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Chapter 8: Q7. (page 173)

True or False. Computers and increased global competition have retarded economic growth in recent decades.

Short Answer

Expert verified

The statement is false.

Step by step solution

01

Step 1. Meaning of economic growth.

Economic growth measures the increase in real GDP from one period to another. If the current GDP is greater than the base year, then the economy is said to be experiencing economic growth, otherwise experiencing retarded economic growth.

02

Step 2. Reason behind the incorrectness of statement.

The invention of computers and increased global competition have created an explosion of entrepreneurship and innovation-based career opportunities. The invention of high-speed internet has made the whole world into one global market. Technology and the internet have enabled laborers to produce and supply more goods and services for this market under different start-ups. It shows that labor productivity has increased because of computers and increased global production.

Since real GDP is the product of labor input and productivity of labor, an increase in the productivity level of laborers will increase the real GDP, which shows the promotion of economic growth. Hence, the statement that computers and increased global competition have retarded economic growth is incorrect.

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Most popular questions from this chapter

Suppose an economy’s real GDP is \(30,000 in year 1 and \)31,200 in year 2. What is the growth rate of its real GDP? Assume that the population is 100 in year 1 and 102 in year 2. What is the growth rate of real GDP per capita?

What annual growth rate is needed for a country to double its output in 7 years? In 35 years? In 70 years? In 140 years?

Identify the following arguments about economic growth as either anti-growth or pro-growth.

a. Growth means worker burnout and frantic schedules.

b. Rising incomes allow people to buy more education, medical care, and recreation.

c. Earth has only finite amounts of natural resources.

d. Even the richest countries still have poverty, homelessness, and discrimination.

e. Richer countries spend more money protecting the environment.

f. Natural resource prices have fallen rather than increased over time.

Identify each of the following situations as something that either promotes growth or retards growth.

a. Increasing corruption allows government officials to steal people’s homes.

b. A nation introduces patent laws for the first time.

c. A court order shuts down all banks permanently.

d. A poor country extends free public schooling from 8 years to 12 years.

e. A nation adopts a free-trade policy.

f. A formerly communist country adopts free markets.

True or False: If false, explain why.

a. Technological advance, which to date has played a relatively small role in U.S. economic growth, is destined to play a more important role in the future.

b. Many public capital goods are complementary to private capital goods.

c. immigration has slowed economic growth in the United States.
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