Chapter 9- Long-Run Economic Growth

Indicate whether the statements are true or false.

a. In the 19th century, countries with the highest per capita GDP were nearly always abundant in minerals and productive farming land.
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Indicate whether the statements are true or false.

a. In the 19th century, countries with the highest per capita GDP were nearly always abundant in minerals and productive farming land.
A. True
Which of the statements best describes the idea of economic convergence?

Wages for all workers worldwide will eventually converge to equal levels.

In a supply and demand diagram, the preferences of producers and consumers converge on the equilibrium point.

Lower GDP per capita countries will catch up with higher GDP per capita countries.

The salaries of men and women will one day be equal.
Lower GDP per capita countries will catch up with higher GDP per capita countries.
Indicate whether the statements are true or false.

a. Human and physical capital are only beneficial to an economy when there is an abundance of natural resources in the economy.
a. false
Select the best definition of labor productivity

Output per capita

Output per worker and output per capita

Output per worker

Ouput per worker and capital per worker

Capital per worker
Output per worker
The average rate of growth for slow-growth countries is around 2% per year, and for fast-growth, greater than 5% per year.

Suppose the growth rate of the economy is 2%. The size of the economy roughly doubles every

20 years.
10 years.
35 years.
5 years.
50 years or more.

If instead the growth rate is 7%, the doubling time for the economy is
10 years.
20 years.
35 years.
5 years.
50 years or more.
35 years.

10 years.
Economic growth is important to understand because

it is closely tied to standard of living.

growth guarantees that the rich get richer and the poor get poorer.

understanding economic growth is key to getting a banking job after graduation.

income equality cannot exist without growth.
it is closely tied to standard of living.
When considering economic growth, many policy makers focus on real gross domestic product (GDP) per capita since it takes into account the potentially distorting effects of

unemployment.
population change.
capital flows.
pollution.
population change.
Any large, sustainable increase in real GDP must be due to steadily increasinglevels of labor force

participation.
birth rates.
levels of research and development.
labor productivity.
labor productivity.
Classify each example as either relating to human capital, physical capital, or technology.

An increase in adult literacy affects

An increase in the number of company cars impacts

An increase in the number of college gradudates impacts
human capital.
physical capital.
human capital.
Classify each example as either relating to human capital, physical capital, or technology.

New distribution techniques affect.

An increase in the number of company computers affects

More people graduating from culinary school affects
technology.
physical capital.
human capital.
Classify each example as either relating to human capital, physical capital, or technology. A new cancer treatment affects A doctor's knowledge about a new cancer treatment affectstechnology. human capital.Indicate whether the given statements about climate change and economic growth are true or false. a. Poorer countries have historically been responsible for the bulk of world carbon emissions because of poor technology and environmental regulations. b. Tackling climate change issues is likely only to modestly dent long-term economic growth. c. Air and water quality in developed countries is generally much better today than it was several decades ago. d. Carbon emissions are negatively correlated with economic growth.false true true falseComplete the sentences on the role of government in promoting economic growth. a. The government's direct role in the production of physical capital is primarily focused on b. The government's direct role in creating human capital is primarily focused on c. Governments play an indirect role in private savings and investment throughdeveloping infrastructure . improving the education system . regulating the financial system .The purpose of growth accounting is to estimate the contribution each component of the aggregate production function makes to overall economic growth. estimate the growth rate of an economy. estimate the extent to which growing costs are affecting the overall performance of an economy. use the change in total factor productivity to estimate the growth rate of an economy.estimate the contribution each component of the aggregate production function makes to overall economic growth.Indicate whether the statements are true or false. b. In the modern economy, human and physical capital are generally less important in productivity than natural resources.B. FalseIndicate whether the statements are true or false. c. Finding alternatives to natural resources will be very important to long-term economic growth.C. TrueIndicate whether the statements are true or false. d. In the modern economy, countries that possess few domestic natural resources essentially have no chance to develop economically.D. FalseIndicate whether the statements are true or false. e. Long-run economic growth is unlikely to be sustainable because of finite natural resources.E. FalseIndicate whether the statements are true or false. b. The key to prosperity in the 20th century is an economy rich in natural resources.b. falseIndicate whether the statements are true or false. c. Over the past two hundred years, improvements in productivity have offset lost productivity reduction due to less land being available.c. trueIndicate whether the statements are true or false. d. All else equal, countries with more natural resources have a higher GDP per capita than those with few natural resources.d. trueIndicate if the following is an input in the aggregate production function for GDP. a. Contributions to Social Securitya. Is not an inputIndicate if the following is an input in the aggregate production function for GDP. b. Bonds issued by an automakerb. Is not an inputIndicate if the following is an input in the aggregate production function for GDP. c. Profits of a large investment companyc. Is not an inputIndicate if the following is an input in the aggregate production function for GDP. d. A significant amount of oil discovered in Texasd. Is an inputIndicate if the following is an input in the aggregate production function for GDP. e. A recent graduate with an engineering degreee. Is an inputIndicate if the following is an input in the aggregate production function for GDP. g. A decrease in property taxesg. Is not an inputIndicate if the following is an input in the aggregate production function for GDP. h. An upgrade of computers for Mikey's Motorsh. Is an inputIndicate if the following is an input in the aggregate production function for GDP. f. Unskilled migrant worker from Latin Americaf. Is an inputA country's real GDP in 2014 is $400,000 and increases by 2% in 2015. The population is 1,000 in 2014 and increases to 1,200 in 2015. The country's real GDP per capita in 2015 is $_____.340