Question 1

Which of the following best explains why economic growth is crucial for improving health outcomes, such as reducing child mortality rates?

Accepted Answer

Higher GDP per capita directly leads to better access to medical technology and nutrition.

Question 2

Suppose Country A has a GDP per capita of $$10,000 and Country B has a GDP per capita of 50$$,000. If both countries have the same growth rate, what can you infer about their living standards over time?

Accepted Answer

Country B will maintain a higher standard of living unless Country A's growth rate increases.

Question 3

Productivity is defined as output per worker. Which formula correctly expresses productivity?

Accepted Answer

$$\frac{Y}{L}$$

Question 4

If a country increases its physical capital per worker ($$K/L$$), what is the expected effect on productivity ($$Y/L$$)?

Accepted Answer

Productivity ($$Y/L) $$will increase.

Question 5

Which of the following is an example of investment in human capital?

Accepted Answer

Providing subsidized loans for college education.

Question 6

A government wants to boost long-run economic growth. Which policy is most likely to be effective based on historical evidence?

Accepted Answer

Allowing free trade and eliminating restrictions on foreign investment.

Question 7

Which of the following best describes the tradeoff involved in increasing investment in physical capital?

Accepted Answer

Increasing investment in physical capital requires reducing current consumption.

Question 8

Which institution is NOT typically considered essential for economic growth?

Accepted Answer

High levels of government corruption

Question 9

Suppose a country implements patent laws and increases grants for university research. Which factor of productivity is the government primarily targeting?

Accepted Answer

Technological knowledge

Question 10

If a country has high levels of corruption, what is the likely impact on its long-run economic growth?

Accepted Answer

Corruption reduces economic growth by undermining institutions and incentives.

Question 11

Which of the following policies is most likely to help a poor country escape a poverty trap?

Accepted Answer

Cracking down on government corruption and improving property rights.

Question 12

A country with outward-oriented policies is most likely to experience which of the following outcomes?

Accepted Answer

Faster economic growth and higher living standards.

Question 13

Which formula represents capital per worker?

Accepted Answer

$$\frac{K}{L}$$

Question 14

If a country increases its average years of schooling, what is the expected effect on productivity?

Accepted Answer

Productivity will increase as human capital rises.

Question 15

Which of the following is a direct result of technological progress?

Accepted Answer

Society can produce more output from the same amount of resources.

Question 16

Which of the following is an example of foreign direct investment?

Accepted Answer

A U.S. company builds and operates a factory in Vietnam.

Question 17

Why is knowledge considered a public good in the context of economic growth?

Accepted Answer

Because it can be shared freely and increases productivity for many.

Question 18

A country wants to increase its $$Y/L ($$output per worker). Which combination of policies would be most effective?

Accepted Answer

Increase $$K/L$$, $$H/L$$, and promote technological progress.

Question 19

Which of the following best describes the relationship between saving and investment in the context of long-run economic growth?

Accepted Answer

Higher saving leads to more funds available for investment, which increases productivity.

Question 20

Suppose a country has strong property rights, political stability, and a dependable legal system. What is the likely impact on its economic growth?

Accepted Answer

These institutions will likely promote higher economic growth.

Long-Run Economic Growth: Determinants, International Comparisons, and Policy

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