Question 1

Inventors often obtain patents on new products and processes, thereby turning new ideas into

Accepted Answer

A) private goods and increasing the incentive to engage in research. 
B) private goods but decreasing the incentive to engage in research. 
C) public goods and increasing the incentive to engage in research. 
D) public goods but decreasing the incentive to engage in research. 
A) private goods and increasing the incentive to engage in research. 
B) private goods but decreasing the incentive to engage in research. 
C) public goods and increasing the incentive to engage in research. 
D) public goods but decreasing the incentive to engage in research.

Question 2

Suppose that Slovenia undertakes a policy to increase its saving rate. This policy will likely

Accepted Answer

A) have no impact on GDP growth. 
B) lead to higher GDP growth for a few years. 
C) lead to higher GDP growth for a period of several decades. 
D) lead to a permanently higher growth rate. 
A) have no impact on GDP growth. 
B) lead to higher GDP growth for a few years. 
C) lead to higher GDP growth for a period of several decades. 
D) lead to a permanently higher growth rate.

Question 3

Which of the following would increase productivity?

Accepted Answer

A) an increase in the physical capital stock per worker 
B) an increase in human capital per worker 
C) an increase in natural resources per worker 
D) All of the above are correct. 
A) an increase in the physical capital stock per worker 
B) an increase in human capital per worker 
C) an increase in natural resources per worker 
D) All of the above are correct.

Question 4

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N).
-Refer to Scenario 12-1. K represents the quantity of

Accepted Answer

A) human capital only. 
B) physical capital only. 
C) human capital and physical capital combined. 
D) nonrenewable natural resources. 
A) human capital only. 
B) physical capital only. 
C) human capital and physical capital combined. 
D) nonrenewable natural resources.

Question 5

The logic behind the catch-up effect is that

Accepted Answer

A) workers in countries with low incomes will work more hours than workers in countries with high incomes. 
B) the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. 
C) new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. 
D) None of the above is correct. 
A) workers in countries with low incomes will work more hours than workers in countries with high incomes. 
B) the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. 
C) new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. 
D) None of the above is correct.

Question 6

Which of the following is correct?

Accepted Answer

A) There is no debate about the effects of higher population growth on economic growth. 
B) Natural resources clearly place limits on growth; there is simply no way to reduce either the amount or type of natural resources needed to produce goods. 
C) How much an increase in capital increases a country's output is independent of that country's current level of capital. 
D) Economists argue that outward rather than inward policies are likely to promote economic growth. 
A) There is no debate about the effects of higher population growth on economic growth. 
B) Natural resources clearly place limits on growth; there is simply no way to reduce either the amount or type of natural resources needed to produce goods. 
C) How much an increase in capital increases a country's output is independent of that country's current level of capital. 
D) Economists argue that outward rather than inward policies are likely to promote economic growth.

Question 7

Assuming diminishing returns,

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 8

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N).
-Refer to Scenario 12-1. If the production function has the constant-returns-to-scale property, then it could be rewritten as

Accepted Answer

A) Y/L = AF(1, K/L, H/L, N/L) 
B) Y/L = AF(L, 1, H/L, N/L) 
C) Y/L = AF(L, K/L, 1, N/L) 
D) Y/L = AF(L, K/L, H/L, 1) 
A) Y/L = AF(1, K/L, H/L, N/L) 
B) Y/L = AF(L, 1, H/L, N/L) 
C) Y/L = AF(L, K/L, 1, N/L) 
D) Y/L = AF(L, K/L, H/L, 1)

Question 9

Foreign saving is used for domestic investment when foreigners engage in

Accepted Answer

A) foreign direct investment. 
B) foreign portfolio investment. 
C) either foreign direct investment or foreign portfolio investment. 
D) None of the above is correct. 
A) foreign direct investment. 
B) foreign portfolio investment. 
C) either foreign direct investment or foreign portfolio investment. 
D) None of the above is correct.

Question 10

Which of the following best illustrates the human capital of a survivor stranded on an island?

Accepted Answer

A) the fishing poles she has produced 
B) the invention of a better fishing lure 
C) the fresh fruit and fish on and around the island 
D) her previous training in a survival course 
A) the fishing poles she has produced 
B) the invention of a better fishing lure 
C) the fresh fruit and fish on and around the island 
D) her previous training in a survival course

Question 11

If companies from foreign countries build and operate factories in China, then China's productivity

Accepted Answer

A) and the wages of Chinese workers increase. 
B) increases but the wages of Chinese workers decrease. 
C) decreases but the wages of Chinese workers increase. 
D) and the wages of Chinese workers decrease. 
A) and the wages of Chinese workers increase. 
B) increases but the wages of Chinese workers decrease. 
C) decreases but the wages of Chinese workers increase. 
D) and the wages of Chinese workers decrease.

Question 12

Over the period 1900-2008, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Accepted Answer

A) Indonesia 
B) India 
C) Pakistan 
D) Brazil 
A) Indonesia 
B) India 
C) Pakistan 
D) Brazil

Question 13

When a society decides to increase its quantity of physical capital, the society

Accepted Answer

A) can avoid the usual need to face trade-offs. 
B) is apparently not very concerned about its rate of economic growth in the future. 
C) is in effect deciding to consume fewer goods and services in the present. 
D) is in effect deciding to save less of its current income in the present. 
A) can avoid the usual need to face trade-offs. 
B) is apparently not very concerned about its rate of economic growth in the future. 
C) is in effect deciding to consume fewer goods and services in the present. 
D) is in effect deciding to save less of its current income in the present.

Question 14

Which of the following statements is true?

Accepted Answer

A) Productivity is calculated as hours worked divided by output produced. 
B) Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers. 
C) Both A and B are correct. 
D) None of the above are correct. 
A) Productivity is calculated as hours worked divided by output produced. 
B) Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers. 
C) Both A and B are correct. 
D) None of the above are correct.

Question 15

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at larger levels of existing capital per worker.

Accepted Answer

A) True 
 B)False

Question 16

Both the standard of living and the growth of real GDP per person vary widely across countries.

Accepted Answer

A) True 
 B)False

Question 17

Over extended periods of time, population growth

Accepted Answer

A) has no effect on the standard of living. 
B) has uncertain effects on the standard of living. 
C) clearly raises the standard of living. 
D) clearly lowers the standard of living. 
A) has no effect on the standard of living. 
B) has uncertain effects on the standard of living. 
C) clearly raises the standard of living. 
D) clearly lowers the standard of living.

Question 18

Which of the following is a determinant of productivity?

Accepted Answer

A) human capital per worker 
B) physical capital per worker 
C) natural resources per worker 
D) All of the above are correct. 
A) human capital per worker 
B) physical capital per worker 
C) natural resources per worker 
D) All of the above are correct.

Question 19

Which of the following is not correct?

Accepted Answer

A) China allows only one child per family and couples that violate this rule are subject to substantial fines. 
B) In developed countries, population growth is consistently about 3 percent per year; in developing countries it is consistently about 5 percent per year. 
C) Educational attainment tends to be lowest in countries with the highest population growth. 
D) Economists generally believe that a country that decreases a high population growth rate can increase its economic growth rate. 
A) China allows only one child per family and couples that violate this rule are subject to substantial fines. 
B) In developed countries, population growth is consistently about 3 percent per year; in developing countries it is consistently about 5 percent per year. 
C) Educational attainment tends to be lowest in countries with the highest population growth. 
D) Economists generally believe that a country that decreases a high population growth rate can increase its economic growth rate.

Question 20

Over the period 1960-1991,

Accepted Answer

A) South Korea had a higher growth rate than the United States because it had a higher ratio of investment to GDP. 
B) the United States had a higher growth rate than South Korea because it had a higher ratio of investment to GDP. 
C) South Korea had a higher growth rate than the United States even though it had a similar ratio of investment to GDP. 
D) the United States had a higher growth rate than South Korea even though it had a similar ratio of investment to real GDP. 
A) South Korea had a higher growth rate than the United States because it had a higher ratio of investment to GDP. 
B) the United States had a higher growth rate than South Korea because it had a higher ratio of investment to GDP. 
C) South Korea had a higher growth rate than the United States even though it had a similar ratio of investment to GDP. 
D) the United States had a higher growth rate than South Korea even though it had a similar ratio of investment to real GDP.

Exam 12: Production and Growth

Inventors often obtain patents on new products and processes, thereby turning new ideas into

Suppose that Slovenia undertakes a policy to increase its saving rate. This policy will likely

Which of the following would increase productivity?

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N). -Refer to Scenario 12-1. K represents the quantity of

The logic behind the catch-up effect is that

Which of the following is correct?

Assuming diminishing returns,

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N). -Refer to Scenario 12-1. If the production function has the constant-returns-to-scale property, then it could be rewritten as

Foreign saving is used for domestic investment when foreigners engage in

Which of the following best illustrates the human capital of a survivor stranded on an island?

If companies from foreign countries build and operate factories in China, then China's productivity

Over the period 1900-2008, which of the following countries experienced the highest average annual growth rate of real GDP per person?

When a society decides to increase its quantity of physical capital, the society

Which of the following statements is true?

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at larger levels of existing capital per worker.

Both the standard of living and the growth of real GDP per person vary widely across countries.

Over extended periods of time, population growth

Which of the following is a determinant of productivity?

Which of the following is not correct?

Over the period 1960-1991,

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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