Question 1

The growth rate of productivity is measured by changes in output per hour of work.

Accepted Answer

A) True 
 B)False

Question 2

Economists commonly refer to a person's accumulated knowledge and skills as

Accepted Answer

A) relevant accumulated productivity. 
B) human capital. 
C) the knowledge productivity base. 
D) internal capital. 
E) robotic capital. 
A) relevant accumulated productivity. 
B) human capital. 
C) the knowledge productivity base. 
D) internal capital. 
E) robotic capital.

Question 3

As more capital is added per worker, the production function

Accepted Answer

A) shifts down in smaller increments. 
B) gets flatter. 
C) shifts up in smaller increments. 
D) gets steeper. 
E) shifts up in larger increments. 
A) shifts down in smaller increments. 
B) gets flatter. 
C) shifts up in smaller increments. 
D) gets steeper. 
E) shifts up in larger increments.

Question 4

Which of the following is an element of a good institution?

Accepted Answer

A) High corruption. 
B) Strong redtape. 
C) Strong democracy. 
D) A large government size. 
E) A closed economy. 
A) High corruption. 
B) Strong redtape. 
C) Strong democracy. 
D) A large government size. 
E) A closed economy.

Question 5

The situation in which workers become more proficient by doing a particular task many times is known by economists as

Accepted Answer

A) learning by doing. 
B) marginal productivity gains. 
C) repetitive human capital. 
D) revolving learning. 
E) None of these 
A) learning by doing. 
B) marginal productivity gains. 
C) repetitive human capital. 
D) revolving learning. 
E) None of these

Question 6

According to the growth-accounting formula, productivity growth

Accepted Answer

A) can be a result of an upward shift and a rightward movement along the productivity curve. 
B) can only be a result of a shift of the productivity curve. 
C) can only be a result of a movement along the productivity curve. 
D) only occurs when an upward shift of the productivity curve is offset by a leftward movement of that curve. 
E) cannot be described by the productivity curve. 
A) can be a result of an upward shift and a rightward movement along the productivity curve. 
B) can only be a result of a shift of the productivity curve. 
C) can only be a result of a movement along the productivity curve. 
D) only occurs when an upward shift of the productivity curve is offset by a leftward movement of that curve. 
E) cannot be described by the productivity curve.

Question 7

Productivity continues to grow in the twenty-first century, and in particular it is spreading to countries like India and China.

Accepted Answer

A) True 
 B)False

Question 8

The purpose of the growth accounting formula is to quantify the process that has increased the accounting oversight of American companies in the aftermath of the Enron debacle.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following best explains the source of increases in productivity?

Accepted Answer

A) Increases in capital per hour of work 
B) Technological change 
C) Increases in the number of hours worked 
D) Both technological change and increases in capital per hour of work 
E) It is not known what causes productivity to increase. 
A) Increases in capital per hour of work 
B) Technological change 
C) Increases in the number of hours worked 
D) Both technological change and increases in capital per hour of work 
E) It is not known what causes productivity to increase.

Question 10

Diminishing marginal returns can be associated with the popular notion of "too many cooks in a kitchen," in the sense that as we increase the number of people cooking in a reduced space they may bump into each other and therefore not be as productive as they would be in a larger workplace.

Accepted Answer

A) True 
 B)False

Question 11

Productivity, defined as real GDP per hour worked, increases if

Accepted Answer

A) All of these 
B) new technologies are continuously discovered. 
C) saving and investment cause an increase in the quantity of capital per worker. 
D) the average educational level of the work force increases. 
E) new knowledge is applied in production. 
A) All of these 
B) new technologies are continuously discovered. 
C) saving and investment cause an increase in the quantity of capital per worker. 
D) the average educational level of the work force increases. 
E) new knowledge is applied in production.

Question 12

If capital per hour of work is growing at a rate of 3 percent and the government wants output per hour of work to grow at 4 percent, how high does the growth rate of technology have to be?

Accepted Answer

A) 0 percent 
B) 4 percent 
C) 3 percent 
D) 2 percent 
E) 1 percent 
A) 0 percent 
B) 4 percent 
C) 3 percent 
D) 2 percent 
E) 1 percent

Question 13

Diminishing returns to labor means that

Accepted Answer

A) the greater the amount of output, the less labor that is needed. 
B) as more labor is employed, total output declines. 
C) as more labor is employed, each additional worker produces less additional output. 
D) as more labor is employed, total output will increase. 
E) the greater the amount of output, the less additional labor that is needed. 
A) the greater the amount of output, the less labor that is needed. 
B) as more labor is employed, total output declines. 
C) as more labor is employed, each additional worker produces less additional output. 
D) as more labor is employed, total output will increase. 
E) the greater the amount of output, the less additional labor that is needed.

Question 14

Which of the following could the government do to increase the incentive for individuals and firms to engage in R&D?

Accepted Answer

A) The government could eliminate any private gain arising from the R&D endeavor. 
B) The government could design incentives that will increase the private gain from an R&D endeavor. 
C) The government could ensure that there will be social gains from the activity. 
D) There is no role for government. 
E) The government should make itself the sole beneficiary of the result's proceeds. 
A) The government could eliminate any private gain arising from the R&D endeavor. 
B) The government could design incentives that will increase the private gain from an R&D endeavor. 
C) The government could ensure that there will be social gains from the activity. 
D) There is no role for government. 
E) The government should make itself the sole beneficiary of the result's proceeds.

Question 15

Why are intellectual property laws necessary for technological growth?

Accepted Answer

Because technology is nonexcludable, it

Question 16

Suppose in 2016 that real GDP of a particular country is $6 trillion, and the capital stock in real terms is $11 trillion. What is the slope of the productivity function?

Accepted Answer

Since r(K/Y) = 1/3=0

Question 17

Suppose that the capital stock grows at the same rate as the labor force and there is positive technological growth. This would cause

Accepted Answer

A) an upward movement along the productivity curve. 
B) a downward shift of the productivity curve. 
C) a downward movement along the productivity curve. 
D) an upward shift of the productivity curve. 
E) an upward shift of the productivity curve and an upward movement along the productivity curve. 
A) an upward movement along the productivity curve. 
B) a downward shift of the productivity curve. 
C) a downward movement along the productivity curve. 
D) an upward shift of the productivity curve. 
E) an upward shift of the productivity curve and an upward movement along the productivity curve.

Question 18

According to economist Daron Acemoglu, physical capital accumulation is

Accepted Answer

A) a proximate cause of economic growth. 
B) a fundamental cause of economic growth 
C) not related to economic growth. 
D) an effect instead of a cause of economic growth. 
E) the only cause of economic growth. 
A) a proximate cause of economic growth. 
B) a fundamental cause of economic growth 
C) not related to economic growth. 
D) an effect instead of a cause of economic growth. 
E) the only cause of economic growth.

Question 19

Innovation can best be thought of as

Accepted Answer

A) another word for invention. 
B) what occurs when new capital equipment is used. 
C) the discovery of a new principle. 
D) what occurs when new knowledge is applied in production. 
E) what happens when a new business is started. 
A) another word for invention. 
B) what occurs when new capital equipment is used. 
C) the discovery of a new principle. 
D) what occurs when new knowledge is applied in production. 
E) what happens when a new business is started.

Question 20

Because investors often cannot be fully compensated for the benefits their ideas provide to others, they may produce too little technology. Thus, there is a potential role for government in providing funds for research and development, both in industry and in universities.

Accepted Answer

A) True 
 B)False

Exam 21: Productivity and Economic Growth

The growth rate of productivity is measured by changes in output per hour of work.

Economists commonly refer to a person's accumulated knowledge and skills as

As more capital is added per worker, the production function

Which of the following is an element of a good institution?

The situation in which workers become more proficient by doing a particular task many times is known by economists as

According to the growth-accounting formula, productivity growth

Productivity continues to grow in the twenty-first century, and in particular it is spreading to countries like India and China.

The purpose of the growth accounting formula is to quantify the process that has increased the accounting oversight of American companies in the aftermath of the Enron debacle.

Which of the following best explains the source of increases in productivity?

Diminishing marginal returns can be associated with the popular notion of "too many cooks in a kitchen," in the sense that as we increase the number of people cooking in a reduced space they may bump into each other and therefore not be as productive as they would be in a larger workplace.

Productivity, defined as real GDP per hour worked, increases if

If capital per hour of work is growing at a rate of 3 percent and the government wants output per hour of work to grow at 4 percent, how high does the growth rate of technology have to be?

Diminishing returns to labor means that

Which of the following could the government do to increase the incentive for individuals and firms to engage in R&D?

Why are intellectual property laws necessary for technological growth?

Suppose in 2016 that real GDP of a particular country is $6 trillion, and the capital stock in real terms is $11 trillion. What is the slope of the productivity function?

Suppose that the capital stock grows at the same rate as the labor force and there is positive technological growth. This would cause

According to economist Daron Acemoglu, physical capital accumulation is

Innovation can best be thought of as

Because investors often cannot be fully compensated for the benefits their ideas provide to others, they may produce too little technology. Thus, there is a potential role for government in providing funds for research and development, both in industry and in universities.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters