Question 1

Which of the following is important in the development of a large economy dominated by trade between parties who do not know each other (depersonalized exchange) ?

Accepted Answer

A)   having few or minimal constitutional rules to avoid preventing the democratic institutions of a country from working to their fullest potential
B)   having a sound legal system that protects property and enforces contracts
C)   the presence of abundant natural resources
D)   heavy government regulation and control of prices so that individuals do not try to take advantage of one another in market exchangeE) All of the above
F) A) and B)

Question 2

Which of the following will increase economic freedom?

Accepted Answer

A)   low rates of inflation and easy access to money that maintains its purchasing power
B)   high tariff rates
C)   government spending that comprises a large share of the economy
D)   rapid and unpredictable inflationE) B) and C)
F) A) and D)

Question 3

Which of the following will increase economic freedom?

Accepted Answer

A)   freedom to enter and compete in markets
B)   high tariff rates
C)   high taxes
D)   rapid and unpredictable inflationE) None of the above
F) A) and D)

Question 4

Which of the following will increase economic freedom?

Accepted Answer

A)   an increase in tariff rates imposed on imported goods
B)   an increase in government spending as a share of the economy
C)   elimination of regulations that make it difficult to start a business
D)   an increase in the rate of inflation and its variabilityE) B) and C)
F) None of the above

Question 5

The income per person in the quartile of countries with the most economic freedom was approximately ____ times the figure for the least free group of countries.

Accepted Answer

A)   2
B)   4
C)   5
D)   8E) A) and C)
F) A) and D)

Question 6

In order to achieve a high economic freedom rating, a country must

Accepted Answer

A)   provide secure protection of privately owned property and evenhanded enforcement of contracts.
B)   refrain from creating barriers that limit domestic and international trade.
C)   rely more fully on markets rather than governments to allocate goods and resources.
D)   all of the above.E) B) and D)
F) A) and C)

Question 7

Which of the following would contribute to a higher Economic Freedom of the World (EFW)  rating for a country?

Accepted Answer

A)   low taxes
B)   rapid inflation
C)   high tariffs on imported goods
D)   government spending being a large share of the economyE) A) and B)
F) None of the above

Question 8

In order to achieve a high economic freedom rating, a country must

Accepted Answer

A)   elect political officials democratically.
B)   protect property rights, enforce contracts even-handedly, and rely extensively on markets to allocate goods and services.
C)   provide citizens with housing, health care, and other basic goods free of charge.
D)   use the taxing power of the state to redistribute income from the rich to the poor and thereby promote income equality.E) B) and D)
F) A) and B)

Question 9

Which of the following countries has the lowest per capita income?

Accepted Answer

A)   United States
B)   France
C)   Ireland
D)   NigerE) B) and C)
F) C) and D)

Question 10

Government policies that heavily tax some activities while subsidizing others and that fix or control interest rates will result in

Accepted Answer

A)   higher productivity of investment.
B)   lower productivity of investment.
C)   no change in the productivity of investment.
D)   a greater level of investment.E) A) and B)
F) B) and C)

Question 11

Which of the following economies is most economically free?

Accepted Answer

A)   Hong-Kong
B)   Russia
C)   Algeria
D)   MyanmarE) A) and B)
F) A) and C)

Question 12

Which of the following is true regarding the growth record of LDCs over the past 25 years?

Accepted Answer

A)   All have been growing rapidly.
B)   All have experienced negative growth rates.
C)   Some are among the highest growth countries, whereas others are among the lowest.
D)   None of the above.E) A) and B)
F) A) and C)

Question 13

Which of the following economies have the highest degree of economic freedom?

Accepted Answer

A)   Hong Kong and Singapore
B)   Argentina and Brazil
C)   Germany and Italy
D)   Russia and NigeriaE) C) and D)
F) A) and D)

Question 14

Since the mid-1980s, the overall Economic Freedom of the World (EFW)  ratings of most countries have been increasing due to

Accepted Answer

A)   more stable monetary policies.
B)   lower tax rates.
C)   trade liberalization.
D)   All of the above.E) C) and D)
F) A) and B)

Question 15

According to data on GDP growth between 1980 and 2009,

Accepted Answer

A)   poor nations stagnated, while the rich nations continued to grow.
B)   poor nations grew rapidly, while the rich nations stagnated.
C)   most of the world's rapidly growing countries were located in Africa.
D)   many poor nations grew more rapidly than wealthy nations, while others continued to stagnate.E) A) and D)
F) A) and C)

Question 16

Which of the following is true?

Accepted Answer

A)   Economic freedom is present if a country is a political democracy.
B)   Economic freedom ratings indicate the consistency of a nation's institutions and policies with personal choice, freedom of exchange, and protection of private property.
C)   Economies that are highly free tend to grow less rapidly than those with less economic freedom.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 17

Which of the following is true of technology?

Accepted Answer

A)   Technological improvements are less important today than was true in the past.
B)   Lack of access to modern technology is a major barrier restraining the growth of low-income countries.
C)   Often, perverse institutions and policies in low-income countries undermine the potential gains from adoption of modern technology.
D)   Countries with high investment rates will be unable to apply modern technology effectively.E) A) and B)
F) B) and C)

Question 18

If a country's political leaders wanted to promote economic growth, which of the following policy alternatives would be most effective?

Accepted Answer

A)   imposition of price controls on agricultural products in an effort to keep food cheap.
B)   imposition of high marginal tax rates designed to reduce income inequality.
C)   imposition of tariffs and other trade restraints limiting international trade.
D)   monetary policy consistent with long-run price stabilityE) None of the above
F) B) and C)

Question 19

Which of the following countries has the highest per capita income?

Accepted Answer

A)   Malawi
B)   South Korea
C)   Sierra Leone
D)   NigerE) A) and B)
F) C) and D)

Question 20

Which of the following countries achieved the most rapid growth rate of real income per person during 1980-2009?

Accepted Answer

A)   France and Germany
B)   Argentina and Brazil
C)   China and South Korea
D)   Japan and the United StatesE) B) and D)
F) C) and D)

Exam 17: Institutions, Policies, and Cross-Country Differences in Income and Growth

According to data on GDP growth between 1980 and 2009,

Correct AnswerverifiedShow Answer

Which of the following is important in the development of a large economy dominated by trade between parties who do not know each other (depersonalized exchange) ?

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Which of the following countries achieved the most rapid growth rate of real income per person during 1980-2009?

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Which of the following would contribute to a higher Economic Freedom of the World (EFW) rating for a country?

Correct AnswerverifiedShow Answer

Which of the following will increase economic freedom?

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The income per person in the quartile of countries with the most economic freedom was approximately ____ times the figure for the least free group of countries.

Correct AnswerverifiedShow Answer

Which of the following countries has the lowest per capita income?

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Which of the following will increase economic freedom?

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Which of the following is true?

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Government policies that heavily tax some activities while subsidizing others and that fix or control interest rates will result in

Correct AnswerverifiedShow Answer

In order to achieve a high economic freedom rating, a country must

Correct AnswerverifiedShow Answer

In order to achieve a high economic freedom rating, a country must

Correct AnswerverifiedShow Answer

Since the mid-1980s, the overall Economic Freedom of the World (EFW) ratings of most countries have been increasing due to

Correct AnswerverifiedShow Answer

Which of the following is true regarding the growth record of LDCs over the past 25 years?

Correct AnswerverifiedShow Answer

Which of the following will increase economic freedom?

Correct AnswerverifiedShow Answer

Which of the following economies have the highest degree of economic freedom?

Correct AnswerverifiedShow Answer

Which of the following is true of technology?

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If a country's political leaders wanted to promote economic growth, which of the following policy alternatives would be most effective?

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Which of the following countries has the highest per capita income?

Correct AnswerverifiedShow Answer

Which of the following economies is most economically free?

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