Increase physical capital alone, holding all other production function elements constant, cannot generate sustained growth in standards of living because capital is subject to diminishing returns economies have constant returns to scale countries need money to purchase capital capital is not that important to production Question 3 1 pts Which of the countries listed below have successfully transitioned from low income to high income countries since the 1950s. CHECK ALL RESPONSES THAT APPLY. Hong Kong Japan South Korea O China The importance of institutions for economic growth are best explained as a country's gain from participation in international organizations O a country's ability to take part in international cooperation defining an economy's incentives for accumulating physical and human capital and for innovation O a proximate cause of growth 2 Question 5 1 pts Which of the following is an example of an economic institution the International Monetary Fund the World Bank O marriage O property rights Countries that are at the technological frontier must to increase living standards and therefore these economies tend to grow relative to countries that are below the technological frontier. innovate, slower innovate, faster O adopt technologies, slower adopt technologies, faster Question 8 1 pts Most of the differences in standards of living between countries is due to differences in O Monetary policy Productivity O Population O None of the above Today North Korea is one of the poorest countries in the world while South Korea is one of the richest. The most likely explanation for this difference is that O they have different cultures O North Korea has been unlucky North Korea has recently been ravaged by war O North Korea adopted the institution of communism Question 10 1 pts Good institutions are fundamental to economic growth because O they create the right incentives for innovation, human capital and physical capital accumulation are the organizations that provide entrepreneurs with advice they are the organizations that provide consumers with access to financial markets O both of the above choices, but not the first choice Often an economy does not adopt better institutions because the people in power would not benefit from better institutions even though the economy would improve substiantially o it is too difficult to know which institutions generate good economic performance O the better institutions may be blocked by international organizations O the better institutions may require lower taxes Question 12 1 pts Which of the following is NOT an institution as defined by the study of economic growth the United Nations corruption O property rights democracy Question 13 1 pts There is a current on-going debate as to whether the current inflation rise is temporary or might become a more permanent feature of the economic environment. In the Project Syndicate article posted on Canvas, Ken Rogoff draws parallels between the current situation and the origins of the 1970s inflation. Match the 1970s scenario to the similar current one as described in the article. Increased government spending on the Vietnam War and the Great Society Program [Choose increase in oil prices [Choose) slow down in innovation durin Choose the 1970s possible overestimation of future productivity gains from blotech and artificial intelligence Increased spending on pandemic related measures and proposed infrastructure spending break down of the global supply chains There is a current on-going debate as to whether the current inflation rise is temporary or might become a more permanent feature of the economic environment. In the New York Times article posted on Canvas, Paul Krugman argues for the differences between the 1970s and the current scenario. Which of the following items is NOT part of Krugman's case for the current inflation spike to be categorized as temporary recent inflation has been driven mostly by pandemic affected goods O Fed's Beige book narrative suggests that firms are reluctant to raise wages O the Cleveland Fed's measure of expected inflation has surpassed 2% O more appropriate to compare current inflation with post WWII and post Korean war inflationary periods rather than 1970s inflation The CEA blog story posted on Canvas discusses housing prices and their contribution to the CPI. Housing is part consumption and part investment. Since the CPI is intended to measure consumption prices, only the consumption equivalent price of housing is included in the CPI. The consumption portion of housing is called owner equivalent rent (OER). So, housing prices enter the CPI in two items: rent (non- owner occupied rent) and OER. Since the pandemic, housing prices have o increased sharply, but the CPI rent and OER numbers remain below pre- pandemic trend. o increased sharply and the CPI rent and OER are sharply above pre- pandemic trend declined, but the CPI rent and OER numbers are above pre-pandemic trend. o declined and the CPI rent and OER numbers are below pre-pandemic trend. One characteristic of a modern rich economy is that it experiences sustained growth in living standards. Since at least from the mid-19th century, the U.S. economy's standard of living has increased, on average, about O 1% per year 2% per year O 3% per year 04% per year