Question 1

If a country has a higher level of productivity than another, then it also has a higher level of real GDP.

Accepted Answer

A) True 
 B)False

Question 2

If a good has become more scarce, then we know for sure that

Accepted Answer

A) the demand for it increased. 
B) the supply of it decreased. 
C) either the demand for it increased or the supply of it decreased. 
D) both the supply of it and the demand for it decreased. 
A) the demand for it increased. 
B) the supply of it decreased. 
C) either the demand for it increased or the supply of it decreased. 
D) both the supply of it and the demand for it decreased.

Question 3

Megan is a landscaper. Which of the following are included in her human 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 4

Which of the following is correct?

Accepted Answer

A) Although levels of real GDP per person vary substantially from country to country, the growth rate of real GDP per person is similar across countries. 
B) Productivity is not closely linked to government policies. 
C) The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress. 
D) Productivity may be measured by the growth rate of real GDP per person. 
A) Although levels of real GDP per person vary substantially from country to country, the growth rate of real GDP per person is similar across countries. 
B) Productivity is not closely linked to government policies. 
C) The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress. 
D) Productivity may be measured by the growth rate of real GDP per person.

Question 5

The behavior of market prices over time indicates that natural resources are

Accepted Answer

A) a limit to economic growth. 
B) unrelated to economic growth. 
C) not a limit to economic growth. 
D) the major determinant of productivity. 
A) a limit to economic growth. 
B) unrelated to economic growth. 
C) not a limit to economic growth. 
D) the major determinant of productivity.

Question 6

Evidence shows that other things the same, poor countries grow

Accepted Answer

A) faster than rich countries. However, no country that was poor in 1870 is now rich. 
B) faster than rich countries. In fact, some countries that were poor in 1870 are now rich. 
C) slower than rich countries. In fact, no country that was poor in 1870 is now rich. 
D) slower than rich countries. However, some countries that were poor in 1870 are now rich. 
A) faster than rich countries. However, no country that was poor in 1870 is now rich. 
B) faster than rich countries. In fact, some countries that were poor in 1870 are now rich. 
C) slower than rich countries. In fact, no country that was poor in 1870 is now rich. 
D) slower than rich countries. However, some countries that were poor in 1870 are now rich.

Question 7

Which of the following would be considered physical capital?

Accepted Answer

A) the available knowledge on how to make semiconductors 
B) a taxi-cab driver's knowledge of the fastest routes to take 
C) bulldozers, backhoes and other construction equipment 
D) All of the above are correct. 
A) the available knowledge on how to make semiconductors 
B) a taxi-cab driver's knowledge of the fastest routes to take 
C) bulldozers, backhoes and other construction equipment 
D) All of the above are correct.

Question 8

Average income has been stagnant for many years in

Accepted Answer

A) Gabon. 
B) Ireland. 
C) Singapore. 
D) All of the above are correct. 
A) Gabon. 
B) Ireland. 
C) Singapore. 
D) All of the above are correct.

Question 9

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Accepted Answer

A) raise productivity. Other things the same, this increase will be larger in a poor country. 
B) raise productivity. Other things the same, this increase will be larger in a rich country. 
C) reduce productivity. Other things the same, this decrease will be larger in a poor country. 
D) reduce productivity. Other things the same, this decrease will be larger in a rich country. 
A) raise productivity. Other things the same, this increase will be larger in a poor country. 
B) raise productivity. Other things the same, this increase will be larger in a rich country. 
C) reduce productivity. Other things the same, this decrease will be larger in a poor country. 
D) reduce productivity. Other things the same, this decrease will be larger in a rich country.

Question 10

Human capital is the

Accepted Answer

A) knowledge and skills that workers acquire through education, training, and experience. 
B) stock of equipment and structures that is used to produce goods and services. 
C) total number of hours worked in an economy. 
D) same thing as technological knowledge. 
A) knowledge and skills that workers acquire through education, training, and experience. 
B) stock of equipment and structures that is used to produce goods and services. 
C) total number of hours worked in an economy. 
D) same thing as technological knowledge.

Question 11

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Accepted Answer

A) 5 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
B) 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
C) 5 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger. 
D) 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger. 
A) 5 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
B) 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
C) 5 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger. 
D) 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger.

Question 12

Nathan owns a coffee kiosk. All of his employees work 8 hours per day. In 2009, he employed 5 people who produced a total of 900 cups of coffee each day. In 2010, he hired a sixth employee and production increased to 1188 cups of coffee each day. In Nathan's kiosk, productivity

Accepted Answer

A) decreased by 2 percent. 
B) increased by 9 percent. 
C) increased by 10 percent. 
D) increased by 1.11 percent. 
A) decreased by 2 percent. 
B) increased by 9 percent. 
C) increased by 10 percent. 
D) increased by 1.11 percent.

Question 13

Over the period 1900-2008, Brazil's rate of economic growth exceeded that of China.

Accepted Answer

A) True 
 B)False

Question 14

Over the last century, U.S. real GDP per person grew at a rate of about

Accepted Answer

A) 2 percent per year, so that it is now 2 times as high as it was a century ago. 
B) 2 percent per year, so that it is now 8 times as high as it was a century ago. 
C) 4 percent per year, so that it is now 2 times as high as it was a century ago. 
D) 4 percent per year, so that it is now 8 times as high as it was a century ago. 
A) 2 percent per year, so that it is now 2 times as high as it was a century ago. 
B) 2 percent per year, so that it is now 8 times as high as it was a century ago. 
C) 4 percent per year, so that it is now 2 times as high as it was a century ago. 
D) 4 percent per year, so that it is now 8 times as high as it was a century ago.

Question 15

Suppose that a country increased its saving rate. In the long run it would have

Accepted Answer

A) higher productivity, and another unit of capital would increase output by more than before. 
B) higher productivity, but another unit of capital would increase output by less than before. 
C) lower productivity, and another unit of capital would increase output by more than before. 
D) lower productivity, but another unit of capital would increase output by less than before. 
A) higher productivity, and another unit of capital would increase output by more than before. 
B) higher productivity, but another unit of capital would increase output by less than before. 
C) lower productivity, and another unit of capital would increase output by more than before. 
D) lower productivity, but another unit of capital would increase output by less than before.

Question 16

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 4 percent to 7 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 per worker will grow faster. 
C) the country that started with more capital per worker will grow faster. 
D) both countries will grow and at the same higher rate. 
A) the growth rate will not change in either country. 
B) the country that started with less capital per worker will grow faster. 
C) the country that started with more capital per worker will grow faster. 
D) both countries will grow and at the same higher rate.

Question 17

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

Accepted Answer

A) True 
 B)False

Question 18

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

Accepted Answer

A) True 
 B)False

Question 19

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Accepted Answer

A) decreasing returns to scale. 
B) zero returns to scale. 
C) constant returns to scale. 
D) increasing returns to scale. 
A) decreasing returns to scale. 
B) zero returns to scale. 
C) constant returns to scale. 
D) increasing returns to scale.

Question 20

Figure 12-1. 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 12-1. The curve becomes flatter as the amount of capital per worker increases because of

Accepted Answer

A) increasing returns to capital. 
B) increasing returns to labor. 
C) diminishing returns to capital. 
D) diminishing returns to labor. 
A) increasing returns to capital. 
B) increasing returns to labor. 
C) diminishing returns to capital. 
D) diminishing returns to labor.

Exam 12: Production and Growth

If a country has a higher level of productivity than another, then it also has a higher level of real GDP.

If a good has become more scarce, then we know for sure that

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

Which of the following is correct?

The behavior of market prices over time indicates that natural resources are

Evidence shows that other things the same, poor countries grow

Which of the following would be considered physical capital?

Average income has been stagnant for many years in

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Human capital is the

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Nathan owns a coffee kiosk. All of his employees work 8 hours per day. In 2009, he employed 5 people who produced a total of 900 cups of coffee each day. In 2010, he hired a sixth employee and production increased to 1188 cups of coffee each day. In Nathan's kiosk, productivity

Over the period 1900-2008, Brazil's rate of economic growth exceeded that of China.

Over the last century, U.S. real GDP per person grew at a rate of about

Suppose that a country increased its saving rate. In the long run it would have

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Figure 12-1. 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 12-1. The curve becomes flatter as the amount of capital per worker increases because of

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

Application: The Costs of Taxation

Application: International Trade

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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