What three things do you look at to determine living standards? correct answers 1. GDP
2. Life Expectancy
3. Literacy Rate
There is a high correlation between living standards and ... correct answers GDP Per Capita
Who is Oliver Blanchard. What did he say about the financial crisis and reco...
Econ 203 Midterm 2 || A+ Graded Already.
What three things do you look at to determine living standards? correct answers 1. GDP
2. Life Expectancy
3. Literacy Rate
There is a high correlation between living standards and ... correct answers GDP Per Capita
Who is Oliver Blanchard. What did he say about the financial crisis and recovery? correct
answers One of the top economists.
Said that on average GDP does not go back to its old trend path, but rather remains below it
permanently.
(GDP goes down but not the Growth rate.)
What is productivity? correct answers The average quantity of goods and services produced per
unit of labor input.
What is the productivity formula? correct answers Productivity = ( Y /L )
What are the determinants of Productivity? (Factors) correct answers 1. Physical Capital
2. Human Capital
3. Amount of Natural Resources
4. Technological Knowledge
What is the production function? correct answers Y = A F(K,L,H,N)
What function is a graph or equation showing the relationship between outputs and inputs?
correct answers The Production Function
What tradeoff do agents make when they decide to Save or Invest? correct answers The tradeoff
between current and future consumption.
What is Diminishing Returns to Capital? correct answers As K rises, the extra output from an
additional unit of K falls.
What is the catch-up effect? correct answers The Property whereby poor countries tend to grow
more rapidly than rich ones.
What are the two types of investment from abroad? correct answers 1. Foreign Direct
Investment.
2. Foreign portfolio Investment.
What is foreign Direct Investment correct answers A capital investment (factory) that is owned
and operated by a foreign entity. (A Toyota car factory producing in the US)
, What is foreign portfolio investment? correct answers A capital investment financed with foreign
money but operated by domestic residents.
How can an economy increase Human Capital? (2 ways) correct answers 1. Education
2. Health and Nurition
What is the trade off of going to College to increase H? correct answers Tradeoff one years
worth of wages to make more money in future years.
In the US, each additional year of school results in approximately how much more wages per
year. correct answers 10%
Who is Robert Fogel? correct answers Nobel winner who found that improved nutrition in great
britain accounted for 30% the nations growth from 1790 to 1980.
What system allocates resources to their most efficient use? correct answers Price System
Define Property Rights correct answers The ability of an individual to own and exercise control
over scarce resources
What economic issue creates uncertainty as to whether property rights will be protected in the
future? correct answers Political Instability
What are the two types of trade? correct answers 1. Inward-Oriented policies
2. Outward-Oriented policies
What is inward-oriented trade? correct answers Raise living standards by avoiding interaction
with other countries.
What is outward-oriented trade? correct answers Promote integration with the world economy.
Which is more preferable for economic growth, inward-oriented or outward-oriented trade?
correct answers Outward-oriented Policies
What is the main reason living standards rise over the long run? (Most important part of
productivity function)? correct answers Technology.
What government policies promote technological progress? correct answers 1. Patent Laws
2. Tax Incentives or direct support for R&D
3. Grants for basic research at universities.
What three ways does population growth affect standard of living? correct answers 1. Stretching
Natural Resources
2. Diluting Capital Stock
3. Promotes Technological Progress
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