Chapter 25 — Quiz

Multiple choice

Q1. The Rule of 70 says: a) GDP always grows at 70% b) Doubling time ≈ 70 / growth rate c) 70% of growth comes from capital d) GDP peaks at age 70

Q2. At 2% growth, GDP per capita doubles in approximately: a) 2 years b) 20 years c) 35 years d) 70 years

Q3. The most important source of sustained long-run growth is: a) Physical capital b) Natural resources c) Technology / total factor productivity d) Population growth

Q4. Diminishing returns to capital means: a) Capital has no value b) Each additional unit of capital adds less output than the previous one c) Capital always depreciates d) Rich countries have too much capital

Q5. The Solow model predicts that capital accumulation alone: a) Can sustain growth forever b) Can drive growth temporarily but faces diminishing returns c) Is irrelevant to growth d) Always causes recessions

Q6. Acemoglu and Robinson's key thesis is: a) Geography determines growth b) Culture determines growth c) The quality of institutions (inclusive vs. extractive) is the primary determinant of growth d) Natural resources determine growth

Q7. "Inclusive institutions" include: a) Concentrated power, weak rights b) Secure property rights, rule of law, broad access to opportunity c) Military dictatorship d) State control of the economy

Q8. South Korea's growth since 1960 is best explained by: a) Oil exports b) High savings + education + export orientation + inclusive institutions c) Foreign aid d) Low wages alone

Q9. Conditional convergence means: a) All poor countries catch up to rich ones b) Poor countries grow faster IF they have good institutions, education, and stability c) All countries converge to the same income d) Convergence never happens

Q10. Argentina's economic decline over the 20th century illustrates: a) The benefits of extractive institutions b) That growth is irreversible once started c) That bad institutions can reverse decades of prosperity d) That natural resources guarantee growth

Short answer

SA1. State the Rule of 70 and give an example.

SA2. Name the four sources of growth in the production function. Which is most important for the long run?

SA3. What is the Solow model's key insight about capital accumulation and long-run growth?

SA4. Distinguish inclusive from extractive institutions with examples.

SA5. Why has sub-Saharan Africa's GDP per capita grown so slowly compared to East Asia's?

True / False

TF1. Natural resources are the primary determinant of economic growth. (True / False)

TF2. The Solow model predicts unconditional convergence of all countries. (True / False)

TF3. Botswana's growth success is partly explained by inclusive institutions. (True / False)

TF4. Small differences in growth rates don't matter over long periods. (True / False)

TF5. Growth must always involve increasing material throughput. (True / False)

Selected answers in appendices/answers-to-selected.md.