Chapter 13 Why Do Economies Grow?

| November 9, 2018

3)
An increase in the capital stock will
A)
shift the production function downward.
B)
shift the production function upward.
C)
flatten the production function.
D)
steepen the production function.

4)
Capital deepening causes ________ in the demand for labor.
A)
an increase
B)
a decrease
C)
no change
D)
either an increase or decrease

Recall
the Application about the relationship between economic growth and inequality
to answer the following question(s).

5)
Recall the application. Recent research indicates that
A)
higher growth can only occur if there is increased inequality.
B)
economic growth and inequality are directly related.
C)
there is no apparent relationship between economic growth and equality.
D)
equality may be beneficial to growth.

6)
Recall the application. Berg and Ostrey found that
A)
levels of equality or inequality had no direct bearing on long periods of
growth.
B)
inequality promoted longer periods of growth than did equality.
C)
when there was more equality, spells of growth within a country tended to last
longer.
D)
when there was more equality, any signs of growth were short-lived.

7)
Recall the application. Factors which are important for economic growth include
all of the following EXCEPT
A)
a continuously increasing money supply.
B)
well-functioning credit markets.
C)
the quality of the political institution.
D)
an economy’s openness to trade.

8)
In a simple economy without government or foreign trade, any income not
consumed is called
A)
investment.
B)
net investment.
C)
saving.
D)
depreciation.

9)
In a simple economy (without government or foreign trade) where output can be
purchased only by consumers or by firms, saving must equal
A)
investment.
B)
depreciation.
C)
consumption.
D)
income.

10)
Increases in the stock of capital are the result of decreases in
A)
gross investment.
B)
depreciation.
C)
net investment.
D)
all of the above

11)
Gross investment minus depreciation is equal to
A)
gross domestic product.
B)
net investment.
C)
personal investment.
D)
nominal investment.

12)
Gross investment minus net investment is equal to
A)
depreciation.
B)
nominal investment.
C)
real investment.
D)
consumption.

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