Chapter 25: Economic Growth(Completely solved)
How do economists define and measure economic growth? correct answersEconomists define
economic growth as an increase in real GDP occurring over some time period or an increase in
real GDP per capita occurring over some time period.
What is real GDP per capita? correct answersReal GDP per capita is the amount of real output
per person in a country.
How is real GDP per capita calculated? correct answersReal GDP divided by population
Why is growth a widely held economic goal? correct answersGrowth lessens the burden of
scarcity
What does the rule of 70 provide? correct answersIt provides a quantitative prediction of the
effect of economic growth.
Growth accounting groups supply-side elements into what two main categories? correct
answersThe system groups these element into increases in hours of work and increases in labor
productivity.
How many determinants of growth are there and what are they? correct answersThere are six
determinants of growth. There are four supply factors: increases in the quantity and quality of
natural resources, increases in the quantity and quality of human resources, increases in the
supply of capital goods, and improvements in technology. There is a demand factor: to achieve
the higher production potential created by the supply factors, households, businesses, and
government must purchase the economy's expanding output of goods and services. There is also
the efficiency factor: to reach its full production potential, an economy must achieve economic
efficiency and full employment
What are the institutional structures that promote growth? correct answersFree trade, strong
property rights, patents and copyrights, efficient financial institutions, and literacy and
widespread education.
What is the largest contributor to productivity growth and what percent is accounted for? correct
answersThe largest contributor is technological advance, which accounts for approximately 40%
of productivity growth.
What are the sources of increasing returns and economies of scale? correct answersMore
specialized inputs, spreading o development costs, simultaneous consumption, network effects,
and learning by doing.
How do economists define and measure economic growth? correct answersEconomists define
economic growth as an increase in real GDP occurring over some time period or an increase in
real GDP per capita occurring over some time period.
What is real GDP per capita? correct answersReal GDP per capita is the amount of real output
per person in a country.
How is real GDP per capita calculated? correct answersReal GDP divided by population
Why is growth a widely held economic goal? correct answersGrowth lessens the burden of
scarcity
What does the rule of 70 provide? correct answersIt provides a quantitative prediction of the
effect of economic growth.
Growth accounting groups supply-side elements into what two main categories? correct
answersThe system groups these element into increases in hours of work and increases in labor
productivity.
How many determinants of growth are there and what are they? correct answersThere are six
determinants of growth. There are four supply factors: increases in the quantity and quality of
natural resources, increases in the quantity and quality of human resources, increases in the
supply of capital goods, and improvements in technology. There is a demand factor: to achieve
the higher production potential created by the supply factors, households, businesses, and
government must purchase the economy's expanding output of goods and services. There is also
the efficiency factor: to reach its full production potential, an economy must achieve economic
efficiency and full employment
What are the institutional structures that promote growth? correct answersFree trade, strong
property rights, patents and copyrights, efficient financial institutions, and literacy and
widespread education.
What is the largest contributor to productivity growth and what percent is accounted for? correct
answersThe largest contributor is technological advance, which accounts for approximately 40%
of productivity growth.
What are the sources of increasing returns and economies of scale? correct answersMore
specialized inputs, spreading o development costs, simultaneous consumption, network effects,
and learning by doing.
