Question

33. The "Catch-Up effect" refers to: a. a situation where poor countries will never grow faster than rich countries because they can never "catch up" in terms of economic production. b. when an economy is sitting in a trough, economic activity will eventually increase and an increase in productivity will result. c. the difference between real GDP and nominal GDP. d. a situation where poor countries tend to grow more rapidly than rich countries. e. when an economy just starts its expansionary phase of the business cycle. Singapore has experienced average annual growth rates of 8 percent for the last 30 years. Using the rule of 70, how long did it take for real GDP per capita in Singapore to double? a. 2.4 years. b. 8 years. c. 8.75 years. d. 12.5 years. e. 30 years. Figure 7.1 Real GOP per hour worked Prom Production function, Podus function, 40.000 60.000 Capper hour worked 35. Refer to Figure 7.1. Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from a. D to C. b. A to C. c. C to D d. B to C. e. all of the above show diminishing marginal returns.

Answer 1

33. Option D

Explanation: According to this hypothesis, poor countries tend to grow faster than richer countries.

34. Option C

Explanation: According to the rule of 70, the time required for the GDP to double = 70/ rate of growth in percentage = 70/8 = 8.75 years.

35. Option B

Explanation: When more capital per hour worked is used, real GDP per hour worked increases at a lower rate.