Understanding Economic Growth

According to Paul Romer, what is a useful metaphor for production in an economy?

• A factory

• A kitchen

• A farm

• A workshop

Which of the following is a common measurement of the income of nations?

• GDP

• National wealth

• Human capital

• Natural capital

What does a business cycle correspond to?

• Fluctuations in economic activity

• Constant economic growth

• Decline in GDP

• Increase in unemployment

Which phase of the economic cycle is characterized by outperformers in information technology, financials, communications, and consumer discretionary?

• A) Expansion

• B) Peak

• C) Contraction

• D) Recovery

Fill in the blank: Innovation is the process of improving or making major modifications to current items, methods, or _______.

• ideas

• products

• services

• technologies

Innovations improve customer satisfaction by:

• enhancing product quality and features

• increasing product prices

• limiting customer choices

• reducing customer service

Raw materials innovation includes using renewable or recycled materials to lower production costs and reduce environmental impact.

• True

• False

New forms of collaboration can enhance production efficiency and adaptability by:

• increasing communication and coordination among team members

• reducing the need for skilled labor

• eliminating the use of technology

• decreasing the number of team members

What is creative destruction according to Schumpeter?

• The process by which old products are improved

• The process by which an innovation replaces old products, processes, markets, and organizational forms with new ones

• The process of maintaining existing products

• The process of reducing costs in production

Give an example of creative destruction mentioned in the text.

• The rise of digital photography leading to the decline of film photography

• The invention of the steam engine

• The development of the internet

• The creation of the smartphone