#2What are the 4 determinants of productivity?
A = Technology
K/L = physical capital per worker
H/L = human capital per worker
N/L = natural resources per worker
#3 Which of the following policy proposals would lead to increased growth in a poor country?
1. Reduce corruption in the legal system;
2. Reduce reliance on market forces because
they allocate goods and services in an unfair manner;
3. Restrict investment in domestic industries by foreigners
because they take some of the profits out of the country;
4. Encourage trade with neighboring countries
5. Increase the fraction of GDP devoted to consumption
ANS: #1, #4
#4 In a market economy, we know that a resource has become scarcer when :
ANS: The price of that resource has increased
#5 True or False: Historically, the market prices of most natural resources (adjusted for inflation) have
False-they have remained stable or decreased.