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

Economic growth leads to higher GDP per capita, which is strongly correlated with higher survival rates for newborns.

Question 2

Suppose Country A has a GDP per capita of $$10,000 and Country B has a GDP per capita of 50$$,000. According to the study materials, which of the following is most likely true?

Accepted Answer

Country B is likely to have a higher child survival rate than Country A.

Question 3

Which formula correctly represents labor productivity as described in the materials?

Accepted Answer

$$Y/L$$

Question 4

A country wants to increase its long-run standard of living. According to the materials, which of the following policies is most likely to be effective?

Accepted Answer

Allowing free trade and encouraging foreign investment

Question 5

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

Accepted Answer

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

Question 6

Which of the following is NOT considered an institution that supports economic growth?

Accepted Answer

Frequent government corruption

Question 7

Country X is considering two policies: (1) increasing public investment in education, and (2) increasing tariffs on imports. Based on the materials, which combination is most likely to promote long-run economic growth?

Accepted Answer

Increase education investment and reduce tariffs

Question 8

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 9

Suppose a country has a high level of human capital per worker ($$H/L). $$What is the likely effect on productivity ($$Y/L$$)?

Accepted Answer

Productivity ($$Y/L) $$will be higher.

Question 10

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 11

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

Accepted Answer

Because ideas can be shared freely, increasing productivity for many.

Question 12

Which of the following best illustrates the concept of opportunity cost in investing in human capital?

Accepted Answer

A student spends a year in school and forgoes a year's wages to gain higher future earnings.

Question 13

Which policy is most likely to promote technological progress and long-run economic growth?

Accepted Answer

Providing tax incentives for private sector R&D

Question 14

If a country is stuck in a 'poverty trap,' which of the following is LEAST likely to help it achieve sustained economic growth?

Accepted Answer

Restricting imports to protect domestic industries

Question 15

Suppose a country increases its saving rate, leading to higher investment in capital. According to the materials, what is the likely long-run effect?

Accepted Answer

A higher level of GDP per capita, but not a permanent increase in the growth rate

Question 16

Which of the following best describes the relationship between institutions and economic growth?

Accepted Answer

Strong institutions, such as property rights and honest government, promote economic growth.

Question 17

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

Accepted Answer

Higher productivity and living standards

Question 18

Which of the following equations correctly expresses the tradeoff between current and future consumption when a country increases investment?

Accepted Answer

$$C + I = Y$$

Question 19

Which of the following is a likely consequence of a country adopting inward-oriented policies such as high tariffs and restrictions on foreign investment?

Accepted Answer

Stagnant growth and lower productivity

Question 20

If a government wants to encourage both domestic and foreign investment, which of the following policies would be most effective according to the study materials?

Accepted Answer

Offering tax incentives for investment by both local and foreign firms

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

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