The rate of economic growth is the annual rate of change in per capita real GDP. This measure of the rate of growth of a​ nation's economy takes into account both its growth in overall production of goods and services and the growth rate of its population. It is an average measure that does not account for possible changes in the distribution of income or various welfare costs or benefits that may accompany growth of the economy.
question
Per Capita Real GDP
answer
1)Real GDP in billions/ Population in millions = thousands
2) per capital real GDP 2016 = per capital real GDP 2015 x annual growth rate
3) real GDP 2016 = per capital real GDP 2016 x population 2016
question
What is economic​ growth?
answer
Economic growth is increases in per capita real GDP measured by its rate of change per year.
question
Why are politicians and economists concerned about the economic growth rate in the​ U.S.?
answer
Small differences in the rate of economic growth can make large differences in the standard of living over time.
question
Economic growth as it is currently measured
answer
-does not account for how increased per capita income is distributed across income groups.
-understates actual economic growth since it does not adjust for changes in leisure.
-does not consider​ spiritual, cultural or social difficulties that may arise from growth.
-All of the above
question
Real standards of living can only go up with positive economic growth.
answer
False
-Real standards of living can go up without any positive economic growth.
question
All of the following are benefits of economic growth except
answer
urban congestion.
question
If the average annual rate of economic growth is 4​ percent, approximately how long will it take for the​ nation's per capita real GDP to​ double?
answer
17.5 years
question
Economic growth can be defined as the increase in
____ ______ real​ GDP, measured by its rate of change per year.
answer
per capita
question
The ________ of economic growth are reductions in​ illiteracy, poverty, and illness and increases in life spans and political stability. The _______ of economic growth may include environmental​ pollution, alienation, and urban congestion.
answer
benefits/ costs
question
Small​ percentage-point differences in growth rates lead to _______ differences in per capita real GDP over time.
answer
large
question
Between the start of 20162016 and the start of 20172017​, a​ country's economic growth rate was 4 percent. Its population did not change during the​ year, nor did its price level.
answer
The rate of increase of the​ country's nominal GDP during this​ one-year interval is 4% .
question
An​ economy's rate of economic growth equals
answer
rate of growth of capital plus rate of growth of labor plus rate of growth in the productivity of capital and labor.
question
Which of the following will increase labor​ productivity?
answer
Labor has more physical capital to work with.
question
The rate of growth in the productivity of capital is 1​ percent, the rate of growth of capital is 2​ percent, the rate of growth of labor is 1​ percent, and the rate of growth in the productivity of labor is 3 percent. From this we know that
answer
The rate of economic growth​ (7 percent) is found by combining rates of growth in​ growth-contributing factors​ (1 percent from​ labor, 3 percent from​ labor's productivity, 2 percent from​ capital, and 1 percent from​ capital's productivity).
question
Labor productivity is normally measured by
answer
dividing total real domestic output by the number of workers or by the number of labor hours.
question
A country that saves a larger percentage of GDP than another country​ will, ceteris paribus
answer
A country that saves a larger percentage of GDP than another country​ will, ceteris paribus
question
For economic growth to take​ place, a country must save.​ But, for saving to actually generate economic​ growth,
answer
saving must be channeled into investment.
question
One of the most important factors for economic growth to take place is that a society must
answer
consume less than they produce.
question
Which of the following statements is ​false?
answer
A society that wants more in the future should consume more of its capital today.
question
Total capital is the sum of
answer
physical capital and human capital.
question
On a national​ basis, higher saving rates eventually mean higher living standards in the long​ run, all other things held constant.
answer
True
question
Improvements in _______ ​productivity, all other things being​ equal, lead to ________ economic growth and higher living standards.
answer
labor/greater
question
One fundamental determinant of the rate of growth is the rate of _______. To have more consumption in the​ future, we have to _____ rather than consume. In​ general, countries that have had higher rates of
_______ have had higher rates of growth in per capita real GDP.
answer
saving/save/saving
question
According to the new growth theory
answer
knowledge about how to produce goods and services is an important source of economic growth.
question
New growth theory differs from traditional growth theory in that
answer
traditional theory did not explain what causes improvements in​ technology, but new growth theory does.
question
The new growth theory argues that
answer
technology must be considered a separate factor of production that is sensitive to economic incentives.
question
Economic growth is positively related to all of the following except
answer
import tariffs.
question
There are predictions that computers may become as powerful as the human brain by 2030.
answer
True
question
According to new growth​ theory, more technological advances will occur when the rewards are greater.
answer
True
question
In the United​ States, a patent gives the inventor of a product the exclusive right to​ make, use, or sell the product for 50 years.
answer
False
-In the United​ States, a patent gives the inventor of a product the exclusive right to​ make, use, or sell the product for 20 years.
question
For every 1 percent increase in the stock of research and development in the United​ States, productivity in the rest of the world
answer
increases by about 0.25 percent.
question
Nations with high tariff barriers have tended to have higher average annual rates of real GDP per capita growth since 1965.
answer
False
-Nations with high tariff barriers have tended to have lower average annual rates of real GDP per capita growth since 1965.
question
An innovation is the same thing as an invention.
answer
False
-Innovation involves the transformation of something​ new, such as an​ invention, into something that benefits the economy either by lowering production costs or by providing new goods and services.
question
According to economist Paul​ Romer, ideas are what drive economic growth.
answer
True
question
The knowledge and skills that people in the workforce acquire through​ education, on-the-job​ training, and​ self-teaching is referred to as
answer
human capital
question
The openness of a​ nation's economy to international
________ seems to correlate with its rate of economic growth.
answer
trade
question
_______ ________theory argues that the greater the​ rewards, the more rapid the pace of technology. And greater rewards spur research and development.
answer
New growth
question
Invention and innovation are not the same thing. ______ are useless until _______ transforms them into goods and services that people find valuable.
answer
inventions/innovation
question
According to ________ ______ ​theory, economic growth can continue as long as we keep coming up with new ideas.
answer
new growth
question
Increases in ___________ capital can lead to greater rates of economic growth. These come about by increased​ education, on-the-job​ training, and​ self-teaching.
answer
human
question
Population growth generally
answer
encourages technological progress that increases economic growth.
question
Limiting the immigration of highly educated professionals hurts U.S. economic growth because
answer
both A and B
-it restricts the supply of high human capital workers and the new ideas they could potentially generate.
-it restricts the knowledge base of the workforce
question
According to new growth​ theorists, increased population growth rates can lead to faster economic growth because
answer
the larger the market the more incentive there is to innovate.
question
According to Julian​ Simon,
answer
legal and illegal immigrants have a positive effect on the welfare of American citizens.
question
Government enforced property rights are crucial to economic growth because they
answer
-make the returns to​ risk-taking relatively more certain.
-provide incentives for capital accumulation and entrepreneurial activity.
-encourage people to save knowing their wealth will not be arbitrarily confiscated.
All of the above.
question
Which of the following statements is not​ true?
answer
Property rights encourage people to take fewer​ risks, making the economy more secure.
question
Entrepreneurship functions better when
answer
a system of private property rights permits entrepreneurs to capture the rewards from their entrepreneurial activities.
question
In the absence of​ well-defined property​ rights, we would likely find
answer
people with fewer incentives to take risks.
question
Population growth can have both a positive and a negative impact on economic growth.
answer
True
question
In​ general, the more securely private property rights are​ assigned, the more capital accumulation there will be.
answer
True
question
While some economists argue that population growth reduces __________ ​growth, others contend that the opposite is true. The latter economists consequently believe that immigration should be encouraged rather than discouraged.
answer
economic
question
​Well-defined and protected _______ rights are important for fostering entrepreneurship. In the absence of​ well-defined _______ rights, individuals have less incentive to take​ risks, and economic growth rates suffer.
answer
property/property
question
The economic development of a country is dependent on all of the following except
answer
promoting protectionist barriers.
question
The development of modern rich nations can be characterized by three​ stages:
answer
agricultural​ stage, followed by manufacturing​ stage, and lastly the tertiary stage.
question
To encourage economic development a country should do all of the following except
answer
limit the amount of imports allowed in to the country.
question
Developing countries should
answer
focus on production based on comparative advantage.
question
The World Bank estimates that​ _______ of the​ world's people live on less than​ $1.50 per day.
answer
nearly 20 percent
question
As nations become​ richer, average family size increases.
answer
False
question
The​ world's population is growing at a rate of about
answer
2 people per second.
question
For​ modern, rich​ nations, the three stages of development​ (in order of​ occurrence) are
answer
agriculture, manufacturing, and services.
question
Which of the following factors are highly related to the pace of economic​ development?
answer
-developing an educated population
-establishing a system of property rights
-limiting protectionism
All of the above.
question
Although many people believe that population growth hinders economic​ development, there is little evidence to support that notion. What is clear is that economic development tends to lead to a reduction in the rate of _________ growth.
answer
population
question
​Historically, there are three stages of economic​ development: the ______ stage, the ________ stage, and the
________ ​stage, when a large part of the workforce is employed in providing services.
answer
agricultural, manufacturing, service sector
question
Although one theory of economic development holds that a sizable natural resource base is the key to a​ nation's development, this fails to account for the importance of the human​ element: The _______ _________ must be capable of using a​ country's natural resources.
answer
working population
question
Fundamental factors contributing to the pace of economic development are a​ well-defined system of _______ ______, training and __________, allowing new generations of companies and industries to ________ older​ generations, and promoting an open economy by allowing ___________ _________.
