Macroeconomics “Economic Growth”
1. Which of the following is not a consequence of the Industrial Revolution?
A. Similar and sustained growth for all countries B. Increasing inequality among countries C. Increasing specialization and labor productivity D. Migration of peasants to urban environments
2. One of the main factors for economic growth is labor productivity. If you were to advise a government in how to increase labor productivity, which policy suggestion would be more likely to be successful?
A. Invest in education, which will likely decrease human capital
B. Promote the immediate free use of all new innovations
C. Invest in education, which will likely increase human capital
D. Provide disincentives for invention
3. Analyze the following graph, which shows the average annual rates of productivity growth for the United States in different time periods, as measured by the change in output per hour worked. Which of the statements is incorrect?
4. One straight-forward way of measuring the components of economic growth is to utilize an aggregate production function. Which of the following conclusions regarding the results of those studies for the United States is incorrect?
A. Investment in physical capital has proven to be more important than investment in human capital
B. Physical capital, human capital and technology typically work together to promote economic growth
C. Growth in human capital and physical capital often explains only half or less than half of the economic growth that occurs
D. A big portion of economic growth is left unexplained by physical and human capital, meaning that technology plays a major role in that process
5. One of the arguments favoring the convergence hypothesis is the existence of diminishing marginal returns. What that does that argument implies?
A. High-income economies and low-income economies will never invest the same amount in physical and human capital
B. If high-income economies and low-income economies invest the same amount in physical and human capital, both economies will grow at the same rate
C. If high-income economies and low-income economies invest the same amount in physical and human capital, the former will grow less than the later because the returns for those investments will be smaller
D. If high-income economies and low-income economies invest the same amount in physical and human capital, the former will grow faster than the later because they already have larger stocks of capital
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7. Which of the following sentences is true about the relationship between labor productivity, capital deepening, and technology?
A. Improvements in technology are always accompanied by increasing labor productivity and capital deepening
B. Improvements in technology can be a way of avoiding decreasing marginal returns in output per capita
C. It is impossible to increase labor productivity without capital deepening D. When there’s no technological advancement, labor productivity remains constant
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