nearly no change in U.S. real GDP per capita by the end of 1980.
D) an average annual rate of 8 percent growth in U.S. real GDP through 1980.
6) According to the text, a person born in the United States at the beginning of this century
would likely observe
A) an overall increase in real GDP per capita of 200 percent by 2020.
B) an overall decrease in real GDP per capita of 100 percent by 2020.
C) an overall increase in real GDP per capita of about 20 percent by 2020.
D) virtually no change in real GDP per capita by 2020.
7) According to the text, all of the following are possible causes of recent secular stagnation
among advanced countries EXCEPT
A) increases in trade barriers such as tariffs.
B) low growth of productivity growth.
C) reduced payoffs from human capital investments.
D) increased governmental and regulatory policies.
8) Which of the following has most likely occurred across advanced countries since 2000?
A) high population growth
B) reduced international trade flows with other countries
C) a slowdown in productivity growth
D) drastic increases in government spending on human capital and physical capital
9) According to the text, the term “Eurosclerosis” refers to
A) stagnant economic growth in Europe.
B) the cumulative effects of high productivity growth in Europe.
C) the differing views about the growth rates of European countries.
D) a long period of higher growth rates among European countries than the growth rates of the
United rates.
10) In which of the following periods did nations of the European Union experience the highest
average annual rate of growth of per capita real Gross Domestic Product (GDP)?
A) 1981-1990
B) 1991-2000
C) 2001-2010
D) 2011-2017
11) In which of the following periods did nations of the European Union experience the lowest
average annual rate of growth of per capita real Gross Domestic Product (GDP)?
A) 1981-1990
B) 1991-2000
C) 2001-2010
D) 2011-2017
12) What are the alternative causes of the observed secular stagnation pattern of advanced
countries in the recent decade, as argued by economists?