ECON 306 Lecture Notes - Lecture 11: Wvmp, Unemployment Benefits, Marginal Product
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Question 3
According to Joseph Schumpeter, the theory of creative destruction describes a process by which
| A | some new products unleash a gale of destruction that drive other new products out of the market. | |
| B | new products unleash a gale of destruction that drives old products out of the market. | |
| C | new products are created by the destruction of capital. | |
| D | the creation of new products never involves the destruction of old products. |
Question 4
Which of the following countries had the highest GDP per capita in 2012?
| A Qatar | ||
| B | United States | |
| C | Japan | |
| D | Norway |
Question 5
________ save a ________ of their income. This ________ capital in their economy and raises economic growth.
| A | Developing countries; large proportion; decreases | |
| B | Developing countries; small proportion; increases | |
| C | High-income countries; large proportion; increases | |
| D | High-income countries; small proportion; increases |
Question 6
The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.
A
| A | government | |
| B | households | |
| C | banks | |
| D | firms |
Question 7
The U.S. economy has been more stable since 1950.
True
False
Question 8
When the economy reaches a trough in a business cycle, which of the following will occur?
| A | Income, production, and employment will continue to fall. | |
| B | Income, production, and employment will begin to rise. | |
| C | Income and production will rise, but employment will continue to fall. | |
| D | Employment rises, but income and production will continue to fall. |
Question 9
In a closed economy, what is the relationship between saving and investment?
| A | Saving is greater than investment. | |
| B | Investment is greater than saving. | |
| C | Investment is equal to saving. | |
| D | Investment may be greater or smaller than saving. |
Question 10
The per-worker production function shows the relationship between ________ per hour worked and ________ per hour worked, holding ________ constant.
| A | labor; real GDP; technology | |
| B | capital; real GDP; technology | |
| C | labor; capital; real GDP | |
| D | capital; labor; real GDP |
Question 11
New growth theory states that increases in ________ capital will result in ________ at the ________ level.
| A | knowledge; increasing returns to scale; firm | |
| B | physical; decreasing returns to scale; firm | |
| C | knowledge; decreasing returns to scale; economy | |
| D | knowledge; increasing returns to scale; economy |
Question 12
Which of the following is not a reason why the Industrial Revolution occurred when and where it did?
| A | The British government was committed to upholding private property rights. | |
| B | The British government was able to eliminate arbitrary increases in taxes. | |
| C | The British government was able to more easily seize wealth. | |
| D | Institutional changes by the British government helped protect wealth. |
Question 13
Growth in real GDP per capita for the world economy was greatest during
| A | the seventeenth century. | |
| B | the eighteenth century. | |
| C | the nineteenth century. | |
| D | the twentieth century. |
Question 14
Which of the following is a normative statement about economic growth?
| A | Economic growth is associated with higher labor productivity growth. | |
| B | Economic growth increases GDP per capita. | |
| C | Economic growth hurts developing countries. | |
| D | Foreign direct investment stimulates economic growth. |
Question 15
The effect of a recession on a company like Whirlpool Corporation is such that
| A | sales decline more sharply for Whirlpool as compared to firms that do not produce durable goods. | |
| B | profits fall less sharply as compared to firms that do not produce durable goods. | |
| C | the decline in sales is more short-lived as compared to firms that do not produce durable goods. | |
| D | there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods. |
Question 16
For the recessions in the United States since the 1950s,
| A | cyclical unemployment has been non-existent. | |
| B | unemployment rises on average by about 1.2 percentage points 12 months after a recession begins. | |
| C | unemployment falls on average by 2 percentage points 12 months after a recession begins. | |
| D | unemployment rises on average about 5 percentage points 12 months after a recession begins. |
Question 17
You are an economic advisor to the president. You are asked to recommend a policy to promote long-term economic growth in the economy. Which of the following policies would you choose?
| A | a reduction in sales taxes | |
| B | an investment tax credit | |
| C | a reduction in taxes on luxury yachts | |
| D | All of these |
Question 18
In comparison to a government that runs a balanced budget, when the government runs a budget deficit,
| A | the equilibrium interest rate will fall. | |
| B | business investment will fall. | |
| C | household savings will fall. | |
| D | None of these |
Question 19
If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined.
| A | labor force participation | |
| B | the quantity of goods or services that can be produced by one hour of work | |
| C | the working-age population | |
| D | nominal GDP |
Question 20
Policies to promote growth by increasing saving and investment work through
| A | decreasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. | |
| B | increasing the supply of loanable funds, increasing the interest rate, raising the level of investment in physical capital. | |
| C | increasing the supply of loanable funds, lowering the interest rate, lowering the level of investment in physical capital. | |
| D | increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. |