Question 1

Higher future living standards require:

Accepted Answer

A) reduced rates of current consumption. 
B) increased rates of population growth. 
C) increased rates of current consumption. 
D) reduced rates of current investment. 
A) reduced rates of current consumption. 
B) increased rates of population growth. 
C) increased rates of current consumption. 
D) reduced rates of current investment.

Question 2

Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years, real GDP per person grows at a 1 percent annual rate in Alpha and at a 2 percent annual rate in Omega. After 100 years, real GDP per person in Alpha is ________ smaller than real GDP per person in Omega.

Accepted Answer

A) $2,000 
B) $5,410 
C) $9,080 
D) $11,080 
A) $2,000 
B) $5,410 
C) $9,080 
D) $11,080

Question 3

The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs)is based on the:

Accepted Answer

A) principle of comparative advantage. 
B) principle of diminishing returns to capital. 
C) scarcity principle. 
D) cost-benefit principle. 
A) principle of comparative advantage. 
B) principle of diminishing returns to capital. 
C) scarcity principle. 
D) cost-benefit principle.

Question 4

Entrepreneurs contribute to increased average labor productivity in each of the following ways except by:

Accepted Answer

A) introducing new production methods. 
B) implementing new technological processes. 
C) developing new products. 
D) assigning workers to jobs. 
A) introducing new production methods. 
B) implementing new technological processes. 
C) developing new products. 
D) assigning workers to jobs.

Question 5

Over the period from 1950 to 2010, which country experienced the fastest average annual growth rate of real GDP per person?

Accepted Answer

A) United States 
B) Japan 
C) China 
D) Canada 
A) United States 
B) Japan 
C) China 
D) Canada

Question 6

U.S. productivity growth rebounded in 1995-2000 largely as a result of:

Accepted Answer

A) increases in human capital. 
B) discoveries of new natural resources. 
C) increased political stability. 
D) advances in information and communication technology. 
A) increases in human capital. 
B) discoveries of new natural resources. 
C) increased political stability. 
D) advances in information and communication technology.

Question 7

Government support of basic research by funding scientists through the National Science Foundation is an example of a government policy to promote economic growth by:

Accepted Answer

A) increasing human capital. 
B) increasing physical capital. 
C) improving technology. 
D) increasing the availability of natural resources. 
A) increasing human capital. 
B) increasing physical capital. 
C) improving technology. 
D) increasing the availability of natural resources.

Question 8

The payment of interest not only on the original deposit, but on all previously accumulated interest is called:

Accepted Answer

A) the real interest rate. 
B) the nominal interest rate. 
C) compound interest. 
D) simple interest. 
A) the real interest rate. 
B) the nominal interest rate. 
C) compound interest. 
D) simple interest.

Question 9

Each of the following statements describes how the political and legal environment encourages productivity except:

Accepted Answer

A) Well-defined property rights encourage production and saving. 
B) Political stability promotes economic growth. 
C) Price changes in markets give suppliers incentives to supply goods to markets. 
D) Pay rates determined by a governmental planning agency provide workers with incentives to work hard. 
A) Well-defined property rights encourage production and saving. 
B) Political stability promotes economic growth. 
C) Price changes in markets give suppliers incentives to supply goods to markets. 
D) Pay rates determined by a governmental planning agency provide workers with incentives to work hard.

Question 10

If average labor productivity in two countries is the same, average living standards will be lower in the country with:

Accepted Answer

A) the smaller population. 
B) the larger population. 
C) the higher share of population employed. 
D) the lower share of population employed. 
A) the smaller population. 
B) the larger population. 
C) the higher share of population employed. 
D) the lower share of population employed.

Question 11

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

Accepted Answer

A) 2,000 
B) 15,000 
C) 16,000 
D) 17,000 
A) 2,000 
B) 15,000 
C) 16,000 
D) 17,000

Question 12

If an economy maintains a small rate of growth for a long period of time, then the size of the economy:

Accepted Answer

A) can only increase by a small amount. 
B) can increase by a large amount. 
C) can never double. 
D) will stay nearly constant. 
A) can only increase by a small amount. 
B) can increase by a large amount. 
C) can never double. 
D) will stay nearly constant.

Question 13

The biggest problem thwarting economic growth in the poorest countries, compared to the richest countries, is:

Accepted Answer

A) insufficient human capital. 
B) outdated physical capital. 
C) no access to technology. 
D) a legal and/or political environment unfavorable to economic growth. 
A) insufficient human capital. 
B) outdated physical capital. 
C) no access to technology. 
D) a legal and/or political environment unfavorable to economic growth.

Question 14

When a firm builds a new factory, this is an example of an investment in:

Accepted Answer

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

Question 15

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 60 chicken breasts per hour by hand, while Tom's experience allows him to debone 120 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; 80 
B) Mike; 110 
C) Tom; 80 
D) Tom; 110 
A) Mike; 80 
B) Mike; 110 
C) Tom; 80 
D) Tom; 110

Question 16

Advances in information and communication technology are the principal factors cited for the:

Accepted Answer

A) slowdown in productivity growth between 1973 and 1995. 
B) speedup in productivity growth between 1973 and 1995. 
C) slowdown in productivity growth from 1995-2000. 
D) speedup in productivity growth from 1995-2000. 
A) slowdown in productivity growth between 1973 and 1995. 
B) speedup in productivity growth between 1973 and 1995. 
C) slowdown in productivity growth from 1995-2000. 
D) speedup in productivity growth from 1995-2000.

Question 17

Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is $10,000. However, Richland's real GDP per person is growing at 1 percent per year, and Poorland's real GDP per person is growing at 2 percent per year. After 50 years, real GDP per person in Richland minus real GDP in Poorland is:

Accepted Answer

A) positive and greater than $10,000. 
B) positive but less than $10,000. 
C) zero. 
D) negative. 
A) positive and greater than $10,000. 
B) positive but less than $10,000. 
C) zero. 
D) negative.

Question 18

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 60 chicken breasts per hour, while Tom's experience allows him to debone 120 chicken breasts per hour. Both Mike and Tom work 40 hours per week. Their average hourly productivity as a team is ________ chicken breasts.

Accepted Answer

A) 60 
B) 75 
C) 90 
D) 100 
A) 60 
B) 75 
C) 90 
D) 100

Question 19

Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays an 8 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals ________, while your deposit in Bank S equals ________.

Accepted Answer

A) $1,060; $1,800 
B) $1,600; $1,800 
C) $1,600; $2,159 
D) $1,791; $1,800 
A) $1,060; $1,800 
B) $1,600; $1,800 
C) $1,600; $2,159 
D) $1,791; $1,800

Question 20

Suppose that average labor productivity in Country C is $5,000, and that Countries C and E have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country E?  
$$\begin{array} { | c | r | r r } 
\hline \text { Country } & \text { Pupulatim (millims) } &  { \text { Share of Populatimu Emplayed } } \
\hline \text { A } & 100 & & 60 \
\hline \text { B } & 150 & 55 \
\hline \text { C } & 75 & 50 \
\hline \text { D } & 250 & 45 \
\hline \text { E } & 95 & 40 \
\hline
\end{array}$$

Accepted Answer

A) $1,000 
B) $1,500 
C) $4,500 
D) $6,250 
A) $1,000 
B) $1,500 
C) $4,500 
D) $6,250

Exam 19: Economic Growth, Productivity, and Living Standards

Higher future living standards require:

Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years, real GDP per person grows at a 1 percent annual rate in Alpha and at a 2 percent annual rate in Omega. After 100 years, real GDP per person in Alpha is ________ smaller than real GDP per person in Omega.

The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs)is based on the:

Entrepreneurs contribute to increased average labor productivity in each of the following ways except by:

Over the period from 1950 to 2010, which country experienced the fastest average annual growth rate of real GDP per person?

U.S. productivity growth rebounded in 1995-2000 largely as a result of:

Government support of basic research by funding scientists through the National Science Foundation is an example of a government policy to promote economic growth by:

The payment of interest not only on the original deposit, but on all previously accumulated interest is called:

Each of the following statements describes how the political and legal environment encourages productivity except:

If average labor productivity in two countries is the same, average living standards will be lower in the country with:

Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

If an economy maintains a small rate of growth for a long period of time, then the size of the economy:

The biggest problem thwarting economic growth in the poorest countries, compared to the richest countries, is:

When a firm builds a new factory, this is an example of an investment in:

Advances in information and communication technology are the principal factors cited for the:

Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays an 8 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals ________, while your deposit in Bank S equals ________.

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

Filters

Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays an 8 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals , while your deposit in Bank S equals .