Question 1

Which statement best describes the relationship between the initial wealth and the growth rate of a country?

Accepted Answer

A)  Countries with the highest growth rates over the past 140 years are the ones that had the highest level of real GDP 140 years ago. 
B)  Countries that were rich 140 years ago had little fluctuation around their average growth rates during the past 100 years. 
C)  Though the catch-up effect may suggest otherwise, the data show no strong relationship between initial conditions and growth rates. 
D)  Over the past 140 years, the United States had the highest real GDP growth rate, and now it has the highest real GDP per person. 
A)  Countries with the highest growth rates over the past 140 years are the ones that had the highest level of real GDP 140 years ago. 
B)  Countries that were rich 140 years ago had little fluctuation around their average growth rates during the past 100 years. 
C)  Though the catch-up effect may suggest otherwise, the data show no strong relationship between initial conditions and growth rates. 
D)  Over the past 140 years, the United States had the highest real GDP growth rate, and now it has the highest real GDP per person.

Question 2

Lesley looks over reports on four of her workers. Smith made 30 baskets in 6 hours. Dex made 40 baskets in 10 hours. Leo made 55 baskets in 10 hours. Neve made 21 baskets in 3 hours. Who has the greatest productivity?

Accepted Answer

A)  Neve 
B)  Smith 
C)  Dex 
D)  Leo 
A)  Neve 
B)  Smith 
C)  Dex 
D)  Leo

Question 3

In a market economy, what is scarcity of resources most clearly reflected in?

Accepted Answer

A)  supply 
B)  demand 
C)  market prices 
D)  the stock of the resource 
A)  supply 
B)  demand 
C)  market prices 
D)  the stock of the resource

Question 4

Which statement best describe the relationship between productivity and standard of living?

Accepted Answer

A)  International trade makes a country's productivity irrelevant. 
B)  A country's standard of living and its productivity are closely related. 
C)  Productivity only increases revenue to investors, while general well-being is not affected. 
D)  A rich country can enjoy a high standard of living without the need for high productivity. 
A)  International trade makes a country's productivity irrelevant. 
B)  A country's standard of living and its productivity are closely related. 
C)  Productivity only increases revenue to investors, while general well-being is not affected. 
D)  A rich country can enjoy a high standard of living without the need for high productivity.

Question 5

What is generally an opportunity cost of investment in human capital?

Accepted Answer

A)  future job security 
B)  forgone wages at present 
C)  increased earning potential 
D)  the cost of tuition during the years of school 
A)  future job security 
B)  forgone wages at present 
C)  increased earning potential 
D)  the cost of tuition during the years of school

Question 6

Michael Kremer found that world growth rates have increased as world population has.

Accepted Answer

A) True 
 B)False

Question 7

What is the key difference between Thomas Malthus and Michael Kremer's theories about population growth?

Accepted Answer

A)  Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production and economies will eventually decline irreversibly. 
B)  Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. 
C)  Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production and economies will eventually decline irreversibly. 
D)  Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. 
A)  Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production and economies will eventually decline irreversibly. 
B)  Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. 
C)  Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production and economies will eventually decline irreversibly. 
D)  Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.

Question 8

What type of investment has foreigners buying shares in domestic companies?

Accepted Answer

A)  foreign direct investment 
B)  foreign portfolio investment 
C)  foreign capital investment 
D)  foreign indirect investment 
A)  foreign direct investment 
B)  foreign portfolio investment 
C)  foreign capital investment 
D)  foreign indirect investment

Question 9

In the traditional view, which production process is considered when studying economic growth?

Accepted Answer

A)  constant returns 
B)  increasing returns 
C)  diminishing returns 
D)  diminishing returns for low levels of capital, and increasing returns for high levels of capital 
A)  constant returns 
B)  increasing returns 
C)  diminishing returns 
D)  diminishing returns for low levels of capital, and increasing returns for high levels of capital

Question 10

Which statement best explains the logic behind the catch-up effect?

Accepted Answer

A)  Workers in countries with low incomes will work more hours than workers in countries with high incomes. 
B)  The capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. 
C)  New capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. 
D)  Poor countries tend to save a higher share of their income than rich countries. 
A)  Workers in countries with low incomes will work more hours than workers in countries with high incomes. 
B)  The capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. 
C)  New capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. 
D)  Poor countries tend to save a higher share of their income than rich countries.

Question 11

If there are constant returns to scale, how is the production function written?

Accepted Answer

A)  xY = 2 x A F(L, K, H, N) 
B)  Y/L = A F(xL, xK, xH, xN) 
C)  Y/L = A F( 1, K/L, H/L, N/L) 
D)  xL = A F(1,Y, K, H, N) 
A)  xY = 2 x A F(L, K, H, N) 
B)  Y/L = A F(xL, xK, xH, xN) 
C)  Y/L = A F( 1, K/L, H/L, N/L) 
D)  xL = A F(1,Y, K, H, N)

Question 12

Which has been happening to the market prices of most natural resources (adjusted for inflation)?

Accepted Answer

A)  They have been rising. 
B)  They have been stable or rising. 
C)  They have been stable or falling. 
D)  They have been falling. 
A)  They have been rising. 
B)  They have been stable or rising. 
C)  They have been stable or falling. 
D)  They have been falling.

Question 13

Which country benefitted a lot from the catch-up effect in the last half of the twentieth century?

Accepted Answer

A)  South Africa 
B)  Russia 
C)  South Korea 
D)  Greece 
A)  South Africa 
B)  Russia 
C)  South Korea 
D)  Greece

Question 14

How large was the growth rate of Japan over the period 1890-2014?

Accepted Answer

A)  1.5 percent 
B)  1.75 percent 
C)  2.59 percent 
D)  3.02 percent 
A)  1.5 percent 
B)  1.75 percent 
C)  2.59 percent 
D)  3.02 percent

Question 15

According to the traditional view of the production process, how does output per worker change when capital per worker increases?

Accepted Answer

A)  It increases. This increase is larger at larger values of capital per worker. 
B)  It increases. This increase is smaller at larger values of capital per worker. 
C)  It increases. This increase is the same at all values of capital per worker. 
D)  It decreases. This decrease is larger at larger values of capital per worker. 
A)  It increases. This increase is larger at larger values of capital per worker. 
B)  It increases. This increase is smaller at larger values of capital per worker. 
C)  It increases. This increase is the same at all values of capital per worker. 
D)  It decreases. This decrease is larger at larger values of capital per worker.

Question 16

Which country had the lowest growth rate over the period 1870 and 2014?

Accepted Answer

A)  the United Kingdom 
B)  Mexico 
C)  Brazil 
D)  the United States 
A)  the United Kingdom 
B)  Mexico 
C)  Brazil 
D)  the United States

Question 17

The catch-up effect says that countries with low income can grow faster than countries with higher income. However, in statistical studies that include many diverse countries, we do not observe the catch-up effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

Accepted Answer

The argument that poor countries will te

Question 18

According to a 1998 list published by American Heritage magazine, who was the richest American of all time?

Accepted Answer

A)  Henry Ford 
B)  Warren Buffett 
C)  John D. Rockefeller 
D)  Bill Gates 
A)  Henry Ford 
B)  Warren Buffett 
C)  John D. Rockefeller 
D)  Bill Gates

Question 19

What will a rapid increase in the number of workers, other things the same, likely do in the short term?

Accepted Answer

A)  raise real GDP per person but decrease real GDP 
B)  decrease both real GDP and real GDP per person 
C)  raise both real GDP and real GDP per person 
D)  raise real GDP but decrease real GDP per person 
A)  raise real GDP per person but decrease real GDP 
B)  decrease both real GDP and real GDP per person 
C)  raise both real GDP and real GDP per person 
D)  raise real GDP but decrease real GDP per person

Question 20

What is the average amount of goods and services produced from each hour of a worker's time called?

Accepted Answer

A)  per capita GDP 
B)  per capita national income 
C)  productivity 
D)  human capital 
A)  per capita GDP 
B)  per capita national income 
C)  productivity 
D)  human capital

Which statement best describes the relationship between the initial wealth and the growth rate of a country?

Lesley looks over reports on four of her workers. Smith made 30 baskets in 6 hours. Dex made 40 baskets in 10 hours. Leo made 55 baskets in 10 hours. Neve made 21 baskets in 3 hours. Who has the greatest productivity?

In a market economy, what is scarcity of resources most clearly reflected in?

Which statement best describe the relationship between productivity and standard of living?

What is generally an opportunity cost of investment in human capital?

Michael Kremer found that world growth rates have increased as world population has.

What is the key difference between Thomas Malthus and Michael Kremer's theories about population growth?

What type of investment has foreigners buying shares in domestic companies?

In the traditional view, which production process is considered when studying economic growth?

Which statement best explains the logic behind the catch-up effect?

If there are constant returns to scale, how is the production function written?

Which has been happening to the market prices of most natural resources (adjusted for inflation)?

Which country benefitted a lot from the catch-up effect in the last half of the twentieth century?

How large was the growth rate of Japan over the period 1890-2014?

According to the traditional view of the production process, how does output per worker change when capital per worker increases?

Which country had the lowest growth rate over the period 1870 and 2014?

According to a 1998 list published by American Heritage magazine, who was the richest American of all time?

What will a rapid increase in the number of workers, other things the same, likely do in the short term?

What is the average amount of goods and services produced from each hour of a worker's time called?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 7: Production and Growth

Which statement best describes the relationship between the initial wealth and the growth rate of a country?

Lesley looks over reports on four of her workers. Smith made 30 baskets in 6 hours. Dex made 40 baskets in 10 hours. Leo made 55 baskets in 10 hours. Neve made 21 baskets in 3 hours. Who has the greatest productivity?

In a market economy, what is scarcity of resources most clearly reflected in?

Which statement best describe the relationship between productivity and standard of living?

What is generally an opportunity cost of investment in human capital?

Michael Kremer found that world growth rates have increased as world population has.

What is the key difference between Thomas Malthus and Michael Kremer's theories about population growth?

What type of investment has foreigners buying shares in domestic companies?

In the traditional view, which production process is considered when studying economic growth?

Which statement best explains the logic behind the catch-up effect?

If there are constant returns to scale, how is the production function written?

Which has been happening to the market prices of most natural resources (adjusted for inflation)?

Which country benefitted a lot from the catch-up effect in the last half of the twentieth century?

How large was the growth rate of Japan over the period 1890-2014?

According to the traditional view of the production process, how does output per worker change when capital per worker increases?

Which country had the lowest growth rate over the period 1870 and 2014?

According to a 1998 list published by American Heritage magazine, who was the richest American of all time?

What will a rapid increase in the number of workers, other things the same, likely do in the short term?

What is the average amount of goods and services produced from each hour of a worker's time called?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters