Multiple Choice Questions:
1. If a country increased its saving rate?
a. Its current consumption would have to fall.
b. Its current consumption would have to rise.
c. Its future consumption possibilities will fall.
d. Its future consumption possibilities will rise.
e. Both a and d will occur.
2. Which of the following statements is incorrect?
a. One of the most important determinants of economic growth is a nation’s saving rate.
b. Injections of foreign capital from abroad may contribute to a nation’s economic growth.
c. Economic growth depends on the quality and type of investments made.
d. Economic growth rates tend to be lower in countries where property rights are better enforced by government.
3. High rates of saving and investment in a country?
a. Guarantee rapid economic growth.
b. Tend to increase economic growth but do not guarantee it.
c. Will result in greater economic growth if they are accompanied by advances in technology than if they are not.
d. Will result in greater economic growth if they are accompanied by more investment in human capital than if they are not.
e. Will result in all of the above except a.
4. Which of the following is considered a factor that contributes to economic growth?
a. Government protection of property rights.
b. Increased specialization of labor.
c. Research and development.
d. Improved efficiencies through economies of scale.
e. All of the above.
5. Economic growth tends to be greater in countries where?
a. The government effectively protects property rights.
b. More resources are devoted to research and development.
c. There is greater freedom to trade freely.
d. Any of the above is true.
6. During the Klondike gold rush, the first prospectors in the region arrived before any government authority was established. They followed a long goldfield tradition and created “miners’ laws,” which described how gold claims could be staked and how these claims would be enforced. The creation of “miners’ laws” showed that these prospectors recognized the importance of which of the following factors that affect economic growth?
a. Increasing physical capital.
b. Economies of scale.
c. Well-defined and enforced property rights.
d. Technological advance.
7. In a country that has an unstable government or judiciary, would you expect to see more entrepreneurial activity, or less?
a. Less, because an unstable economy has fewer entrepreneurs.
b. Less, because of an unreliable infrastructure for protecting property rights.
c. More, because of fewer governmental restrictions.
d. More, because of less taxation of commercial and research activities.
8. Investment in human capital?
a. Is of minor importance to economic growth.
b. Can be acquired through on-the-job training.
c. Is an important source of economic growth.
d. Does not affect economic growth; only physical capital does.
e. Is characterized by both b and c.
9. Other things being equal, the higher the rate of savings across countries?
a. The higher the rate of change of real GDP per capita.
b. The lower the rate of change of real GDP per capita.
c. The lower the productivity of labor.
d. The lower the rate of investment.
10. Reduced levels of illiteracy?
a. Are, in part, a cause of economic growth.
b. Are, in part, caused by economic growth.
c. Are, in part, both a cause of economic growth and caused by economic growth.
d. Are largely unrelated to economic growth.