1. Clear property rights reduce growth in an economy because producers are not able to freely use innovations. ________ (True/False)
2. Which of the following methods has the World Bank not tried to assist developing countries?
a. Increases in foreign aid
b. Infusions of new machinery
c. Promotion of universal education
d. Promotion of population growth
3. The return from education in developing countries is often higher than in developed countries. ________ (True/False)
4. New growth theory suggests that consumption spending will lead to permanent increases in the rate of technological progress. ________ (True/False)
5. Diversity and Economic Growth. Some economists and political scientists have suggested that when communities are more racially or ethnically diverse, they invest less in education and spend more on private goods. Assuming this theory is true, what are the consequences for economic growth?
6. The Brain Drain and Incentives for Education. Some economists are concerned about the brain drain, the phenomenon in which highly educated workers leave developing countries to work in developed countries. Other economists have argued that brain drain could create incentives for others in the country to secure increased education, and many of the newly educated might not emigrate. Explain why the brain drain could lead to increased education among the remaining residents. How would you test this theory?
7. Secure Property Rights and Work outside the Home. With secure land titles, parents can work outside the home (rather than guarding their property) and earn higher incomes. Explain why this might reduce child labor.