Question 3 According to Joseph Schumpeter, the theory of creative destruction describes a process by which A some new products unleash a gale of destruction that drive other new products out of the...

Question 3 According to Joseph Schumpeter, the theory of creative destruction describes a process by which A some new products unleash a gale of destruction that drive other new products out of the market. B new products unleash a gale of destruction that drives old products out of the market. C new products are created by the destruction of capital. D the creation of new products never involves the destruction of old products. Question 4 Which of the following countries had the highest GDP per capita in 2012? A Qatar B United States C Japan D Norway Question 5 ________ save a ________ of their income. This ________ capital in their economy and raises economic growth. A Developing countries; large proportion; decreases B Developing countries; small proportion; increases C High-income countries; large proportion; increases D High-income countries; small proportion; increases Question 6 The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects. A A government B households C banks D firms Question 7 The U.S. economy has been more stable since 1950. True False Question 8 When the economy reaches a trough in a business cycle, which of the following will occur? A Income, production, and employment will continue to fall. B Income, production, and employment will begin to rise. C Income and production will rise, but employment will continue to fall. D Employment rises, but income and production will continue to fall. Question 9 In a closed economy, what is the relationship between saving and investment? A Saving is greater than investment. B Investment is greater than saving. C Investment is equal to saving. D Investment may be greater or smaller than saving. Question 10 The per-worker production function shows the relationship between ________ per hour worked and ________ per hour worked, holding ________ constant. A labor; real GDP; technology B capital; real GDP; technology C labor; capital; real GDP D capital; labor; real GDP Question 11 New growth theory states that increases in ________ capital will result in ________ at the ________ level. A knowledge; increasing returns to scale; firm B physical; decreasing returns to scale; firm C knowledge; decreasing returns to scale; economy D knowledge; increasing returns to scale; economy Question 12 Which of the following is not a reason why the Industrial Revolution occurred when and where it did? A The British government was committed to upholding private property rights. B The British government was able to eliminate arbitrary increases in taxes. C The British government was able to more easily seize wealth. D Institutional changes by the British government helped protect wealth. Question 13 Growth in real GDP per capita for the world economy was greatest during A the seventeenth century. B the eighteenth century. C the nineteenth century. D the twentieth century. Question 14 Which of the following is a normative statement about economic growth? A Economic growth is associated with higher labor productivity growth. B Economic growth increases GDP per capita. C Economic growth hurts developing countries. D Foreign direct investment stimulates economic growth. Question 15 The effect of a recession on a company like Whirlpool Corporation is such that A sales decline more sharply for Whirlpool as compared to firms that do not produce durable goods. B profits fall less sharply as compared to firms that do not produce durable goods. C the decline in sales is more short-lived as compared to firms that do not produce durable goods. D there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods. Question 16 For the recessions in the United States since the 1950s, A cyclical unemployment has been non-existent. B unemployment rises on average by about 1.2 percentage points 12 months after a recession begins. C unemployment falls on average by 2 percentage points 12 months after a recession begins. D unemployment rises on average about 5 percentage points 12 months after a recession begins. Question 17 You are an economic advisor to the president. You are asked to recommend a policy to promote long-term economic growth in the economy. Which of the following policies would you choose? A a reduction in sales taxes B an investment tax credit C a reduction in taxes on luxury yachts D All of these Question 18 In comparison to a government that runs a balanced budget, when the government runs a budget deficit, A the equilibrium interest rate will fall. B business investment will fall. C household savings will fall. D None of these Question 19 If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined. A labor force participation B the quantity of goods or services that can be produced by one hour of work C the working-age population D nominal GDP Question 20 Policies to promote growth by increasing saving and investment work through A decreasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital. B increasing the supply of loanable funds, increasing the interest rate, raising the level of investment in physical capital. C increasing the supply of loanable funds, lowering the interest rate, lowering the level of investment in physical capital. D increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital.