Question 1

Which nation experienced average rates of economic growth of more than 2.0 percent between 1900 and 2014?

Accepted Answer

A)  Brazil 
B)  India 
C)  Bangladesh 
D)  the United Kingdom 
A)  Brazil 
B)  India 
C)  Bangladesh 
D)  the United Kingdom

Question 2

What would increase productivity, everything else being the same?

Accepted Answer

A)  an increase in immigration 
B)  an increase in the number of hours of work per week 
C)  an increase in prices 
D)  an increase in physical capital per worker 
A)  an increase in immigration 
B)  an increase in the number of hours of work per week 
C)  an increase in prices 
D)  an increase in physical capital per worker

Question 3

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

Accepted Answer

A) True 
 B)False

Question 4

What is an effect of inward-oriented policies?

Accepted Answer

A)  They impede growth because they restrict investment. 
B)  They have generally increased productivity and growth in the countries that pursued them. 
C)  They promote production of goods and services; the country that adopts them can produce most efficiently. 
D)  They are likely to create more jobs for domestic workers. 
A)  They impede growth because they restrict investment. 
B)  They have generally increased productivity and growth in the countries that pursued them. 
C)  They promote production of goods and services; the country that adopts them can produce most efficiently. 
D)  They are likely to create more jobs for domestic workers.

Question 5

What is an effect of outward-oriented policies?

Accepted Answer

A)  Some countries gain and some lose from trade. 
B)  They have generally led to high growth for the countries that pursued them. 
C)  They impede growth in poor countries, but create more jobs. 
D)  They increase GDP, but also increase overall unemployment. 
A)  Some countries gain and some lose from trade. 
B)  They have generally led to high growth for the countries that pursued them. 
C)  They impede growth in poor countries, but create more jobs. 
D)  They increase GDP, but also increase overall unemployment.

Question 6

The president of a developing country proposes that his country needs to help domestic firms by imposing trade restrictions. What kind of policies are these?

Accepted Answer

A)  These are outward-oriented policies and most economists believe they would have beneficial effects on growth. 
B)  These are outward-oriented policies and most economists believe they would have adverse effects on growth. 
C)  These are inward-oriented policies and most economists believe they would have beneficial effects on growth. 
D)  These are inward-oriented policies and most economists believe they would have adverse effects on growth. 
A)  These are outward-oriented policies and most economists believe they would have beneficial effects on growth. 
B)  These are outward-oriented policies and most economists believe they would have adverse effects on growth. 
C)  These are inward-oriented policies and most economists believe they would have beneficial effects on growth. 
D)  These are inward-oriented policies and most economists believe they would have adverse effects on growth.

Question 7

Suppose you build bird houses. One day, you double the time you spend building and double the wood, nails, paint, and all the other inputs in order to build twice as many bird houses. What kind of production function is this?

Accepted Answer

A)  decreasing returns to scale 
B)  zero returns to scale 
C)  constant returns to scale 
D)  increasing returns to scale 
A)  decreasing returns to scale 
B)  zero returns to scale 
C)  constant returns to scale 
D)  increasing returns to scale

Question 8

Why would the opening of a new Canadian-owned factory in Egypt tend to increase Egypt's GDP more than it increases Egypt's GNP?

Accepted Answer

A)  Some of the income from the factory accrues to people who live in Egypt. 
B)  GDP is income earned by residents only, whereas GNP is income earned by residents and non-residents. 
C)  All of the income from the factory is included in Egypt's GDP, but not all is included in GNP. 
D)  Foreign direct investment is part of GDP, but it is not part of GNP. 
A)  Some of the income from the factory accrues to people who live in Egypt. 
B)  GDP is income earned by residents only, whereas GNP is income earned by residents and non-residents. 
C)  All of the income from the factory is included in Egypt's GDP, but not all is included in GNP. 
D)  Foreign direct investment is part of GDP, but it is not part of GNP.

Question 9

How does the political environment affect economic growth?

Accepted Answer

A)  Political instability can reduce foreign investment, thus reducing growth. 
B)  Economic growth only depends on markets and production, while politics has no impact. 
C)  Policies designed to prevent imports from other countries generally increase economic growth. 
D)  Policies designed to restrict the immigration of foreign workers generally promote growth because wages earned by foreigners are not part of GNP. 
A)  Political instability can reduce foreign investment, thus reducing growth. 
B)  Economic growth only depends on markets and production, while politics has no impact. 
C)  Policies designed to prevent imports from other countries generally increase economic growth. 
D)  Policies designed to restrict the immigration of foreign workers generally promote growth because wages earned by foreigners are not part of GNP.

Question 10

Which of the following would NOT be considered physical capital?

Accepted Answer

A)  a sewing machine in an alterations shop 
B)  a computer used to help Mercury Delivery Service keep track of their orders 
C)  on-the-job training 
D)  a desk used in an accountant's office 
A)  a sewing machine in an alterations shop 
B)  a computer used to help Mercury Delivery Service keep track of their orders 
C)  on-the-job training 
D)  a desk used in an accountant's office

Question 11

As measured by real GDP per person, approximately how much higher is average income in Canada today than it was 140 years ago?

Accepted Answer

A)  8 times higher 
B)  10 times higher 
C)  13 times higher 
D)  17 times higher 
A)  8 times higher 
B)  10 times higher 
C)  13 times higher 
D)  17 times higher

Question 12

Drug companies can usually obtain patents on new drugs. Which goods do patents turn new ideas into?

Accepted Answer

A)  private goods, which increase the incentive to engage in research 
B)  private goods, which decrease the incentive to engage in research 
C)  public goods, which increase the incentive to engage in research 
D)  public goods, which decrease the incentive to engage in research 
A)  private goods, which increase the incentive to engage in research 
B)  private goods, which decrease the incentive to engage in research 
C)  public goods, which increase the incentive to engage in research 
D)  public goods, which decrease the incentive to engage in research

Question 13

What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.

Accepted Answer

A production function is a mathematical

Question 14

What is one of the consequences of accumulating capital?

Accepted Answer

A)  Accumulating capital requires that society sacrifice consumption in the present. 
B)  Accumulating capital allows society to consume more in the present. 
C)  Accumulating capital decreases saving rates. 
D)  Accumulating capital increases income inequality. 
A)  Accumulating capital requires that society sacrifice consumption in the present. 
B)  Accumulating capital allows society to consume more in the present. 
C)  Accumulating capital decreases saving rates. 
D)  Accumulating capital increases income inequality.

Question 15

Productivity can be found as number of hours worked divided by output.

Accepted Answer

A) True 
 B)False

Question 16

Monica works 8 hours and produces 7 units of goods per hour. Rachel works 6 hours and produces 10 units of goods per hour. What can we conclude?

Accepted Answer

A)  Monica's productivity and output are greater that Rachel's. 
B)  Monica's productivity is greater than Rachel's, but Monica's output is less. 
C)  Rachel's productivity and output are greater than Monica's. 
D)  Rachel's productivity is greater that Monica's, but Rachel's output is less. 
A)  Monica's productivity and output are greater that Rachel's. 
B)  Monica's productivity is greater than Rachel's, but Monica's output is less. 
C)  Rachel's productivity and output are greater than Monica's. 
D)  Rachel's productivity is greater that Monica's, but Rachel's output is less.

Question 17

In the 1800s, Europeans purchased stock in Canadian companies, which used the funds to build railroads and factories. What type of investments did the Europeans make?

Accepted Answer

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

Question 18

What is a valid policy to use for increasing the rate of economic growth?

Accepted Answer

A)  reduce reliance on market forces because they allocate goods and services in an unfair manner 
B)  encourage trade with neighbouring countries 
C)  increase the fraction of GDP devoted to consumption 
D)  restrict investment in domestic industries by foreigners because they take some of the profits out of the country 
A)  reduce reliance on market forces because they allocate goods and services in an unfair manner 
B)  encourage trade with neighbouring countries 
C)  increase the fraction of GDP devoted to consumption 
D)  restrict investment in domestic industries by foreigners because they take some of the profits out of the country

Question 19

Using the production function and notation in the text, what does K/L measure?

Accepted Answer

A)  average wages per worker 
B)  human capital per worker 
C)  output per worker 
D)  physical capital per worker 
A)  average wages per worker 
B)  human capital per worker 
C)  output per worker 
D)  physical capital per worker

Question 20

If the production function for an economy had constant returns to scale, the labour force doubled, and all other inputs stayed the same, what would happen to real GDP?

Accepted Answer

A)  It would stay the same. 
B)  It would increase by 50 percent. 
C)  It would increase, but by something less than double. 
D)  It would double. 
A)  It would stay the same. 
B)  It would increase by 50 percent. 
C)  It would increase, but by something less than double. 
D)  It would double.

Which nation experienced average rates of economic growth of more than 2.0 percent between 1900 and 2014?

What would increase productivity, everything else being the same?

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

What is an effect of inward-oriented policies?

What is an effect of outward-oriented policies?

The president of a developing country proposes that his country needs to help domestic firms by imposing trade restrictions. What kind of policies are these?

Suppose you build bird houses. One day, you double the time you spend building and double the wood, nails, paint, and all the other inputs in order to build twice as many bird houses. What kind of production function is this?

Why would the opening of a new Canadian-owned factory in Egypt tend to increase Egypt's GDP more than it increases Egypt's GNP?

How does the political environment affect economic growth?

Which of the following would NOT be considered physical capital?

As measured by real GDP per person, approximately how much higher is average income in Canada today than it was 140 years ago?

Drug companies can usually obtain patents on new drugs. Which goods do patents turn new ideas into?

What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.

What is one of the consequences of accumulating capital?

Productivity can be found as number of hours worked divided by output.

Monica works 8 hours and produces 7 units of goods per hour. Rachel works 6 hours and produces 10 units of goods per hour. What can we conclude?

In the 1800s, Europeans purchased stock in Canadian companies, which used the funds to build railroads and factories. What type of investments did the Europeans make?

What is a valid policy to use for increasing the rate of economic growth?

Using the production function and notation in the text, what does K/L measure?

If the production function for an economy had constant returns to scale, the labour force doubled, and all other inputs stayed the same, what would happen to real GDP?

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 nation experienced average rates of economic growth of more than 2.0 percent between 1900 and 2014?

What would increase productivity, everything else being the same?

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

What is an effect of inward-oriented policies?

What is an effect of outward-oriented policies?

The president of a developing country proposes that his country needs to help domestic firms by imposing trade restrictions. What kind of policies are these?

Suppose you build bird houses. One day, you double the time you spend building and double the wood, nails, paint, and all the other inputs in order to build twice as many bird houses. What kind of production function is this?

Why would the opening of a new Canadian-owned factory in Egypt tend to increase Egypt's GDP more than it increases Egypt's GNP?

How does the political environment affect economic growth?

Which of the following would NOT be considered physical capital?

As measured by real GDP per person, approximately how much higher is average income in Canada today than it was 140 years ago?

Drug companies can usually obtain patents on new drugs. Which goods do patents turn new ideas into?

What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.

What is one of the consequences of accumulating capital?

Productivity can be found as number of hours worked divided by output.

Monica works 8 hours and produces 7 units of goods per hour. Rachel works 6 hours and produces 10 units of goods per hour. What can we conclude?

In the 1800s, Europeans purchased stock in Canadian companies, which used the funds to build railroads and factories. What type of investments did the Europeans make?

What is a valid policy to use for increasing the rate of economic growth?

Using the production function and notation in the text, what does K/L measure?

If the production function for an economy had constant returns to scale, the labour force doubled, and all other inputs stayed the same, what would happen to real GDP?

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