Economic Growth: Definition, Determinants, and Theories

Question 1

Which of the following is a characteristic of endogenous growth theory?

Accepted Answer

Human capital is considered a key factor of production

Answer

Growth is driven by external factors

Answer

The steady-state level of output is determined by exogenous factors

Answer

Technology is assumed to be exogenous

Question 2

Human capital refers to:

Accepted Answer

The skills and knowledge of the workforce

Answer

The physical capital stock

Answer

The natural resources of a country

Answer

The financial assets of individuals

Question 3

The concept of 'creative destruction' describes the process of:

Accepted Answer

Technological innovation and the replacement of old technologies with new ones

Answer

Government intervention in the economy to promote economic growth

Answer

The impact of globalization on economic growth

Answer

The relationship between economic growth and environmental sustainability

Question 4

According to the neoclassical growth model, long-run economic growth is primarily driven by:

Accepted Answer

Technological progress

Answer

Population growth

Answer

Government spending

Answer

Natural resource extraction

Question 5

The endogenous growth model emphasizes the role of:

Accepted Answer

Investment in research and development

Answer

Exogenous factors in economic growth

Answer

Government intervention in the economy

Answer

Natural resource extraction

Question 6

Which of the following is an example of a supply-side economic policy that can promote economic growth?

Accepted Answer

Reducing taxes on businesses

Answer

Increasing government spending

Answer

Raising interest rates

Answer

Printing more money

Question 7

What is the primary objective of fiscal policy?

Accepted Answer

To influence aggregate demand and promote economic growth

Answer

To control inflation

Answer

To stabilize the financial system

Answer

To manage foreign exchange rates

Question 8

Which of the following is NOT a factor that can foster technological progress?

Accepted Answer

Economic stagnation

Answer

Research and development

Answer

Education and training

Answer

Government subsidies

Question 9

Which economic indicator is used to measure the change in the total value of goods and services produced in an economy over a one-year period?

Accepted Answer

Gross domestic product (GDP)

Answer

Consumer price index (CPI)

Answer

Unemployment rate

Answer

Balance of payments

Question 10

Which of the following is NOT a potential benefit of economic growth?

Accepted Answer

Higher levels of pollution

Answer

Improved living standards

Answer

Increased employment opportunities

Answer

Reduced social inequality

Question 11

Which of the following characteristics accurately describes the endogenous growth model?

Accepted Answer

Emphasis on human capital and innovation

Answer

Constant returns to scale

Answer

Exogenous technological change

Answer

Dependence on natural resources

Question 12

According to the neoclassical growth model, what is considered the primary driver of economic growth?

Accepted Answer

Capital accumulation

Answer

Technological progress

Answer

Government spending

Answer

Foreign investment

Question 13

Human capital refers specifically to:

Accepted Answer

The skills, knowledge, and abilities of a workforce

Answer

The physical infrastructure of a country

Answer

The natural resources available in a country

Answer

The financial resources available in a country

Question 14

Which of the following is NOT a recognized role of government in promoting economic growth?

Accepted Answer

Interfering in the free market

Answer

Providing public goods and services

Answer

Regulating the economy

Answer

Redistributing income

Question 15

Within the UK, which institution is primarily responsible for monetary policy?

Accepted Answer

The Bank of England

Answer

The Treasury

Answer

The Office for Budget Responsibility

Answer

The Department for Business, Energy and Industrial Strategy

Question 16

Which of the following is a distinguishing characteristic of endogenous growth models?

Accepted Answer

Emphasis on the role of innovation

Answer

Assumption that technological progress is solely driven by external factors

Answer

Prediction of eventual slowdown in economic growth

Answer

Focus on accumulation of physical capital

Question 17

Which of the following is a common measure of economic growth?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Gross National Product (GNP)

Answer

Consumer Price Index (CPI)

Answer

Producer Price Index (PPI)

Question 18

Which of the following is NOT a primary factor that contributes to economic growth?

Accepted Answer

Natural disasters

Answer

Accumulation of physical capital

Answer

Advancement of technological knowledge

Answer

Enhancement of human capital

Question 19

The term that describes the accumulation of knowledge and skills, improving the productivity of the workforce, is:

Accepted Answer

Human capital

Answer

Physical capital

Answer

Financial capital

Answer

Natural capital

Question 20

According to the Solow-Swan model of economic growth, which factor is considered the primary driver of long-term economic growth?

Accepted Answer

Technological advancements

Answer

Capital accumulation

Answer

Government expenditure

Answer

Natural resource abundance

Question 21

The concept of diminishing returns explains that as more of a particular factor of production is added, the:

Accepted Answer

Marginal product increases at a decreasing rate

Answer

Marginal product remains constant

Answer

Marginal product increases at an increasing rate

Answer

Marginal product decreases

Question 22

The process of transforming inputs into finished goods or services is known as:

Accepted Answer

Production

Answer

Consumption

Answer

Investment

Answer

Distribution

Question 23

Which economic measure represents the total value of all final goods and services produced within a country's borders during a specific period?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Net Domestic Product (NDP)

Answer

Gross National Income (GNI)

Answer

National Income (NI)

Question 24

Select the primary factor that drives economic expansion?

Accepted Answer

Accumulation of capital

Answer

Advancements in technology

Answer

Intervention by the government

Answer

Natural resource availability

Question 25

Which outcome is NOT commonly associated with economic growth?

Accepted Answer

Improved environmental conditions

Answer

Enhanced living standards

Answer

Elevated income disparity

Answer

Job creation

Question 26

Explain the concept of 'convergence' in the context of economic growth.

Accepted Answer

The tendency for less developed economies to experience faster growth rates compared to developed economies

Answer

The notion that all economies will eventually attain the same level of development

Answer

The widening gap between wealthy and poor economies over time

Answer

The impact of globalization on the growth trajectories of different economies

Question 27

Which of the following is an appropriate measure of economic growth?

Accepted Answer

Gross domestic product (GDP)

Answer

Gross national product (GNP)

Answer

Consumer price index (CPI)

Answer

Unemployment rate

Question 28

How does human capital primarily contribute to economic growth?

Accepted Answer

Increased productivity of labor

Answer

Advancements in technology

Answer

Increased investment in physical capital

Answer

Reduced economic inequality

Question 29

Which of the following is NOT a factor that contributes to economic growth?

Accepted Answer

Population decline

Answer

Capital accumulation

Answer

Technological progress

Answer

Human capital

Question 30

The Solow growth model suggests that economic growth will eventually reach a:

Accepted Answer

Steady state equilibrium

Answer

Continuously increasing equilibrium

Answer

Continuously decreasing equilibrium

Answer

High level of disequilibrium

Question 31

The concept of human capital refers to:

Accepted Answer

The skills, knowledge, and abilities of a workforce

Answer

The physical capital available in an economy

Answer

The natural resources in a country

Answer

The size of a country's population

Question 32

The concept of diminishing returns implies that:

Accepted Answer

Adding more of a factor of production will eventually lead to a reduced marginal product

Answer

Adding more of a factor of production will always lead to an increased marginal product

Answer

Adding more of a factor of production will have no effect on the marginal product

Answer

Adding more of a factor of production can only occur if all other factors are also increased

Question 33

According to the Harrod-Domar model, economic growth is determined by:

Accepted Answer

Savings rate and capital-output ratio

Answer

Technological advancements and population growth

Answer

Government expenditure and foreign investments

Answer

Natural resource endowments and labor availability

Question 34

Which of the following is NOT a role of government in promoting economic growth?

Accepted Answer

Implementation of protectionist trade policies

Answer

Provision of infrastructure

Answer

Support for research and development

Answer

Investments in education and training

Question 35

Which of the following is a key component of human capital?

Accepted Answer

Education

Answer

Physical infrastructure

Answer

Government spending

Answer

Natural resources

Question 36

According to the Harrod-Domar model, what determines the rate of economic growth?

Accepted Answer

Saving rate / Capital-output ratio

Answer

Investment rate / Marginal propensity to save

Answer

Capital stock / Output

Answer

GDP / Population

Question 37

Which of the following is a potential benefit of government intervention in the economy to promote economic growth?

Accepted Answer

Provision of public goods and services

Answer

Price controls

Answer

Reduction in competition

Answer

Trade protectionism

Question 38

What term measures the average annual percentage change in output per capita over a period of time?

Accepted Answer

Economic growth rate

Answer

Consumer price index

Answer

Unemployment rate

Answer

Inflation rate

Question 39

Which assumption is central to the neoclassical growth model?

Accepted Answer

Perfect competition

Answer

Fixed capital stock

Answer

Government intervention

Question 40

Which of the following poses a potential challenge to achieving sustainable economic growth?

Accepted Answer

Environmental degradation

Answer

High levels of taxation

Answer

Technological unemployment

Answer

Trade openness

Question 41

Technological progress is believed to drive economic growth **primarily** through:

Accepted Answer

Increased productivity

Answer

Increased government revenue

Answer

Expanded markets

Answer

Reduced labor costs

Question 42

Which of the following is **not** a component of human capital?

Accepted Answer

Natural resources

Answer

Skills

Answer

Education

Question 43

Which of the following is a potential **positive** role of government in promoting economic growth?

Accepted Answer

Providing infrastructure

Answer

Restricting trade

Answer

Raising taxes

Answer

Reducing consumer spending

Question 44

The concept of 'diminishing returns to capital' suggests that:

Accepted Answer

As more capital is accumulated, the additional output produced by each unit of capital will **typically** decrease

Answer

Capital accumulation is the only factor that drives economic growth

Answer

The economy will eventually reach a state of full employment

Question 45

Which of the following is a characteristic of an 'endogenous growth model'?

Accepted Answer

Economic growth is driven by self-perpetuating forces **within** the economy

Answer

Technological progress is exogenous to the model

Answer

Human capital is assumed to be constant

Question 46

The Harrod-Domar model is a simple growth model that assumes:

Accepted Answer

The savings rate is constant and **equal** to the capital-output ratio

Answer

Technological progress is the only factor that drives economic growth

Answer

The economy will eventually reach a state of full employment

Question 47

The concept of 'conditional convergence' suggests that:

Accepted Answer

Poorer countries can grow faster than richer countries, **but** only if they implement certain policies or have certain characteristics

Answer

All countries will eventually converge to the **same** level of economic development

Question 48

Which of the following is a potential **problem** related to economic growth?

Accepted Answer

Differences in access to education and skills

Answer

Government intervention to reduce inequality

Answer

Equal distribution of income

Answer

Low levels of economic growth