Question 1

Is physical capital a produced factor of production? Is human capital a produced factor of production?

Accepted Answer

Both physical capita

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A) In 1870, real income per person was higher in the United States than in any other country at that time. 
B) Over about the last 100 years India experienced significantly higher growth of real income per person than did the United States. 
C) Over about the last 100 years the United States experienced significantly higher growth of real income per person than did Japan. 
D) None of the above are correct. 
A) In 1870, real income per person was higher in the United States than in any other country at that time. 
B) Over about the last 100 years India experienced significantly higher growth of real income per person than did the United States. 
C) Over about the last 100 years the United States experienced significantly higher growth of real income per person than did Japan. 
D) None of the above are correct.

Question 5

Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth?

Accepted Answer

A) Great Britain 
B) China 
C) Australia 
D) France 
A) Great Britain 
B) China 
C) Australia 
D) France

Question 6

Which of the following statements is correct?

Accepted Answer

A) By definition, all natural resources are nonrenewable. 
B) Market prices give us reason to believe that natural resources are a limit to economic growth. 
C) An economy must be blessed with ample quantities of natural resources if it is to be a highly productive economy. 
D) Differences in natural resources can explain some of the differences in standards of living around the world. 
A) By definition, all natural resources are nonrenewable. 
B) Market prices give us reason to believe that natural resources are a limit to economic growth. 
C) An economy must be blessed with ample quantities of natural resources if it is to be a highly productive economy. 
D) Differences in natural resources can explain some of the differences in standards of living around the world.

Question 7

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Accepted Answer

A) 8 
B) 12 
C) 16 
D) None of the above is correct. 
A) 8 
B) 12 
C) 16 
D) None of the above is correct.

Question 8

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 9

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

Accepted Answer

A) both the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second 
A) both the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second

Question 10

Which of the following best describes the response of output as time passes to an increase in the saving rate?

Accepted Answer

A) The growth rate of output does not change. 
B) The growth rate of output increases and gets even larger as time passes. 
C) The growth rate of output increases and does not change as time passes. 
D) The growth rate of output increases, but diminishes to its former level as time passes. 
A) The growth rate of output does not change. 
B) The growth rate of output increases and gets even larger as time passes. 
C) The growth rate of output increases and does not change as time passes. 
D) The growth rate of output increases, but diminishes to its former level as time passes.

Question 11

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Accepted Answer

A) True 
 B)False

Question 12

Senator Noitall says that in order to help poor countries develop, the United States should: 1. Encourage poor countries to allow U.S. and other foreign firms to build and operate businesses in their country; 2. Reduce or eliminate subsidies to U.S. producers when poor countries have a comparative advantage producing goods the U.S. subsidizes; 3. Work to promote political stability in poor countries; and 4. Reduce poor countries reliance on market forces in their economies. How many of these ideas are likely to help poor countries grow?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 13

If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following provide benefits to society at large and not just to the person(s) who pursues it?

Accepted Answer

A) both technological knowledge that is a public good and education 
B) technological knowledge that is a public good, but not education 
C) education, but not technological knowledge that is a public good 
D) neither education, nor technological knowledge that is a public good 
A) both technological knowledge that is a public good and education 
B) technological knowledge that is a public good, but not education 
C) education, but not technological knowledge that is a public good 
D) neither education, nor technological knowledge that is a public good

Question 15

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in __________ are responsible for some of the differences in standards of living around the world.

Accepted Answer

The answer of Because of its vast oil reserves, Saudi...

Question 16

In an economy where net exports are zero, if saving rises in some period, then in that period

Accepted Answer

A) consumption and investment fall. 
B) consumption falls and investment rises. 
C) consumption rises and investment falls. 
D) consumption rises and investment rises. 
A) consumption and investment fall. 
B) consumption falls and investment rises. 
C) consumption rises and investment falls. 
D) consumption rises and investment rises.

Question 17

The traditional view of the production process is that capital is subject to

Accepted Answer

A) diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
B) diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. 
C) increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
D) increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. 
A) diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
B) diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. 
C) increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
D) increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries.

Question 18

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

A) not change. 
B) increase but not double. 
C) double. 
D) more than double. 
A) not change. 
B) increase but not double. 
C) double. 
D) more than double.

Question 19

All else equal, which of the following would tend to cause real GDP per person to rise?

Accepted Answer

A) a change from inward-oriented policies to outward-oriented policies 
B) an increase in investment in human capital 
C) strengthening of property rights. 
D) All of the above are correct. 
A) a change from inward-oriented policies to outward-oriented policies 
B) an increase in investment in human capital 
C) strengthening of property rights. 
D) All of the above are correct.

Question 20

Which of the following is an example of physical capital?

Accepted Answer

A) the computer a secretary uses 
B) rivers on which goods are transported 
C) the skills and knowledge of a doctor 
D) All of the above are correct. 
A) the computer a secretary uses 
B) rivers on which goods are transported 
C) the skills and knowledge of a doctor 
D) All of the above are correct.

Exam 25: Production and Growth

Is physical capital a produced factor of production? Is human capital a produced factor of production?

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

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Which of the following statements is correct?

Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth?

Which of the following statements is correct?

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

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

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

Which of the following best describes the response of output as time passes to an increase in the saving rate?

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment.

Which of the following provide benefits to society at large and not just to the person(s) who pursues it?

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in __________ are responsible for some of the differences in standards of living around the world.

In an economy where net exports are zero, if saving rises in some period, then in that period

The traditional view of the production process is that capital is subject to

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

All else equal, which of the following would tend to cause real GDP per person to rise?

Which of the following is an example of physical capital?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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