Question 1

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

Accepted Answer

Economic growth raises incomes, allowing for better nutrition, healthcare, and living conditions, which improve survival rates.

Question 2

Suppose Country A has a real GDP of $1,000,000 and 2,000 workers. What is the productivity (output per worker) in Country A?

Accepted Answer

$$Y/L = \frac{1,000,000}{2,000} = 500$$

Question 3

Which of the following is NOT a direct determinant of a country's productivity according to the study materials?

Accepted Answer

The country's population size

Question 4

A government wants to increase its country's long-run economic growth. Which policy is most likely to be effective based on the study materials?

Accepted Answer

Cracking down on government corruption

Question 5

If a country increases its saving rate, what is the most likely short-run and long-run effect on consumption and investment?

Accepted Answer

Short-run consumption decreases, investment increases, and long-run consumption may rise due to higher future output.

Question 6

Which of the following best describes the tradeoff involved in investing in human capital (education)?

Accepted Answer

Investing in education requires sacrificing current wages for higher future wages.

Question 7

Country X has a high level of physical capital per worker ($$K/L) $$but low technological knowledge. Country Y has moderate $$K/L$$ but advanced technological knowledge. Which country is likely to have higher productivity, and why?

Accepted Answer

Country Y, because technological knowledge can boost productivity even with moderate capital.

Question 8

Which of the following institutional features is LEAST likely to promote long-run economic growth?

Accepted Answer

Political instability

Question 9

Suppose a country implements outward-oriented policies, such as reducing tariffs and encouraging foreign investment. According to the study materials, what is the most likely outcome?

Accepted Answer

The country will likely experience higher economic growth and improved living standards.

Question 10

Which formula correctly represents productivity as defined in the study materials?

Accepted Answer

$$Productivity = \frac{Y}{L}$$

Question 11

A country with high levels of corruption is likely to experience which of the following outcomes?

Accepted Answer

Lower economic growth due to reduced incentives for investment and innovation.

Question 12

Which of the following best explains why technological progress is considered the main driver of rising living standards over the long run?

Accepted Answer

Technological progress allows society to produce more output from the same amount of resources.

Question 13

Which of the following is an example of foreign direct investment (FDI)?

Accepted Answer

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

Question 14

If a country wants to encourage research and development (R&D), which of the following policies would be most effective?

Accepted Answer

Implementing patent laws to protect inventors' rights.

Question 15

Suppose Country Z has a low GDP per capita and high child mortality. Which of the following policies is most likely to improve both indicators over the long run?

Accepted Answer

Allowing free trade and investing in education.

Question 16

Which of the following statements about the relationship between saving, investment, and economic growth is correct?

Accepted Answer

Higher saving leads to higher investment, which can increase the capital stock and boost productivity.

Question 17

A country with strong property rights, honest government, and a dependable legal system is likely to experience which of the following?

Accepted Answer

Higher levels of investment and faster economic growth.

Question 18

Which of the following best describes the effect of trade on economic growth, according to the study materials?

Accepted Answer

Trade has similar effects as discovering new technologies, improving productivity and living standards.

Question 19

If a country wants to increase its human capital per worker ($$H/L$$), which of the following policies would be most effective?

Accepted Answer

Investing in education and training programs.

Question 20

Which of the following is a plausible reason why some countries remain stuck in a poverty trap, according to the study materials?

Accepted Answer

Lack of investment in physical and human capital, poor institutions, and limited technological progress.

Long-Run Economic Growth: Determinants, Measurement, and Policy

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