ECON 1100 COMPLETE LATEST CH 7
UNIT 3 BASED QUESTIONS AND
ANSWERS
sustained economic growth did not begin until - ANSWER-the industrial revolution
compounding - ANSWER-magnifies even small differences in interest rates over long periods of time
in the long run small differences in economic growth rates result in - ANSWER-big differences in living
standards
growth rates matter because - ANSWER-An economy that grows too slowly fails to raise living standards.
2 groups of the worlds economies - ANSWER-1. high income countries/industrial countries/developed
countries
2. low-income countries/developing countries
2 key factors that determine labour productivity - ANSWER-1. the quantity of capital available to workers
2. the level of technology
three main sources of technological change - ANSWER-1. better machinery and equipment
2. increases in human capital
3. better means of organizing and managing production
how to illustrate technological change using the production function - ANSWER-shifting up the curve
equal increases in the amount of capital per hour worked lead to - ANSWER-diminishing increases in
output per hour worked
law of diminishing returns - ANSWER-that as we add more of one inout to a fixed quantity of another
input output increases by smaller additional amounts
what helps avoid diminishing returns to capital - ANSWER-technological change
in the long run a country will experience an increasing standard of living only - ANSWER-if it experiences
continuing technological change
romer argues - ANSWER-that the accumulation of knowledge capital is a key determinant of economic
growth
as firms add to their stock of knowledge capital at the firm level they increase their output but at a -
ANSWER-decreasing rate
at the level of the entire economy knowledge capital is subject to - ANSWER-increasing returns
Knowledge capital is nonrival in the sense that - ANSWER-two people can use the same knowledge to
develop and produce a product.
knowledge capital is nonexcludable in the sense that - ANSWER-once the information is out there you
cannot prevent someone from using it (sorta)
firms free ride - ANSWER-when they benefit from the results of research and development they did not
pay for
3 ways government policy can help increase the accumulation of knowledge capital - ANSWER-1.
protecting intellectual property with patents and copyright
2. supporting research and development
3. subsidizing education
fall back of patent - ANSWER-in filing for patent firm must disclose information about the product or
process that other firms can use to make products similar but do not go against the patent
how to avoid fall back of patent - ANSWER-firm may try to keep the results of its research a trade secret
according to schumpeter the key to rising living standards is - ANSWER-not small changes to existing
products but rather new products that meet consumer wants in qualitatively better ways
to schumpeter want is central to economic growth - ANSWER-the entrepreneur
UNIT 3 BASED QUESTIONS AND
ANSWERS
sustained economic growth did not begin until - ANSWER-the industrial revolution
compounding - ANSWER-magnifies even small differences in interest rates over long periods of time
in the long run small differences in economic growth rates result in - ANSWER-big differences in living
standards
growth rates matter because - ANSWER-An economy that grows too slowly fails to raise living standards.
2 groups of the worlds economies - ANSWER-1. high income countries/industrial countries/developed
countries
2. low-income countries/developing countries
2 key factors that determine labour productivity - ANSWER-1. the quantity of capital available to workers
2. the level of technology
three main sources of technological change - ANSWER-1. better machinery and equipment
2. increases in human capital
3. better means of organizing and managing production
how to illustrate technological change using the production function - ANSWER-shifting up the curve
equal increases in the amount of capital per hour worked lead to - ANSWER-diminishing increases in
output per hour worked
law of diminishing returns - ANSWER-that as we add more of one inout to a fixed quantity of another
input output increases by smaller additional amounts
what helps avoid diminishing returns to capital - ANSWER-technological change
in the long run a country will experience an increasing standard of living only - ANSWER-if it experiences
continuing technological change
romer argues - ANSWER-that the accumulation of knowledge capital is a key determinant of economic
growth
as firms add to their stock of knowledge capital at the firm level they increase their output but at a -
ANSWER-decreasing rate
at the level of the entire economy knowledge capital is subject to - ANSWER-increasing returns
Knowledge capital is nonrival in the sense that - ANSWER-two people can use the same knowledge to
develop and produce a product.
knowledge capital is nonexcludable in the sense that - ANSWER-once the information is out there you
cannot prevent someone from using it (sorta)
firms free ride - ANSWER-when they benefit from the results of research and development they did not
pay for
3 ways government policy can help increase the accumulation of knowledge capital - ANSWER-1.
protecting intellectual property with patents and copyright
2. supporting research and development
3. subsidizing education
fall back of patent - ANSWER-in filing for patent firm must disclose information about the product or
process that other firms can use to make products similar but do not go against the patent
how to avoid fall back of patent - ANSWER-firm may try to keep the results of its research a trade secret
according to schumpeter the key to rising living standards is - ANSWER-not small changes to existing
products but rather new products that meet consumer wants in qualitatively better ways
to schumpeter want is central to economic growth - ANSWER-the entrepreneur
