Question 1

Economist Michael Kremer found that world growth rates fell as population increased.

Accepted Answer

A) True 
 B)False

Question 2

Table 25-1.
Athens and Troy both produce only ribs and baked potatoes.  
-Refer to Table 25-1. Which of the following is correct?

Accepted Answer

A) Both real GDP and real GDP per person are higher in Athens than Troy. 
B) Real GDP is higher in Athens while real GDP per person is higher in Troy 
C) Real GDP is higher in Troy while real GDP per person is higher in Athens. 
D) Both real GDP and real GDP per person are higher in Troy than Athens. 
A) Both real GDP and real GDP per person are higher in Athens than Troy. 
B) Real GDP is higher in Athens while real GDP per person is higher in Troy 
C) Real GDP is higher in Troy while real GDP per person is higher in Athens. 
D) Both real GDP and real GDP per person are higher in Troy than Athens.

Question 3

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

Accepted Answer

A) represents an unconventional view of the production process. 
B) is an assertion that capital is subject to increasing returns. 
C) is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant. 
D) All of the above are correct. 
A) represents an unconventional view of the production process. 
B) is an assertion that capital is subject to increasing returns. 
C) is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant. 
D) All of the above are correct.

Question 4

The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Accepted Answer

In the long run, a higher saving rate le

Question 5

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

Accepted Answer

A) both output and productivity 
B) output, but not productivity 
C) productivity, but not output 
D) neither productivity nor output 
A) both output and productivity 
B) output, but not productivity 
C) productivity, but not output 
D) neither productivity nor output

Question 6

Which of these countries' growth rates of real GDP per person have exceeded the United States' growth rate of real GDP per person over the last century?

Accepted Answer

A) Canada and China 
B) China and India 
C) Germany and India 
D) Germany and Pakistan 
A) Canada and China 
B) China and India 
C) Germany and India 
D) Germany and Pakistan

Question 7

An organization that tries to encourage the flow of investment to poor countries is the

Accepted Answer

A) World Bank. 
B) Organization of Less Developed Countries. 
C) Alliance of Developing Countries. 
D) International Development Alliance. 
A) World Bank. 
B) Organization of Less Developed Countries. 
C) Alliance of Developing Countries. 
D) International Development Alliance.

Question 8

Productivity is the amount of goods and services

Accepted Answer

A) an economy produces. It is not linked to a nation's economic policies. 
B) an economy produces. It is linked to a nation's economic policies. 
C) produced for each hour of a worker's time. It is not linked to a nation's economic policies. 
D) produced for each hour of a worker's time. It is linked to a nation's economic policies. 
A) an economy produces. It is not linked to a nation's economic policies. 
B) an economy produces. It is linked to a nation's economic policies. 
C) produced for each hour of a worker's time. It is not linked to a nation's economic policies. 
D) produced for each hour of a worker's time. It is linked to a nation's economic policies.

Question 9

If the best educated and most skilled persons leave a country, then in the short term this country's human capital per worker

Accepted Answer

A) and physical capital per worker will increase. 
B) and physical capital per worker will decrease. 
C) will increase but physical capital per worker will decrease. 
D) will decrease but physical capital per worker will increase. 
A) and physical capital per worker will increase. 
B) and physical capital per worker will decrease. 
C) will increase but physical capital per worker will decrease. 
D) will decrease but physical capital per worker will increase.

Question 10

Figure 25-1  
-Refer to Figure 21-1. In order for the figure to make sense, do we have to assume that capital is the only determinant of output? Briefly explain.

Accepted Answer

No, we do not have to assume that capita

Question 11

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

Accepted Answer

A) public good. 
B) societal good. 
C) private good. 
D) normal good. 
A) public good. 
B) societal good. 
C) private good. 
D) normal good.

Question 12

The majority of economists believe that future innovations will not be transformational enough to sustain high economic growth rates in the U.S. and western Europe.

Accepted Answer

A) True 
 B)False

Question 13

Rapid population growth

Accepted Answer

A) was hailed by Thomas Robert Malthus as the key to future economic growth. 
B) tends to lead to higher levels of educational attainment. 
C) is the main reason that less developed nations are poor. 
D) may depress economic prosperity by reducing the amount of capital which each worker has to work with. 
A) was hailed by Thomas Robert Malthus as the key to future economic growth. 
B) tends to lead to higher levels of educational attainment. 
C) is the main reason that less developed nations are poor. 
D) may depress economic prosperity by reducing the amount of capital which each worker has to work with.

Question 14

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Accepted Answer

A) True 
 B)False

Question 15

A nation's standard of living is determined by

Accepted Answer

A) the percentage of its GDP that is accounted for by government purchases. 
B) the quantity of natural resources with which it is endowed. 
C) the productivity of its workers. 
D) factors and events that are beyond the nation's control. 
A) the percentage of its GDP that is accounted for by government purchases. 
B) the quantity of natural resources with which it is endowed. 
C) the productivity of its workers. 
D) factors and events that are beyond the nation's control.

Question 16

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

Accepted Answer

A) have no impact on the growth rate of real GDP per person. 
B) decrease the growth of real GDP per person for a few years. 
C) increase the growth of real GDP per person for several decades. 
D) permanently increase the growth rate of real GDP per person. 
A) have no impact on the growth rate of real GDP per person. 
B) decrease the growth of real GDP per person for a few years. 
C) increase the growth of real GDP per person for several decades. 
D) permanently increase the growth rate of real GDP per person.

Question 17

Other things equal, relatively poor countries tend to grow

Accepted Answer

A) slower than relatively rich countries; this is called the poverty trap. 
B) slower than relatively rich countries; this is called the fall-behind effect. 
C) faster than relatively rich countries; this is called the catch-up effect. 
D) faster than relatively rich countries; this is called the constant-returns-to-scale effect. 
A) slower than relatively rich countries; this is called the poverty trap. 
B) slower than relatively rich countries; this is called the fall-behind effect. 
C) faster than relatively rich countries; this is called the catch-up effect. 
D) faster than relatively rich countries; this is called the constant-returns-to-scale effect.

Question 18

Figure 25-1  
-Refer to Figure 21-1. "When the amount of capital per worker increases by one unit, a poor country experiences a greater benefit than does a rich country." Does the figure illustrate this notion? Briefly explain.

Accepted Answer

Yes, the bowed-out (concave) n

Question 19

Which of the following is correct?

Accepted Answer

A) Once adjustment is made for inflation, the prices of most natural resources have been about steady or falling. 
B) Technological progress has allowed us to substitute renewable resources for some nonrenewable resources. 
C) Technological progress has made once-crucial natural resources less necessary. 
D) All of the above are correct. 
A) Once adjustment is made for inflation, the prices of most natural resources have been about steady or falling. 
B) Technological progress has allowed us to substitute renewable resources for some nonrenewable resources. 
C) Technological progress has made once-crucial natural resources less necessary. 
D) All of the above are correct.

Question 20

According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that they could not perform manual labor?

Accepted Answer

A) 5 percent 
B) 10 percent 
C) 20 percent 
D) 25 percent 
A) 5 percent 
B) 10 percent 
C) 20 percent 
D) 25 percent

Exam 25: Production and Growth

Economist Michael Kremer found that world growth rates fell as population increased.

Table 25-1. Athens and Troy both produce only ribs and baked potatoes. -Refer to Table 25-1. Which of the following is correct?

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

Which of these countries' growth rates of real GDP per person have exceeded the United States' growth rate of real GDP per person over the last century?

An organization that tries to encourage the flow of investment to poor countries is the

Productivity is the amount of goods and services

If the best educated and most skilled persons leave a country, then in the short term this country's human capital per worker

Figure 25-1 -Refer to Figure 21-1. In order for the figure to make sense, do we have to assume that capital is the only determinant of output? Briefly explain.

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

The majority of economists believe that future innovations will not be transformational enough to sustain high economic growth rates in the U.S. and western Europe.

Rapid population growth

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

A nation's standard of living is determined by

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

Other things equal, relatively poor countries tend to grow

Figure 25-1 -Refer to Figure 21-1. "When the amount of capital per worker increases by one unit, a poor country experiences a greater benefit than does a rich country." Does the figure illustrate this notion? Briefly explain.

Which of the following is correct?

According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that they could not perform manual labor?

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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