Chapter 26 Self-test questions

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Extensive growth differs from intensive growth in that __________

Extensive growth is often more accurate than intensive growth correct incorrect

Extensive growth looks at growth that occurs outside the country whilst intensive growth is concerned with growth within the country correct incorrect

Extensive growth looks at the growth of total GDP whilst intensive growth is interested in GDP per capita correct incorrect

None of the above correct incorrect

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Countries can continue to grow at high rates as long as __________

They do not remain behind the technological frontier correct incorrect

Corruption is curbed correct incorrect

They have a democracy correct incorrect

The central bank is independent correct incorrect

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The following are all important determinants of growth except __________

Labor force participation rate correct incorrect

Capital accumulation correct incorrect

Innovation correct incorrect

Monetary policy correct incorrect

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The opportunity cost associated with economic growth is __________

That revenues grow slowly correct incorrect

Zero since there is no opportunity cost correct incorrect

Current consumption is reduced in order to generate growth correct incorrect

Democracy is sacrificed in order for the economy to grow correct incorrect

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Improved living standards does not necessarily imply increased happiness for people because ______________

People often do not remember how bad things were in the past correct incorrect

People are ungrateful correct incorrect

People may attach happiness to factors such as quality family relationships which may not be directly affected by economic growth correct incorrect

Happiness is an illusion correct incorrect

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Increasing returns to scale suggest that __________

When all the inputs are increased in equal proportions, the resulting output increases by a greater proportion correct incorrect

When one input is increased, the resulting output increases by a greater proportion. correct incorrect

Returns on investments rise continuously correct incorrect

Rising costs as firms increase the size of their operations correct incorrect

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Solow's growth model in 1956 assumed that the aggregate production function exhibited __________ returns to scale.

Decreasing correct incorrect

Increasing correct incorrect

Zero correct incorrect

constant correct incorrect

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One reason why Malthus' predictions did not materialise was __________

He was just an alarmist correct incorrect

His model was flawed and not based on credible data correct incorrect

He did not consider the potential for the economy to grow at an exponential rate correct incorrect

He did not incorporate the aggregate production function into his model correct incorrect

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When an economy is in a steady-state, it does not matter for the economic wellbeing of people if total GDP increases because __________

Economic growth comes at a cost correct incorrect

The growth is accompanied by inflation correct incorrect

The increase in growth does not trickle down to the people correct incorrect

Per capita GDP remains the same correct incorrect

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Neoclassical growth theories suggest that technological change __________

Shifts the production function upwards correct incorrect

Is exogenous to the model correct incorrect

Allows higher level of output to be generated by the same quantity of inputs as before correct incorrect

All of the above correct incorrect