Question 1

Real GDP per person can increase:

Accepted Answer

A) only if the share of the population employed increases. 
B) only if the share of the population employed decreases. 
C) only if average labor productivity increases. 
D) if the share of population employed and/or average labor productivity increases. 
A) only if the share of the population employed increases. 
B) only if the share of the population employed decreases. 
C) only if average labor productivity increases. 
D) if the share of population employed and/or average labor productivity increases. D

Question 2

Physical capital is the:

Accepted Answer

A) factories and machinery used to produce other goods and services. 
B) talents, training, and education of workers. 
C) financial resources available for investment. 
D) physical labor of workers. 
A) factories and machinery used to produce other goods and services. 
B) talents, training, and education of workers. 
C) financial resources available for investment. 
D) physical labor of workers. A

Question 3

The introduction of an overnight delivery service that guarantees the delivery of packages anywhere in the world overnight would increase:

Accepted Answer

A) average labor productivity. 
B) the share of population employed. 
C) the labor force participation rate. 
D) the unemployment rate. 
A) average labor productivity. 
B) the share of population employed. 
C) the labor force participation rate. 
D) the unemployment rate. A

Question 4

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 30 chicken breasts per hour by hand, while Tom's experience allows him to debone 60 chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain maximum average hourly productivity, ________ is assigned to use the machine and their combined average hourly productivity as a team is ________ chicken breasts

Accepted Answer

A) Mike; 65 
B) Mike; 80 
C) Tom; 65 
D) Tom; 80 
A) Mike; 65 
B) Mike; 80 
C) Tom; 65 
D) Tom; 80

Question 5

Arguments that economic growth must be constrained by environmental problems and limits of natural resources ignore the fact that economic growth can:

Accepted Answer

A) be measured in both nominal and real terms. 
B) increase both average labor productivity and the share of population employed. 
C) take the form of improved quality as well as increased quantity. 
D) occur with only benefits and no economic costs. 
A) be measured in both nominal and real terms. 
B) increase both average labor productivity and the share of population employed. 
C) take the form of improved quality as well as increased quantity. 
D) occur with only benefits and no economic costs.

Question 6

Growth of real GDP per person is totally determined by the growth of average:

Accepted Answer

A) labor productivity and the proportion of the population employed. 
B) labor productivity and the proportion of the population in the labor force. 
C) labor force participation and the share of income going to capital. 
D) labor force participation and the share of the population employed. 
A) labor productivity and the proportion of the population employed. 
B) labor productivity and the proportion of the population in the labor force. 
C) labor force participation and the share of income going to capital. 
D) labor force participation and the share of the population employed.

Question 7

Growth in real GDP per capita has:

Accepted Answer

A) been steady over the course of human history. 
B) slowed since the mid-nineteenth century compared to before. 
C) been more rapid since the mid-nineteenth century than ever before. 
D) increased over the last 150 years only in the United States and Canada. 
A) been steady over the course of human history. 
B) slowed since the mid-nineteenth century compared to before. 
C) been more rapid since the mid-nineteenth century than ever before. 
D) increased over the last 150 years only in the United States and Canada.

Question 8

In the long run, increases in output per person arise primarily from:

Accepted Answer

A) increases in female labor force participation. 
B) increases in male labor force participation. 
C) an increasing proportion of the population retiring 
D) increases in average labor productivity. 
A) increases in female labor force participation. 
B) increases in male labor force participation. 
C) an increasing proportion of the population retiring 
D) increases in average labor productivity.

Question 9

More economic growth is not necessarily better unless the benefits of growth:

Accepted Answer

A) exceed the costs of growth. 
B) increase average labor productivity. 
C) increase real GDP per capita. 
D) increase human capital. 
A) exceed the costs of growth. 
B) increase average labor productivity. 
C) increase real GDP per capita. 
D) increase human capital.

Question 10

Which of the following is consistent with a political and legal framework that discourages economic growth?

Accepted Answer

A) The allocation of bank credit by the government rather than by markets 
B) A speedy approval process for new businesses 
C) Agricultural prices that are allowed to vary according to market conditions 
D) Taxation and regulation that are not very burdensome 
A) The allocation of bank credit by the government rather than by markets 
B) A speedy approval process for new businesses 
C) Agricultural prices that are allowed to vary according to market conditions 
D) Taxation and regulation that are not very burdensome

Question 11

Gamma has $30,000 of capital per worker, while Omega has $7,500 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will increase output ________ in Gamma compared to Omega, holding other factors constant.

Accepted Answer

A) more 
B) less 
C) not at all 
D) by the same amount 
A) more 
B) less 
C) not at all 
D) by the same amount

Question 12

If 50 percent of the population in a country is employed and average labor productivity equals $30,000, then real GDP per person equals:

Accepted Answer

A) $15,000. 
B) $30,000. 
C) $50,000. 
D) $60,000. 
A) $15,000. 
B) $30,000. 
C) $50,000. 
D) $60,000.

Question 13

Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays 6 percent annual compound interest, and you do not withdraw from the account until your retirement at the age of 65, 44 years later. How much will be in the account when you retire?

Accepted Answer

A) $3,752 
B) $12,985 
C) $24,871 
D) $46,794 
A) $3,752 
B) $12,985 
C) $24,871 
D) $46,794

Question 14

Developing new products and services as well as introducing new production methods are among the ways that ________ increases average labor productivity.

Accepted Answer

A) human capital 
B) physical capital 
C) an entrepreneur 
D) a manager 
A) human capital 
B) physical capital 
C) an entrepreneur 
D) a manager

Question 15

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:

Accepted Answer

A) less is produced. 
B) less production is wasted. 
C) the more an additional unit of capital adds to production. 
D) the less an additional unit of capital adds to production. 
A) less is produced. 
B) less production is wasted. 
C) the more an additional unit of capital adds to production. 
D) the less an additional unit of capital adds to production.

Question 16

Average labor productivity is determined by:

Accepted Answer

A) consumption, investment, government spending, and net exports. 
B) the number employed, unemployed, and the labor force participation rate. 
C) the quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment. 
D) the real interest rate, the nominal interest rate, and the rate of inflation. 
A) consumption, investment, government spending, and net exports. 
B) the number employed, unemployed, and the labor force participation rate. 
C) the quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment. 
D) the real interest rate, the nominal interest rate, and the rate of inflation.

Question 17

The population of Alpha totals one million people, 40 percent of whom are employed. Average output per worker in Alpha is $20,000. Real GDP per person in Alpha totals:

Accepted Answer

A) $8,000. 
B) $12,000. 
C) $20,000. 
D) $50,000. 
A) $8,000. 
B) $12,000. 
C) $20,000. 
D) $50,000.

Question 18

When a worker learns how to use a new business-related software program, this is an example of investing in:

Accepted Answer

A) human capital. 
B) physical capital. 
C) research and development 
D) the stock market. 
A) human capital. 
B) physical capital. 
C) research and development 
D) the stock market.

Question 19

In order to promote growth, the poorest countries-in contrast to the middle-level and rich countries-need most to:

Accepted Answer

A) invest in human capital. 
B) improve their infrastructure. 
C) improve their legal and political environments. 
D) increase their capital stock. 
A) invest in human capital. 
B) improve their infrastructure. 
C) improve their legal and political environments. 
D) increase their capital stock.

Question 20

Economists refer to the talents, training, and education of workers as:

Accepted Answer

A) human capital. 
B) physical capital. 
C) average labor productivity. 
D) labor supply. 
A) human capital. 
B) physical capital. 
C) average labor productivity. 
D) labor supply.

Exam 19: Economic Growth, Productivity, and Living Standards

Real GDP per person can increase:

Physical capital is the:

The introduction of an overnight delivery service that guarantees the delivery of packages anywhere in the world overnight would increase:

Arguments that economic growth must be constrained by environmental problems and limits of natural resources ignore the fact that economic growth can:

Growth of real GDP per person is totally determined by the growth of average:

Growth in real GDP per capita has:

In the long run, increases in output per person arise primarily from:

More economic growth is not necessarily better unless the benefits of growth:

Which of the following is consistent with a political and legal framework that discourages economic growth?

If 50 percent of the population in a country is employed and average labor productivity equals $30,000, then real GDP per person equals:

Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays 6 percent annual compound interest, and you do not withdraw from the account until your retirement at the age of 65, 44 years later. How much will be in the account when you retire?

Developing new products and services as well as introducing new production methods are among the ways that ________ increases average labor productivity.

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:

Average labor productivity is determined by:

The population of Alpha totals one million people, 40 percent of whom are employed. Average output per worker in Alpha is $20,000. Real GDP per person in Alpha totals:

When a worker learns how to use a new business-related software program, this is an example of investing in:

In order to promote growth, the poorest countries-in contrast to the middle-level and rich countries-need most to:

Economists refer to the talents, training, and education of workers as:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

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