Question 1

The image above shows a satellite view of the Korean peninsula at night. The stark difference in lighting between the two countries is often used as evidence of the impact of which of the following on economic growth?

Accepted Answer

Differences in economic institutions and policies

Question 2

Which of the following best explains why some countries, such as South Korea, have experienced rapid economic growth while others, like North Korea, have not?

Accepted Answer

South Korea has implemented outward-oriented policies and strong institutions, while North Korea has not.

Question 3

According to the study materials, which of the following is NOT a key institution that supports economic growth?

Accepted Answer

High tariffs on imports

Question 4

Suppose Country A increases its capital per worker ($$K/L) by $$investing in new machinery. According to the production function, what is the expected effect on output per worker ($$Y/L$$)?

Accepted Answer

Output per worker ($$Y/L) $$will increase.

Question 5

Which of the following equations correctly represents productivity as defined in the study materials?

Accepted Answer

$$productivity = Y/L$$

Question 6

A government wants to boost long-run economic growth by increasing human capital. Which policy would be most effective?

Accepted Answer

Subsidizing education and training programs

Question 7

If a country implements policies that encourage foreign direct investment, what is the most likely effect on its economy?

Accepted Answer

An increase in capital per worker ($$K/L) $$and productivity

Question 8

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

Accepted Answer

Increasing saving requires reducing current consumption to fund future investment.

Question 9

Which of the following is an example of technological knowledge as defined in the study materials?

Accepted Answer

A new method for increasing crop yields using AI drones

Question 10

Suppose a country has a high level of corruption and weak property rights. According to the study materials, what is the likely impact on its economic growth?

Accepted Answer

Economic growth will be hindered due to poor institutions.

Question 11

Which of the following policies is most likely to promote long-run economic growth in a poor country, according to the study materials?

Accepted Answer

Allowing free trade

Question 12

If a country increases its average years of schooling, what is the expected effect on GDP per capita, based on the study materials?

Accepted Answer

GDP per capita is expected to increase.

Question 13

Which of the following best explains why technological progress is considered the main driver of long-run increases in living standards?

Accepted Answer

Technological progress allows society to get more output from the same resources.

Question 14

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

Accepted Answer

Slower economic growth and lower productivity

Question 15

Which of the following formulas represents capital per worker?

Accepted Answer

$$K/L$$

Question 16

Suppose a government cracks down on corruption and strengthens property rights. What is the most likely effect on foreign investment?

Accepted Answer

Foreign investment will increase due to improved institutions.

Question 17

Which of the following is a tradeoff involved in investing in human capital?

Accepted Answer

Spending time in school means sacrificing current wages for higher future earnings.

Question 18

Which of the following is an example of a policy that promotes research and development (R&D)?

Accepted Answer

Providing tax incentives for private sector R&D

Question 19

If a country’s productivity ($$Y/L) $$increases rapidly, what is the expected effect on its standard of living?

Accepted Answer

The standard of living will increase.

Question 20

Which of the following best describes the relationship between health and economic growth, as discussed in the study materials?

Accepted Answer

Higher economic growth leads to better health outcomes.

Long-Run Economic Growth: Sources and Policies

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