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For a developing country to grow, it needs capital. The major source of capital in most countries is domestic saving, but the goal of stimulating domestic saving usually is in conflict with government policies aimed at reducing inequality in the distribution of income. Comment on this trade-off between equity and growth. 

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Anne Gillian Duero
Anne Gillian DueroLv10
28 Sep 2019

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Related questions

1. Which one of the following is not a limitation of GDP?

1) GDP does not include unpaid labor

2) GDP does not value leisure time

3) GDP does not consider environmental degradation

4) GDP does not consider capital depreciation

5) GDP does not account for resource depletion

2. Which one of the following measures is obtained by adjusting GDP?

1) Net Domestic Product

2) Adjusted Net Saving

3) Genuine Progress Indicator

4) Environmental asset accounts

5) Better Life Index

3. Which one of the following national accounting measures does not account for natural

resource depreciation or environmental damage?

1) Environmentally Adjusted Net Domestic Product

2) Genuine Progress Indicator

3) Human Development Index

4) Adjusted Net Saving

5) Environmental asset accounts

4. Which one of the following national accounting measures includes a subtraction for natural capital depreciation?

1) Environmentally Adjusted Net Domestic Product

2) Human Development Index

3) Better Life Index

4) Net Domestic Product

5) Environmental asset accounts

5. A negative value for adjusted net saving implies that ...

1) People in a country are not saving enough for retirement

2) Physical capital is being replaced faster than it is depreciating

3) Natural capital is depreciating faster than it is being replaced

4) Net growth of combined physical and natural capital is negative

5) Both natural capital stocks and physical capital stocks are increasing

6. Which one of the following statements is false?

1) Adjusted Net Saving is negative in some developing countries

2) Increases in natural resource exports will always increase Adjusted Net Saving

3) Gross Domestic Product fails to account for unpaid work

4) Environmentally Adjusted Net Domestic Product subtracts a value for natural capital depletion

5) Net investment is overstated if no adjustment is made for natural capital depletion

7. Which one of the following expenditures would increase the Genuine Progress Indicator?

1) Buying a home air filter

2) The cost of maintaining a prison

3) Cleaning up a toxic waste site

4) The cost of auto accident repairs

5) Providing expanded public education

8. Which of the following national accounting measures adjusts for defensive expenditures, natural resource depletion, and income inequality?

1) Environmentally Adjusted Net Domestic Product

2) Genuine Progress Indicator

3) Human Development Index

4) Adjusted Net Saving

5) Environmental asset accounts

9. Which one of the following measures would we expect to have the highest dollar value for a particular society?

1) Genuine Progress Indicator

2) Net Domestic Product

3) Gross Domestic Product

4) Environmentally Adjusted Net Domestic Product

5) Gross National Saving

10. A measurement of environmental stocks and functions in physical terms is called ...

1) Green accounting

2) Sustainable accounts

3) Ecological values

4) Environmental asset accounts

5) Critical natural capital

11. A factory is an example of what type of capital?

1) Manufactured capital

2) Human capital

3) Natural capital

4) Depreciated capital

5) National capital

12. Which one of the following is the best example of critical natural capital?

1) Diamonds

2) Soil

3) Hydropower

4) Natural gas

5) Willow trees

13. Net Domestic Product is obtained by subtracting what from Gross Domestic Product?

1) Net investment

2) Depreciation of natural capital

3) Net foreign borrowing

4) Depreciation of human capital

5) Depreciation of manufactured capital

14. Environmentally Adjusted Net Domestic Product subtracts which two variables from Gross Domestic Product?

1) Net investment and net foreign borrowing

2) Depreciation of natural and manufactured capital

3) Depreciation of human and manufactured capital

4) Depreciation of manufactured capital and net investment

5) Net investment and depreciation of natural capital

15. Which one of the following measures is not measured in monetary units?

1) Better Life Index

2) Net Domestic Product

3) Genuine Progress Indicator

4) Environmentally Adjusted Net Domestic Product

5) Adjusted Net Saving

16. What are three of the subtractions Adjusted Net Saving makes from gross national saving?

1) Depletion of natural resources, depreciation of human capital, depreciation of fixed capital

2) Depletion of natural resources, defensive expenditures, education expenditures

3) Depletion of natural resources, depreciation of fixed capital, defensive expenditures

4) Depletion of natural resources, depreciation of fixed capital, pollution damages

5) Depletion of natural resources, depreciation of human capital, pollution damages

17. The concept of critical natural capital is most strongly associated with which of the

following measures?

1) Genuine Progress Indicator

2) Environmental asset accounts

3) Net Domestic Product

4) Better Life Index

5) Human Development Index

18. What measure best incorporates the recommendations of the Sarkosy Commission?

1) Genuine Progress Indicator

2) Environmentally Adjusted Net Domestic Product

3) Human Development Index

4) Better Life Index

5) Adjusted Net Saving

19. What does the Adjusted Net Saving measure developed by the World Bank consider

as an integral component of national investment?

1) Education

2) Defensive expenditures

3) Unpaid labor

4) The value of consumer durable goods

5) Health care costs

20. Which one of the following statements offers the best assessment of the current status of environmental accounting measures?

1) Measures such as GNP and GDP should be discarded in favor of the use of environmental asset accounts

2) The Genuine Progress Indicator is the best alternative to GDP

3) The Human Development Index is the best alternative to GDP

4) No universally-accepted alternative for revising national accounting has been developed

5) Environmental services should always be accounted for in monetary terms

1. Which one of the following is not a limitation of GDP?

1) GDP does not include unpaid labor

2) GDP does not value leisure time

3) GDP does not consider environmental degradation

4) GDP does not consider capital depreciation

5) GDP does not account for resource depletion

2. Which one of the following measures is obtained by adjusting GDP?

1) Net Domestic Product

2) Adjusted Net Saving

3) Genuine Progress Indicator

4) Environmental asset accounts

5) Better Life Index

3. Which one of the following national accounting measures does not account for natural

resource depreciation or environmental damage?

1) Environmentally Adjusted Net Domestic Product

2) Genuine Progress Indicator

3) Human Development Index

4) Adjusted Net Saving

5) Environmental asset accounts

4. Which one of the following national accounting measures includes a subtraction for natural capital depreciation?

1) Environmentally Adjusted Net Domestic Product

2) Human Development Index

3) Better Life Index

4) Net Domestic Product

5) Environmental asset accounts

5. A negative value for adjusted net saving implies that ...

1) People in a country are not saving enough for retirement

2) Physical capital is being replaced faster than it is depreciating

3) Natural capital is depreciating faster than it is being replaced

4) Net growth of combined physical and natural capital is negative

5) Both natural capital stocks and physical capital stocks are increasing

6. Which one of the following statements is false?

1) Adjusted Net Saving is negative in some developing countries

2) Increases in natural resource exports will always increase Adjusted Net Saving

3) Gross Domestic Product fails to account for unpaid work

4) Environmentally Adjusted Net Domestic Product subtracts a value for natural capital depletion

5) Net investment is overstated if no adjustment is made for natural capital depletion

7. Which one of the following expenditures would increase the Genuine Progress Indicator?

1) Buying a home air filter

2) The cost of maintaining a prison

3) Cleaning up a toxic waste site

4) The cost of auto accident repairs

5) Providing expanded public education

8. Which of the following national accounting measures adjusts for defensive expenditures, natural resource depletion, and income inequality?

1) Environmentally Adjusted Net Domestic Product

2) Genuine Progress Indicator

3) Human Development Index

4) Adjusted Net Saving

5) Environmental asset accounts

9. Which one of the following measures would we expect to have the highest dollar value for a particular society?

1) Genuine Progress Indicator

2) Net Domestic Product

3) Gross Domestic Product

4) Environmentally Adjusted Net Domestic Product

5) Gross National Saving

10. A measurement of environmental stocks and functions in physical terms is called ...

1) Green accounting

2) Sustainable accounts

3) Ecological values

4) Environmental asset accounts

5) Critical natural capital

11. A factory is an example of what type of capital?

1) Manufactured capital

2) Human capital

3) Natural capital

4) Depreciated capital

5) National capital

12. Which one of the following is the best example of critical natural capital?

1) Diamonds

2) Soil

3) Hydropower

4) Natural gas

5) Willow trees

13. Net domestic product is obtained by subtracting what from Gross Domestic Product?

1) Net investment

2) Depreciation of natural capital

3) Net foreign borrowing

4) Depreciation of human capital

5) Depreciation of manufactured capital

14. Environmentally adjusted net domestic product subtracts which two variables from Gross Domestic Product?

1) Net investment and net foreign borrowing

2) Depreciation of natural and manufactured capital

3) Depreciation of human and manufactured capital

4) Depreciation of manufactured capital and net investment

5) Net investment and depreciation of natural capital

15. Which one of the following measures is not measured in monetary units?

1) Better Life Index

2) Net Domestic Product

3) Genuine Progress Indicator

4) Environmentally Adjusted Net Domestic Product

5) Adjusted Net Saving

16. What are three of the subtractions Adjusted Net Saving makes from gross national saving?

1) Depletion of natural resources, depreciation of human capital, depreciation of fixed capital

2) Depletion of natural resources, defensive expenditures, education expenditures

3) Depletion of natural resources, depreciation of fixed capital, defensive expenditures

4) Depletion of natural resources, depreciation of fixed capital, pollution damages

5) Depletion of natural resources, depreciation of human capital, pollution damages

17. The concept of critical natural capital is most strongly associated with which of the following measures?

1) Genuine Progress Indicator

2) Environmental asset accounts

3) Net Domestic Product

4) Better Life Index

5) Human Development Index

18. What measure best incorporates the recommendations of the Sarkozy Commission?

1) Genuine Progress Indicator

2) Environmentally Adjusted Net Domestic Product

3) Human Development Index

4) Better Life Index

5) Adjusted Net Saving

19. What does the adjusted net saving measure developed by the World Bank consider as an integral component of national investment?

1) Education

2) Defensive expenditures

3) Unpaid labor

4) The value of consumer durable goods

5) Health care costs

20. Which one of the following statements offers the best assessment of the current status of environmental accounting measures?

1) Measures such as GNP and GDP should be discarded in favor of the use of environmental asset accounts

2) The Genuine Progress Indicator is the best alternative to GDP

3) The Human Development Index is the best alternative to GDP

4) No universally-accepted alternative for revising national accounting has been developed

5) Environmental services should always be accounted for in monetary terms

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.

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