Question 1According to economists today, economic growth depends onresources.technology.institutions

Question 1According to economists today, economic growth depends onresources.technology.institutions.resources and technology.resources, technology, and institutions.Question 2Which of the following is FALSE?Real-world observations shape economic theory.Economic theory shapes policy decisions.Policies affect real-world events.Economic theory has no impact on real-world events.None of these statements is false.Question 3After the Great Depression, the main focus of macroeconomics wasgrowth theory.the study of business cycles.the study of stock markets.the study of why businesses fail.Question 4The Solow Growth Model serves as a foundation ofmacroeconomic theory.microeconomic theory.growth theory.all economic theory.Question 5According to the Solow Growth Model, which of the following is/are the primary source(s) of economicgrowth?Natural resourcesHuman capitalPhysical capitalNatural resources and Human capitalNatural resources and Physical capitalHuman capital and Physical capitalNatural resources, Human capital, and Physical capitalQuestion 6According to the Solow Growth Model, the marginal product of capital iszero and increases as the quantity of capital increases.zero and decreases as the quantity of capital increases.negative and increases as the quantity of capital increases.negative and decreases as the quantity of capital increases.positive and increases as the quantity of capital increases.positive and decreases as the quantity of capital increases.Question 7If building new capital is costless and the capital depreciation rate is zero, then an economy will reach asteady state in which the marginal product of capital isequal to zero.greater than zero.less than zero.Question 8Which of the following is true for an economy before it reaches the steady state?Investment and net investment are both positive.Investment is positive but net investment is zero.Investment is zero but net investment is positive.Investment and net investment are both zero.Question 9The idea of convergence suggests that when underdeveloped nations begin to develop, they typicallyhave _____________ growth rates as they catch up to the developed nations.higherlowersimilarvery lowQuestion 10Which of the following is true after allowing for sustained technological advance in the Solow GrowthModel?I. The steady-state situation is avoidable.II. The marginal product of each unit of capital will increase.III. A diminishing marginal product is avoidable.only Ionly IIonly IIII and III and IIIII and IIII, II, and IIIQuestion 11What is the primary difference between the basic Solow model and the second Solow model?The models are theoretically similar. The second Solow model is only more mathematicallycomplex than the basic model.The second Solow model allows for technological change, while the basic model doesn’t.The basic Solow model features diminishing returns, in contrast to the second model.The marginal product eventually becomes zero in the basic model, while such a situation isavoidable in the second Solow model.Question 12All of the following can result in economic growth exceptimproved schools and colleges.a boost in population growth.a favorable climate.an improved health care system.Question 13Which of the following will result in a movement along the aggregate production function?I. a technological advanceII. training of the workforceIII. an increase in the country’s capital stockI and III and IIIII and IIII, II, and IIIQuestion 14Which of the following is NOT true about technological change in the Solow model?Technological change is random.Technological change occurs exogenously.Technological change is driven by the incentives of the innovators.Technological change is not due to any inherent characteristics of the economy.Question 15What is the key difference between the new growth theory and the growth theory as envisioned bySolow?There is no difference; technological change is endogenous in both these theories.There is no difference; technological change is exogenous in both these theories.Technological change is endogenous in the new growth theory and exogenous in the Solowtheory.Technological change is exogenous in the new growth theory and endogenous in the Solowtheory.Question 16Which of the following were proposed by the new growth theory?I. Capital resources cannot grow indefinitely.II. Technological change is caused by factors inside the economy.III. Technological changes are entirely unpredictable events.IV. Institutions matter.I and III and IVII and IVIII and IVI, II, III, and IVQuestion 17All of the following except _____________ are barriers to natural growth.corruptionpolitical instabilityhigh tax ratesfree marketsAll of these are barriers to natural growth.Question 18Which of the following is supported by the modern growth theory?Population growth is an obstacle to economic growth.Competition encourages discovery of new goods and services, which leads to economicgrowth.A country can grow faster if it disengages itself from international trade with foreignnations.Taxes should be abolished, as they hurt incentives necessary for economic growth.All of these.Population growth is an obstacle to economic growth and Competition encouragesdiscovery of new goods and services, which leads to economic growthPopulation growth is an obstacle to economic growth, Competition encourages discoveryof new goods and services, which leads to economic growth and Taxes should be abolished,as they hurt incentives necessary for economic growth.Question 19According to the new growth theory, the low living standards in many developing countries can beexplained by a lack ofnatural resources.free markets.sound institutions.strong military resources.all of these.free markets and sound institutions.natural resources and strong military resources.

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