Question 1

The traditional view that the production process has diminishing returns implies that

Accepted Answer

A) the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones. 
B) the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones. 
C) the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones. 
D) the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones. 
A) the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones. 
B) the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones. 
C) the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones. 
D) the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.

Question 2

In addition to investment in physical and human capital,what other public policies might a country adopt to increase productivity?

Accepted Answer

In addition to investment in physical an

Question 3

According to an in-house review,what percent of World Bank projects had been properly evaluated to see if they made a difference?

Accepted Answer

A) 2% 
B) 10% 
C) 30% 
D) 70% 
A) 2% 
B) 10% 
C) 30% 
D) 70%

Question 4

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 5

A nation's standard of living is determined by

Accepted Answer

A) its productivity. 
B) its gross domestic product. 
C) its national income. 
D) how much it has relative to others. 
A) its productivity. 
B) its gross domestic product. 
C) its national income. 
D) how much it has relative to others.

Question 6

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has more capital and so more real GDP per person than the other.Finally,suppose that the saving rate in both countries increases from 5 percent to 6 percent.Over the next ten years we would expect that

Accepted Answer

A) the growth rate will not change in either country. 
B) the country that started with less capital will grow faster. 
C) the country with started with more capital will grow faster. 
D) both countries will grow at the same rate. 
A) the growth rate will not change in either country. 
B) the country that started with less capital will grow faster. 
C) the country with started with more capital will grow faster. 
D) both countries will grow at the same rate.

Question 7

The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents,and he has given the farms to his friends.His friends don't know much about farming.The courts in Turan have ruled that the seizures are illegal,but the dictator has ignored the rulings.Other things equal,we would expect that the growth rate in Turan will

Accepted Answer

A) fall temporarily, but will return to where it was when the new owners learn how to farm. 
B) increase because the total amount of human capital in the country will increase as the new owners learn how to farm. 
C) fall and remain lower for a long time. 
D) not be affected unless widespread civil disorder or civil war results. 
A) fall temporarily, but will return to where it was when the new owners learn how to farm. 
B) increase because the total amount of human capital in the country will increase as the new owners learn how to farm. 
C) fall and remain lower for a long time. 
D) not be affected unless widespread civil disorder or civil war results.

Question 8

Suppose a country reduces trade restrictions.This country would be pursing an

Accepted Answer

A) inward policy, which most economists believe has beneficial effects on the economy. 
B) inward policy, which most economists believe has adverse effects on the economy. 
C) outward policy, which most economists believe has beneficial effects on the economy. 
D) outward policy, which most economists believe has adverse effects on the economy. 
A) inward policy, which most economists believe has beneficial effects on the economy. 
B) inward policy, which most economists believe has adverse effects on the economy. 
C) outward policy, which most economists believe has beneficial effects on the economy. 
D) outward policy, which most economists believe has adverse effects on the economy.

Question 9

Real GDP per person in poor countries like Pakistan and Bangladesh is

Accepted Answer

A) much more than twice as high as it was in the US in 1870. 
B) about twice as high as it was in the US in 1870. 
C) about the same as it was in the US in 1870. 
D) less that it was in the US in 1870. 
A) much more than twice as high as it was in the US in 1870. 
B) about twice as high as it was in the US in 1870. 
C) about the same as it was in the US in 1870. 
D) less that it was in the US in 1870.

Question 10

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

Accepted Answer

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

Question 11

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has less capital and so less real GDP per person.Suppose that both increase their saving rate from 3 percent to 4 percent.In the long run

Accepted Answer

A) both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with more capital. 
B) both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with less capital. 
C) both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital. 
D) both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital. 
A) both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with more capital. 
B) both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with less capital. 
C) both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital. 
D) both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.

Question 12

Cedar Valley Furniture uses 5 workers working 8 hours to produce 80 rocking chairs.What is the productivity of these workers?

Accepted Answer

A) 2 chairs per hour. 
B) 1 hour per chair. 
C) 80 chairs. 
D) None of the above is correct. 
A) 2 chairs per hour. 
B) 1 hour per chair. 
C) 80 chairs. 
D) None of the above is correct.

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

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

Of the following countries which grew the slowest over the last 100 years?

Accepted Answer

A) Brazil 
B) Mexico 
C) China 
D) United States 
A) Brazil 
B) Mexico 
C) China 
D) United States

Question 16

In 2003,the typical Bangladeshi had how many times the income of the typical American a century ago?

Accepted Answer

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

Question 17

If a production function has constant returns to scale,output can be doubled if

Accepted Answer

A) labor alone doubles. 
B) all inputs but labor double. 
C) all of the inputs double. 
D) None of the above is correct. 
A) labor alone doubles. 
B) all inputs but labor double. 
C) all of the inputs double. 
D) None of the above is correct.

Question 18

If a country's saving rate increases,then in the long run

Accepted Answer

A) both productivity growth and income growth increase. 
B) only productivity growth increases. 
C) only income growth increases. 
D) neither productivity growth nor income growth increase. 
A) both productivity growth and income growth increase. 
B) only productivity growth increases. 
C) only income growth increases. 
D) neither productivity growth nor income growth increase.

Question 19

An increase in the saving rate does not permanently increase the growth rate of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 20

Natural resources

Accepted Answer

A) are inputs provided by nature. 
B) are inputs such as land, rivers, and mineral deposits. 
C) take two forms: renewable and nonrenewable. 
D) All of the above are correct. 
A) are inputs provided by nature. 
B) are inputs such as land, rivers, and mineral deposits. 
C) take two forms: renewable and nonrenewable. 
D) All of the above are correct.

Exam 25: Production and Growth

The traditional view that the production process has diminishing returns implies that

In addition to investment in physical and human capital,what other public policies might a country adopt to increase productivity?

According to an in-house review,what percent of World Bank projects had been properly evaluated to see if they made a difference?

A nation's standard of living is determined by

Suppose a country reduces trade restrictions.This country would be pursing an

Real GDP per person in poor countries like Pakistan and Bangladesh is

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

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has less capital and so less real GDP per person.Suppose that both increase their saving rate from 3 percent to 4 percent.In the long run

Cedar Valley Furniture uses 5 workers working 8 hours to produce 80 rocking chairs.What is the productivity of these workers?

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

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.

Of the following countries which grew the slowest over the last 100 years?

In 2003,the typical Bangladeshi had how many times the income of the typical American a century ago?

If a production function has constant returns to scale,output can be doubled if

If a country's saving rate increases,then in the long run

An increase in the saving rate does not permanently increase the growth rate of real GDP per person.

Natural resources

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: 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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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