Question 1

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?

Accepted Answer

A) Productivity will definitely fall. 
B) Productivity will definitely be unchanged. 
C) Productivity will definitely rise. 
D) None of the above are necessarily correct. 
A) Productivity will definitely fall. 
B) Productivity will definitely be unchanged. 
C) Productivity will definitely rise. 
D) None of the above are necessarily correct.

Question 2

Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should

Accepted Answer

A) lend support to the invisible hand by maintaining property rights and political stability. 
B) lower barriers and impediments to free trade. 
C) encourage capital formation. 
D) target and subsidize specific industries important for technological progress. 
A) lend support to the invisible hand by maintaining property rights and political stability. 
B) lower barriers and impediments to free trade. 
C) encourage capital formation. 
D) target and subsidize specific industries important for technological progress.

Question 3

Which of the following lists contains, in this order, natural resources, physical capital, and human capital?

Accepted Answer

A) For a shoe factory: leather, hand tools, the managers' knowledge of shoe making. 
B) For a steel mill: the blast furnaces, iron ore, the workers. 
C) For an airline: oil used to make jet fuel, the pilots' knowledge of flying, jets. 
D) None of the above is correct. 
A) For a shoe factory: leather, hand tools, the managers' knowledge of shoe making. 
B) For a steel mill: the blast furnaces, iron ore, the workers. 
C) For an airline: oil used to make jet fuel, the pilots' knowledge of flying, jets. 
D) None of the above is correct.

Question 4

Countries that grew the fastest over the last 100 or so years had average growth rates of real income per person of about

Accepted Answer

A) 1.5 percent per year. 
B) 2.0 percent per year. 
C) 2.5 percent per year. 
D) 3.0 percent per year. 
A) 1.5 percent per year. 
B) 2.0 percent per year. 
C) 2.5 percent per year. 
D) 3.0 percent per year.

Question 5

The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called

Accepted Answer

A) physical capital. 
B) natural resources. 
C) human capital. 
D) technological knowledge. 
A) physical capital. 
B) natural resources. 
C) human capital. 
D) technological knowledge.

Question 6

In the long run, an increase in the saving rate

Accepted Answer

A) doesn't change the level of productivity or income. 
B) raises the levels of both productivity and income. 
C) raises the level of productivity but not the level of income. 
D) raises the level of income but not the level of productivity. 
A) doesn't change the level of productivity or income. 
B) raises the levels of both productivity and income. 
C) raises the level of productivity but not the level of income. 
D) raises the level of income but not the level of productivity.

Question 7

The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries. She asks you to pick the one you think most likely explains her country's low growth. Which of the following contributes to low growth?

Accepted Answer

A) poorly enforced property rights 
B) outward-oriented trade policies 
C) policies that permit foreign investment 
D) All of the above are correct. 
A) poorly enforced property rights 
B) outward-oriented trade policies 
C) policies that permit foreign investment 
D) All of the above are correct.

Question 8

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity

Accepted Answer

A) in the short run, but not in the long run. 
B) in the long run, but not in the short run. 
C) in both the short run and the long run. 
D) in neither the short run nor the long run. 
A) in the short run, but not in the long run. 
B) in the long run, but not in the short run. 
C) in both the short run and the long run. 
D) in neither the short run nor the long run.

Question 9

According to Michael Kremer, at which population should technological progress be most rapid?

Accepted Answer

A) ​100 million 
B) ​500 million 
C) ​1 billion 
D) ​7.4 billion 
A) ​100 million 
B) ​500 million 
C) ​1 billion 
D) ​7.4 billion

Question 10

Megan is a landscaper. Which of the following are included in her physical capital?

Accepted Answer

A) her knowledge of landscaping learned in college and her landscaping equipment 
B) her knowledge of landscaping learned in college, but not her landscaping equipment 
C) her landscaping equipment, but not her knowledge of landscaping learned in college 
D) neither her knowledge of landscaping learned in college nor her landscaping equipment 
A) her knowledge of landscaping learned in college and her landscaping equipment 
B) her knowledge of landscaping learned in college, but not her landscaping equipment 
C) her landscaping equipment, but not her knowledge of landscaping learned in college 
D) neither her knowledge of landscaping learned in college nor her landscaping equipment

Question 11

If over a short time a large number of teenagers become old enough to find employment and a much smaller number of people retire, then productivity

Accepted Answer

A) and real GDP per person rise. 
B) rises but real GDP per person falls. 
C) falls but real GDP per person rises. 
D) and real GDP per person fall. 
A) and real GDP per person rise. 
B) rises but real GDP per person falls. 
C) falls but real GDP per person rises. 
D) and real GDP per person fall.

Question 12

Some data that at first might seem puzzling: The share of GDP devoted to investment was similar for the United States and South Korea from 1960-1991. However, during these same years South Korea had a 6 percent growth rate of average annual income per person, while the United States had only a 2 percent growth rate. If the saving rates were the same, why were the growth rates so different?

Accepted Answer

The explanation is based on the concept

Question 13

Which of the following is generally an opportunity cost of investment in human capital?

Accepted Answer

A) future job security 
B) forgone present wages 
C) increased earning potential 
D) All of the above are correct. 
A) future job security 
B) forgone present wages 
C) increased earning potential 
D) All of the above are correct.

Question 14

A policy that increases saving

Accepted Answer

A) will worsen economic growth, but improve health outcomes. 
B) will worsen economic growth and health outcomes. 
C) ​will improve economic growth, but worsen health outcomes. 
D) will improve economic growth and health outcomes. 
A) will worsen economic growth, but improve health outcomes. 
B) will worsen economic growth and health outcomes. 
C) ​will improve economic growth, but worsen health outcomes. 
D) will improve economic growth and health outcomes.

Question 15

Which of the following statements is correct?

Accepted Answer

A) Growth of productivity is the main determinant of growth in living standards. 
B) Common knowledge and proprietary technology are both important for the economy's production of goods and services. 
C) The terms capital and physical capital refer to the same thing. 
D) All of the above are correct. 
A) Growth of productivity is the main determinant of growth in living standards. 
B) Common knowledge and proprietary technology are both important for the economy's production of goods and services. 
C) The terms capital and physical capital refer to the same thing. 
D) All of the above are correct.

Question 16

Figure 25-1  
-Refer to Figure 21-1. In what way is the figure relevant to the catch-up effect?

Accepted Answer

The catch-up effect is observed when a r

Question 17

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Accepted Answer

A) 10 percent 
B) 14 percent 
C) 17 percent 
D) 21 percent 
A) 10 percent 
B) 14 percent 
C) 17 percent 
D) 21 percent

Question 18

Country A has real GDP per person of 100,000 while country B has real GDP per person of 200,000. All else constant, country A will eventually have a higher standard of living than country B if

Accepted Answer

A) the level of saving per person is 10,000 in country A and 10,000 in country B. 
B) the level of saving per person is 12,000 in country A and 15,000 in country B. 
C) Both of the above are correct. 
D) None of the above are correct. 
A) the level of saving per person is 10,000 in country A and 10,000 in country B. 
B) the level of saving per person is 12,000 in country A and 15,000 in country B. 
C) Both of the above are correct. 
D) None of the above are correct.

Question 19

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

Accepted Answer

A) True 
 B)False

Question 20

Figure 25-1. On the horizontal axis, K/L represents capital (K) per worker (L). On the vertical axis, Y/L represents output (Y) per worker (L).  
-Refer to Figure 25-1. Choose a point anywhere on the curve and call it point A. If the economy is at point A in 2011, then it will definitely remain at point A in 2012 if, between 2011 and 2012,

Accepted Answer

A) the quantity of physical capital remains constant; the number of workers doubles; and human capital, natural resources, and technology all double as well. 
B) the quantity of physical capital doubles; human capital, natural resources, and technology all double as well; and the number of workers remains constant. 
C) the quantity of physical capital doubles; the number of workers doubles; and human capital, natural resources, and technology all double as well. 
D) the quantity of physical capital doubles; the number of workers doubles; and human capital, natural resources, and technology remain constant. 
A) the quantity of physical capital remains constant; the number of workers doubles; and human capital, natural resources, and technology all double as well. 
B) the quantity of physical capital doubles; human capital, natural resources, and technology all double as well; and the number of workers remains constant. 
C) the quantity of physical capital doubles; the number of workers doubles; and human capital, natural resources, and technology all double as well. 
D) the quantity of physical capital doubles; the number of workers doubles; and human capital, natural resources, and technology remain constant.

Exam 25: Production and Growth

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?

Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should

Which of the following lists contains, in this order, natural resources, physical capital, and human capital?

Countries that grew the fastest over the last 100 or so years had average growth rates of real income per person of about

The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called

In the long run, an increase in the saving rate

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity

According to Michael Kremer, at which population should technological progress be most rapid?

Megan is a landscaper. Which of the following are included in her physical capital?

If over a short time a large number of teenagers become old enough to find employment and a much smaller number of people retire, then productivity

Which of the following is generally an opportunity cost of investment in human capital?

A policy that increases saving

Which of the following statements is correct?

Figure 25-1 -Refer to Figure 21-1. In what way is the figure relevant to the catch-up effect?

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Country A has real GDP per person of 100,000 while country B has real GDP per person of 200,000. All else constant, country A will eventually have a higher standard of living than country B if

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

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

Filters