ECON 1000: Chapter 7

Suppose that “County Z” were to realize a constant GDP Growth Rate of 4% per year. It follows that Real GDP would double in roughly years. (72rule)

• 4

• 18

• 25

• 72

A society can achieve economic growth by

• making deliberate investments in human capital and physical capital.

• making deliberate investments in overhead capital.

• realizing an improvement in technology.

• More than one (perhaps all) of the above answers is correct.

The “Catch-up effect” suggests that, all other factors fixed,

• the global economy is “rigged against new entrants,” in that there is no way for poor countries to catch-up with rich countries.

• growth rates of less developed countries typically exceed growth rates of developed countries, implying that the gap in GDP between less developed and developed countries will decrease over time.

• whenever a countries experiences rapid growth in GDP, they must also experience an increase in income inequality.

• the only way for firms in high tech industries to catch-up to their competitors is to invest large amounts of resources in research and development.

The vicious-cycle-of-poverty

• suggests that poverty is self-perpetuating, because poor countries do not have sufficient resources available to make the investments in capital which are necessary for economic growth.

• is apparently true, since every country that was poor a century ago is still poor today

• has no merit whatsoever, since even poor societies typically have an over abundance of financial capital.

• More than one (perhaps all) of the above answers is correct.

Qihong was born in China. Throughout his entire life he has excelled academically. After earning a Master’s degree from the China University of mining and Technology in Beijing, he came to the United States to pursue a PhD. Upon completion of his PhD he was hired by a prestigious research university in Oklahoma, where he works to this day. This story provides an illustration of the

• Rule of 72.

• vicious-cycle-of-poverty.

• catch-up effect.

• brain drain.

A good that is used in the production process that is not (itself) a final good or service is

• an inferior good.

• a necessary good.

• an intermediate good.

• a permanent good.

“Real GDP Per Capita” is defined as

• the value of Real GDP divided by the value of nominal GDP.

• the value of Real GDP minus the value of nominal GDP.

• the value of Real GDP multiplied by total population.

• the value of Real GDP divided by total population.

____ broadly refers to the knowledge, education, skills, experience, work ethic, interpersonal skills, and other attributes which determine worker productivity.

• Physical Capital

• Human Capital

• Worker Mortality

• Technology

When observing “Average Annual Working Time” across different countries, it was noted that the typical worker in the U.S. spends roughly 1,790 hours per year working. In comparison to other countries, this is

• more hours than any other country in the World (since the country with the second highest value is Mexico, with a figure of 1,708 hours per year)

• fewer hours than any other country in the World (since the country with the second lowest value is Japan, with a figure of 1,812 hours per year).

• higher than the figure for Germany (1,371 hours), roughly equal to the figure for Italy (1,725 hours), but lower than the figure for South Korea (2,113 hours).

• exactly equal to the World average, since there is no variability whatsoever in “Average Annual Working Time” across different countries.

Economic Growth is

• simply a result of whether or not a country has access to natural resources (and is therefore simply determined by “chance” or “nature”).

• defined as a sustained increases over time in a society’s value of real GDP.

• visually illustrated by an inward shift of the Production Possibilities Frontier.

• More than one (perhaps all) of the above answers is correct.