Ch 11 – Flashcards
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A country's rate of economic growth is important because
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An economy that grows too slowly fails to raise the living standards of its citizens
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When examining economic growth rates throughout history.
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The world experienced little to no growth until the industrial revolution, after which some economies began to experience real economic growth.
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Why do economic growth rates matter?
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All of the above.
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Countries that began to experience strong economic growth at an earlier period have the advantage of
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utilizing the benefits of compound growth to a greater extent then countries that began to grow later.
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Economic growth will
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slow down or stop if more capital per hour is used because of diminishing returns to capital.
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Some economies are able to maintain high growth rates despite diminishing returns to capital by using
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A better or enhanced technology, along with accumulating capital; these economies are growing because technology, unlike capital, is subject to increasing returns.
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At the macro-economy level,
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knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns.
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Consider the figure to the right. which of the following is responsible for the upward shifts in the per-worker production function?
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Technological change
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An economy that does not experience increases in technological progress
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can experience economic growth by increasing capital, however, this will eventually stagnate and the economy will not continue to grow.
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What term describes the relationship between real GDP per hour worked and capital per hour worked, holding the level of technology constant?
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The per-worker production function
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Along the per-worker production function, what happens to real GDP per hour worked as capital per hour worked increases?
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Real GDP per hour worked increases at a decreasing rate.
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When a firm increases output by either replacing existing capital with more productive capital or by reorganizing how production takes place, that firm is experiencing
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technological change
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How does technological change affect the per-worker production function
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technological change shifts the per-worker production function up.
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in the long run, a country will experience an increasing standard of living only if
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the country experiences continuing technological change
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According to Joseph Schumpeter, which of the following factors provides entrepreneurs with the most important incentive to bring the factors of production together to start new firms and to introduce new goods and services?
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The profits entrepreneurs hope to earn
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Consider the choices below. All of these except one truly represent the record of productivity growth in the united states from 1800 to the present. find the one that does not belong/
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GDP per capita fell rapidly between 1900 and 1950.
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Which of the following does not explain the slowdown in productivity growth from the mid-1970s to the mid-1990s?
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workers lacked incentives to work hard as their job security was at its lowest.
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All of the following contributed to an increase in productive growth from 1996 to the present except an
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improvement in workers' skills due to better education and training.
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Productivity growth rates matter because
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productivity growth rates have a big impact on future economic growth
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The figure in the window on the right shows average annual growth rates in real GDP per hour worked in the united states. Based on the data from the figure on the right which one of the following statements is false?
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The growth rate of real GDP per hour worked has continually accelerated over time.
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when comparing U.S. economic growth with the economic growth that occurred in the soviet union during the 1900s, a possible explanation for the U.S growing at significantly higher rates is
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The U.S. experienced a greater level of technological progress than the soviet union
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Compared to the period between 1950 and 1972, the productivity of U.S. workers between 1973 and 1994.
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slowed by more than one percentage point per year.
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Some economists argue that that the "new economy" has led to an increase in U.S. productivity growth since 1995. What caused the development of the "new economy"?
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Advances in information technology
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The economic growth model predicts that the
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level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations.
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Have poor countries been catching up to rich countries?
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There has been catch-up by some poor but industrialized countries.
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The labor markets in the United States have greater flexibility and the financial system in the United States has greater efficiency than other higher-income countries, such as those in Europe, because in
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the United States, labor markets have less government regulations so workers have job mobility to better match their skills with jobs and the financial markets provide better legal protection and liquidity to investors
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This greater flexibility in labor markets and greater efficiency in financial markets
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Lead to increases in productivity that contribute to rapid growth in real GDP per capita for the United States
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Most of the poor countries experience slow growth because of all the following reasons except
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Excellent Public health and education.
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Globalization entails all of the following except:
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Cultural exchange between nations
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Developing countries have benefited from globalization, because globalization can do all of the following except
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impose trade barriers and tariffs on imported goods so as to protect domestic industries
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Other high-income countries have had trouble completely closing the gap in real GDP per capita with the United States because the United States has
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Greater flexibility in labor markets and greater efficiency in the financial system.
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Along the downward-sloping catch-up line, a country near the top of the line is
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a poor country growing rapidly
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The government policy that does not increase economic growth is
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foreign trade policy that favors imposing a high tariff on imported high-tech goods.
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When Bardhan refers to "technological catch-up," he means that China
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is experiencing diminishing returns to investments in technology.
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If Bardhan is correct, in the future, the Chinese economy might
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realize slower economic growth
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Comparing the Chinese economy today and the Soviet economy in the 1980s, it can be seen that both countries had a history of
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central planning and have introduced market systems, but have experienced problems in making the transition that have, and will continue to, hinder future growth.
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A free press will be vital for enhancing
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property rights and the rule of law and controlling corruption
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A free press could help reduce corruption, which would then promote growth, by all of the following except:
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Publishing gossip columns about a politician's personal matter
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Technological change is more important to long-run economic growth than changes in capital. The easiest way for firms to gain access to new technology is through
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foreign direct investment
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Does economics answer the question:
"is economic growth good?"
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No. This is a normative question.
