ECON 1202 Chapter 11 Questions with Guaranteed Pass Solutions Edition.

What can low-income countries do in order to increase the amount of loanable funds available to firms for investment projects such as new factories or improved technology? - Answer Provide savings incentives Potential GDP - Answer increases over time as the labor force grows. increases over time as technological change occurs. Which of the following equals the amount of public saving? - Answer Government tax revenue minus the sum of government purchases and transfer payments to households. A government that collects more in taxes than it spends experiences - Answer a budget surplus. Property rights have been determined to be a major factor that helps countries sustain economic growth. Governments can change laws and policies in order to give individuals and firms more freedom. By doing so, government can help promote growth because greater property rights - Answer give entrepreneurs more incentive to take risks that create new products, ideas, and more technology. The figure to the right illustrates the relationship between weak and strong rule-of-law countries and economic growth. In addition to a country's failure to enforce rule-of-law, what else explains why more low-income countries do NOT experience rapid growth as the catch-up line predicts? - Answer Inability to borrow money needed for investment Shortage of childhood vaccinations Lengthy civil wars Consider the per-worker production function to the right. Equal increases in the quantity of capital per hour worked lead to _____ increases in output per hour worked - Answer diminishing Between 1950 and the mid-1990s, the United States experienced a much larger increase in the standard of living than the Soviet Union. This difference can be most attributed to the fact that the U.S.