Question 1

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions?

Accepted Answer

A) A relatively simple way to increase growth rates permanently is to increase a country's saving rate. 
B) Growth is generally inhibited rather than promoted by policies like protective tariffs. 
C) Well-established property rights that are enforced by fair and efficient courts are important to economic growth. 
D) Countries with few domestic natural resources still have opportunities for economic growth. 
A) A relatively simple way to increase growth rates permanently is to increase a country's saving rate. 
B) Growth is generally inhibited rather than promoted by policies like protective tariffs. 
C) Well-established property rights that are enforced by fair and efficient courts are important to economic growth. 
D) Countries with few domestic natural resources still have opportunities for economic growth.

Question 2

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

Accepted Answer

A) True 
 B)False

Question 3

"When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount." This statement

Accepted Answer

A) is an assertion that production functions have the property of constant returns to scale. 
B) is consistent with the view that capital is subject to diminishing returns. 
C) is inconsistent with the view that it is easier for a country to grow fast if it starts out relatively poor. 
D) All of the above are correct. 
A) is an assertion that production functions have the property of constant returns to scale. 
B) is consistent with the view that capital is subject to diminishing returns. 
C) is inconsistent with the view that it is easier for a country to grow fast if it starts out relatively poor. 
D) All of the above are correct.

Question 4

Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true?

Accepted Answer

A) Natural resources per worker influence productivity only when those natural resources are renewable. 
B) The prices of most natural resources are stable or falling relative to other prices. 
C) Technology requires greater use of natural resources. 
D) The terms human capital and technological knowledge are used interchangeably. 
A) Natural resources per worker influence productivity only when those natural resources are renewable. 
B) The prices of most natural resources are stable or falling relative to other prices. 
C) Technology requires greater use of natural resources. 
D) The terms human capital and technological knowledge are used interchangeably.

Question 6

Other things equal, relatively poor countries tend to grow

Accepted Answer

A) slower than relatively rich countries; this is called the poverty trap. 
B) slower than relatively rich countries; this is called the fall-behind effect. 
C) faster than relatively rich countries; this is called the catch-up effect. 
D) faster than relatively rich countries; this is called the constant-returns-to-scale effect. 
A) slower than relatively rich countries; this is called the poverty trap. 
B) slower than relatively rich countries; this is called the fall-behind effect. 
C) faster than relatively rich countries; this is called the catch-up effect. 
D) faster than relatively rich countries; this is called the constant-returns-to-scale effect.

Question 7

In the United States, as measured by real GDP per person, average income is about how many times as high as average income a century ago?

Accepted Answer

A) 2 
B) 4 
C) 6 
D) 8 
A) 2 
B) 4 
C) 6 
D) 8

Question 8

Country A experienced a growth rate of real GDP per person of 4 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Accepted Answer

A) exceptionally high. 
B) moderately high. 
C) moderately low. 
D) exceptionally low. 
A) exceptionally high. 
B) moderately high. 
C) moderately low. 
D) exceptionally low.

Question 9

If WarmWear, a U.S.manufacturer of winter clothing, opens a new factory in Austria, then

Accepted Answer

A) Austrian GNP increases by more than Austrian GDP, because GDP includes income earned by foreigners working in Austria. 
B) Austrian GNP increases by more than Austrian GDP, because GDP excludes income earned by foreigners working in Austria. 
C) Austrian GNP increases by less than Austrian GDP, because GDP includes income earned by foreigners working in Austria. 
D) Austrian GNP increases by less than Austrian GDP, because GDP excludes income earned by foreigners working in Austria. 
A) Austrian GNP increases by more than Austrian GDP, because GDP includes income earned by foreigners working in Austria. 
B) Austrian GNP increases by more than Austrian GDP, because GDP excludes income earned by foreigners working in Austria. 
C) Austrian GNP increases by less than Austrian GDP, because GDP includes income earned by foreigners working in Austria. 
D) Austrian GNP increases by less than Austrian GDP, because GDP excludes income earned by foreigners working in Austria.

Question 10

Like physical capital, human capital is a produced factor of production.

Accepted Answer

A) True 
 B)False

Question 11

A country's standard of living depends on its ability to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) 0.5 percent per year. 
B) 1.5 percent per year. 
C) 2.0 percent per year. 
D) 2.5 percent per year. 
A) 0.5 percent per year. 
B) 1.5 percent per year. 
C) 2.0 percent per year. 
D) 2.5 percent per year.

Question 13

Which of the following is correct?

Accepted Answer

A) Countries with the highest growth rates over the last 100 years are the ones that had the highest level of real GDP 100 years ago. 
B) Most countries have had little fluctuation around their average growth rates during the past 100 years. 
C) The ranking of countries by income changes substantially over time. 
D) Over the last 100 years, Japan had the highest real GDP growth rate, and now has the highest real GDP per person. 
A) Countries with the highest growth rates over the last 100 years are the ones that had the highest level of real GDP 100 years ago. 
B) Most countries have had little fluctuation around their average growth rates during the past 100 years. 
C) The ranking of countries by income changes substantially over time. 
D) Over the last 100 years, Japan had the highest real GDP growth rate, and now has the highest real GDP per person.

Question 14

The average citizen of India in 2008 had

Accepted Answer

A) less real income than the typical resident of Canda in 1870. 
B) less real income than the typical resident of the United Kingdom in 1870. 
C) higher real income than a resident of Japan in 2008. 
D) higher real income than a resident of China in 2008. 
A) less real income than the typical resident of Canda in 1870. 
B) less real income than the typical resident of the United Kingdom in 1870. 
C) higher real income than a resident of Japan in 2008. 
D) higher real income than a resident of China in 2008.

Question 15

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

A) not change. 
B) increase but not double. 
C) double. 
D) more than double. 
A) not change. 
B) increase but not double. 
C) double. 
D) more than double.

Question 16

In some East Asian countries, average income, as measured by real GDP per person, has recently grown at an average annual rate that implies output will double about every

Accepted Answer

A) 10 years. 
B) 15 years. 
C) 20 years. 
D) 25 years. 
A) 10 years. 
B) 15 years. 
C) 20 years. 
D) 25 years.

Question 17

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N).
-Refer to Scenario 12-1. In the production function, which of the following represents technology?

Accepted Answer

A) A 
B) K 
C) H 
D) N 
A) A 
B) K 
C) H 
D) N

Question 18

Over the last ten years productivity grew more slowly in Upland than in Lowland and the population and total hours worked remained the same in both countries. It follows that

Accepted Answer

A) real GDP per person must be lower in Upland than in Lowland. 
B) real GDP per person grew more slowly in Upland than in Lowland. 
C) the standard of living must be higher in Upland than in Lowland. 
D) All of the above are correct. 
A) real GDP per person must be lower in Upland than in Lowland. 
B) real GDP per person grew more slowly in Upland than in Lowland. 
C) the standard of living must be higher in Upland than in Lowland. 
D) All of the above are correct.

Question 19

Average income has been stagnant for many years in

Accepted Answer

A) Chad. 
B) Gabon. 
C) Senegal. 
D) All of the above are correct. 
A) Chad. 
B) Gabon. 
C) Senegal. 
D) All of the above are correct.

Question 20

Which of the following is an observation made by economist Michael Kremer?

Accepted Answer

A) World growth rates increased as the population increased. 
B) Technological progress allows for increasing population because of advances in agriculture. 
C) World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will decline. 
D) All of the above are observations made by Kremer. 
A) World growth rates increased as the population increased. 
B) Technological progress allows for increasing population because of advances in agriculture. 
C) World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will decline. 
D) All of the above are observations made by Kremer.

Exam 12: Production and Growth

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions?

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

"When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount." This statement

Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.

Which of the following statements is true?

Other things equal, relatively poor countries tend to grow

In the United States, as measured by real GDP per person, average income is about how many times as high as average income a century ago?

Country A experienced a growth rate of real GDP per person of 4 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

If WarmWear, a U.S.manufacturer of winter clothing, opens a new factory in Austria, then

Like physical capital, human capital is a produced factor of production.

A country's standard of living depends on its ability to produce goods and services.

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

Which of the following is correct?

The average citizen of India in 2008 had

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

In some East Asian countries, average income, as measured by real GDP per person, has recently grown at an average annual rate that implies output will double about every

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N). -Refer to Scenario 12-1. In the production function, which of the following represents technology?

Over the last ten years productivity grew more slowly in Upland than in Lowland and the population and total hours worked remained the same in both countries. It follows that

Average income has been stagnant for many years in

Which of the following is an observation made by economist Michael Kremer?

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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