Economic Growth Quiz

Suppose that per capita net national product (NNP) begins an annual decline this year by 1%. What impact, if any, is this decline likely to have upon our living standards 20 years from now?

• None.
• It is likely to improve the living standards by conserving resources.
• It will improve the standards by checking population growth.
• It will substantially diminish the quality of living standards by slowing economic growth.

Thomas Malthus believed that the world’s population would be controlled MAINLY by...

• the natural limitations of finite resources.
• war and famine.
• deliberate choice.
• lack of capital investment.

Economist David Ricardo tended to favor the concept of specialization MAINLY because he saw it as a way to...

• raise the standard of living above subsistence levels.
• shift economic domination from the landholding aristocracy to the more deserving industrial class.
• increase the efficient use of resources.
• encourage capital formation—and thus, economic growth.

Other inputs being held constant, the curve for the marginal product of capital will tend to...

• slope downward to the right.
• slope downward to the left.
• be vertical.
• be horizontal.

Current evidence suggests strongly that industrial nations with relatively high investment rates also tend to have...

• better educational opportunities.
• a higher perceived level of economic welfare.
• higher rates of economic growth.
• more rapid population growth.

Which of the following would Henry Ford probably have agreed with most strongly?

• Standardization is the first step toward a decline in product quality.
• The best way to hold down production costs is to trim labor costs.
• The capital-labor ratio has a major impact on efficiency.
• Cutting prices will not significantly expand a healthy market.