Econ Essay

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Question 1 If real GDP per capita in the United States is $8,000, what will real GDP per capita in the United States be after 5 years if real GDP per capita grows at an annual rate of 3.2%? Answer | | $8,520 | | | $9,280 | | | $9,365 | | | $10,560 | 10 points Question 2 Which of the following government policies would most likely result in an increase in economic growth? Answer | | a decrease in the interest rate at which the government provides student loans | | | a decrease in the life of a patent from 20 years to 15 years | | | a decrease in government spending on grants issued through the National Institutes of Health | | | decreased copyright protection on music and movies | 10 points Question 3 When an economy faces diminishing returns, Answer | | the slope of the per-worker production function becomes flatter as capital per hour worked increases. | | | the slope of the per-worker production function becomes steeper as capital per hour worked increases. | | | the per-worker production function shifts to the left. | | | the per-worker production function shifts to the right. | 10 points Question 4 Creative destruction means that Answer | | firms develop new products that replace old products in the economy, thereby encouraging economic growth. | | | research and development should only be financed if research and development is incremental (a result of making small changes to existing products). | | | knowledge capital can be created through a system of government subsidies for education and research and development. | | | economic growth can only be sustained if capital depreciates rapidly. | 10 points Question 5 In a small European country, it is estimated that changing the level of capital from $8 million to $10 million will increase real GDP from $2 million to $3

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