9708 AS Economics - Economic Growth

What will be most likely to decrease a country’s national output in the short run but to increase its potential for long-run growth?

• a decrease in the level of import tariffs

• a decrease in the rate of immigration

• an increase in female participation in the labour force

• an increase in the money supply

Which combination of factors is most likely to result in more rapid economic growth?

• increases in employment and in the balance of payments deficit

• increases in the level of investment and in the size of the working population

• more equal distribution of wealth and a higher level of unemployment benefits

• more rapid inflation and an increase in the national debt

The table shows the figures for consumption, capital formation and depreciation in four economies, all measured in US $.

Assuming that the state of technology remains unchanged, which economy is most likely to experience economic growth?

• 100; 20; 30

• 500; 200; 200

• 1000; 1400; 1200

• 20,000; 5,000; 6,000

What would be most likely to stimulate long-run growth in an economy?

• employment protection legislation

• government policy toc aggregate demand

• technical innovations by firms

• the development of trade unions

It is often argued that the present rate of economic growth will soon lead to the exhaustion of reserves of material resources, such as minerals and oil. What does this argument fail to take into account?

• the drawbacks of present GDP levels as an indicator of the ‘happiness’ of the population

• the effect of increasing resource prices on the discovery and exploitation of new reserves

• the right of future generations to enjoy present standards of living

• the role of education in economic development

country has a high ratio of investment to GDP and rapid economic growth. If the net capital inflow from abroad is zero, what will be a necessary cost of such growth?

• an increase in taxation

• increased consumption of luxury goods by richer residents

• increased imports of goods from abroad

• the sacrifice of present consumption by residents of the country

The diagram shows a country’s production possibility curve and a number of alternative production points. Which change in the country’s output would be most likely to lead to a fall in potential growth?

• U to V

• U to X

• Y to X

• Y to Z

Why may an economy experience an increase in potential economic growth despite net investment remaining unchanged?

• Capital consumption exceeds net investment.

• Net investment exceeds gross investment.

• The new capital equipment embodies more advanced technology

• The new capital equipment is longer lasting than the capital equipment it replaces.

The diagram shows an economy’s production possibility curve. What causes a movement from point X to point Y?

• a positive output gap

• a recession

• actual economic growth

• potential economic growth