Macro Econ 04-08

Property rights refer to

• the ability of people to exercise authority over the resources they own.

• the right of the government to exercise authority over property owners.

• the fact that some countries have greater natural resources.

• a document stating the rights of ownership that accompany owning property.

Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

• a. The demand and supply of loanable funds would shift right.

• b.The demand and supply of loanable funds would shift left.

• c. The supply of loanable funds would shift right.

• d.The demand for loanable funds would shift left

Which of the following is correct?

• Policies designed to prevent imports from other countries generally increase economic growth.

• Gary’s Becker proposal to pay mothers in developing countries to keep their children in school has not worked very well in practice.

• Political instability can reduce foreign investment, reducing growth.

• All of the above are correct.

Outward-oriented policies

• None of the above are correct.

• receive little support from economists, despite such policies’ success.

• have generally led to high growth for the countries that pursued them

• prevent countries from taking advantage of gains from trade.

Which of the following statements is FALSE?

• Investment in poor countries from rich countries is one way poor countries can learn new technologies.

• Adam Smith argued that peace, light taxes and a tolerable administration of justice are the keys to growth.

• Malthus argued that charity and government aid was an effective way to reduce poverty.

• The catch-up effect is based on the assumption of diminishing returns to capital.

On the basis of theory and empirical evidence economists have concluded several things concerning growth. Which of the following is NOT one of these conclusions?

• A relatively simple way to increase growth rates permanently is to increase a country’s saving rate.

• Well-established property rights that are enforced by fair and efficient courts are important to economic growth.

• Growth is generally inhibited rather than promoted by policies like protective tariffs.

• Countries with few natural resources still have opportunities for economic growth.

If natural resources were becoming scarcer, then we would expect their

• known quantities to be falling, but they have not been.

• prices to be rising relative to other prices, as they have been.

• prices to be rising relative to other prices, but this has not occurred.

• known quantities to be falling, as they have been.

If the production function for an economy had constant returns to scale, the labor force doubled, and all other inputs stayed the same, then real GDP would

• double

• stay the same

• increase but by something less than double

• increase by 50 percent

Y/L is

• productivity

• the amount of human capital

• output

• the availability of natural resources

Across countries, investment and growth rates are

• positively related.

• 
  negatively related.

• 
  positively related for rich countries, but negatively related for poor countries.

• negatively related for rich countries, but positively related for poor countries.