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 higher GDP per capita than Country B. According to the study materials, which of the following is most likely true?

Accepted Answer

Country A has a lower child mortality rate than Country B.

Question 3

If a country wants to increase its output per worker ($$Y/L$$), which of the following policies would be most effective in the long run?

Accepted Answer

Encouraging saving and investment to increase the capital stock per worker ($$K/L).$$

Question 4

Which formula correctly represents labor productivity?

Accepted Answer

$$Y \div L$$

Question 5

A government is considering two policies: (1) increasing spending on public education, and (2) subsidizing the purchase of new machinery for factories. According to the determinants of productivity, what is the likely effect of these policies?

Accepted Answer

Both policies will likely increase productivity by raising human capital ($$H/L) $$and physical capital ($$K/L) $$per worker.

Question 6

Which of the following best describes the tradeoff involved in increasing investment to boost economic growth?

Accepted Answer

Increasing investment requires reducing current consumption, as resources are diverted from producing consumption goods to investment goods.

Question 7

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 8

Why do institutions such as property rights and honest government matter for long-run economic growth?

Accepted Answer

They create incentives for investment and innovation, which boost productivity and living standards.

Question 9

Suppose a country implements inward-oriented policies such as high tariffs and restrictions on foreign investment. Based on historical evidence, what is the likely outcome?

Accepted Answer

The country will likely experience slower economic growth compared to countries with outward-oriented policies.

Question 10

Which of the following best explains why technological knowledge is considered a 'public good' in the context of economic growth?

Accepted Answer

Once discovered, technological knowledge can be used by many people without being depleted.

Question 11

A country is debating whether to invest in basic research at universities or to provide tax incentives for private sector R&D. According to the study materials, what is the likely effect of these policies on long-run growth?

Accepted Answer

Both policies can promote technological progress, which is the main driver of rising living standards over the long run.

Question 12

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

Accepted Answer

Productivity will increase because human capital per worker ($$H/L) $$rises.

Question 13

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

Accepted Answer

High trade barriers

Question 14

Suppose a developing country wants to attract more foreign investment. Which policy is most likely to be effective?

Accepted Answer

Strengthening property rights and reducing corruption.

Question 15

Which of the following equations best represents the relationship between output, capital, and labor in the context of productivity?

Accepted Answer

$$Y = A \cdot F(K, L, H, N)$$

Question 16

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

Accepted Answer

Lower economic growth due to weak institutions and poor incentives for investment.

Question 17

Which of the following best describes the effect of outward-oriented trade policies on economic growth?

Accepted Answer

They promote integration with the world economy, leading to higher productivity and growth.

Question 18

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

Accepted Answer

Short-run: higher investment and growth; long-run: higher productivity and living standards.

Question 19

Which of the following is a real-world example of a country that succeeded with outward-oriented policies?

Accepted Answer

South Korea after 1960

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

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