Question 1

Which of the following statements is correct?

Accepted Answer

A)  Technological knowledge is the society's understanding about how the world works, whereas human capital refers to the resources spent transmitting this understanding to the labour force 
B)  Human capital is the society's understanding about how the world works, whereas technological knowledge refers to the resources spent transmitting this understanding to the labour force 
C)  Technological knowledge is the bridge that links physical and natural resources to human capital 
D)  Technological knowledge is the society's understanding about human capital 
A)  Technological knowledge is the society's understanding about how the world works, whereas human capital refers to the resources spent transmitting this understanding to the labour force 
B)  Human capital is the society's understanding about how the world works, whereas technological knowledge refers to the resources spent transmitting this understanding to the labour force 
C)  Technological knowledge is the bridge that links physical and natural resources to human capital 
D)  Technological knowledge is the society's understanding about human capital

Question 2

The catch-up effect is the idea that:

Accepted Answer

A)  savings will always 'catch up' with investment spending 
B)  other countries aid relatively poor countries so as to 'catch them up' 
C)  it is easier for a country to grow fast if it starts out relatively poor 
D)  if investment spending is low, increased savings will help investment to 'catch up' 
A)  savings will always 'catch up' with investment spending 
B)  other countries aid relatively poor countries so as to 'catch them up' 
C)  it is easier for a country to grow fast if it starts out relatively poor 
D)  if investment spending is low, increased savings will help investment to 'catch up'

Question 3

India, which has an open economy, suffered a spate of terrorist attacks in December 2008. How would the responses of both Indian savers and foreigners with savings invested in India expect to affect the value of investment in production? How would such a change affect Australia's trade with India?

Accepted Answer

Capital is likely to

Question 4

Productivity measures the quality of goods and services that a worker can produce for each hour of work.

Accepted Answer

A) True 
 B)False

Question 5

While Africa should have grown faster than other developing areas because of its relatively low income per head, it has grown more slowly. This was because some of its countries had policies of:

Accepted Answer

A)  higher trade barriers 
B)  low tax rates 
C)  excessive saving rates 
D)  all of the above 
A)  higher trade barriers 
B)  low tax rates 
C)  excessive saving rates 
D)  all of the above

Question 6

A capital investment that is owned and operated by a foreign entity is called:

Accepted Answer

A)  indirect foreign investment 
B)  foreign portfolio investment 
C)  foreign direct investment 
D)  foreign financial investment 
A)  indirect foreign investment 
B)  foreign portfolio investment 
C)  foreign direct investment 
D)  foreign financial investment

Question 7

Natural resources:
Natural resources:

Accepted Answer

A)  are inputs provided by nature 
B)  are inputs such as land, rivers and mineral deposits 
C)  take two forms - renewable and non-renewable 
D)  all of the above 
E)  only B and C 
A)  are inputs provided by nature 
B)  are inputs such as land, rivers and mineral deposits 
C)  take two forms - renewable and non-renewable 
D)  all of the above 
E)  only B and C

Question 8

The rule of 70 refers to the compulsory retirement age of employees, as they are no longer as productive as they once were.

Accepted Answer

A) True 
 B)False

Question 9

The term constant returns to scale refers to:

Accepted Answer

A)  none of the below 
B)  a situation where increasing all inputs by a multiple results in no change in the output 
C)  a situation where increasing all inputs by a multiple results in the output being increased by more than that multiple 
D)  a situation where increasing all inputs by a multiple results in the output being increased by the same multiple 
A)  none of the below 
B)  a situation where increasing all inputs by a multiple results in no change in the output 
C)  a situation where increasing all inputs by a multiple results in the output being increased by more than that multiple 
D)  a situation where increasing all inputs by a multiple results in the output being increased by the same multiple

Question 10

In 1950, Japan's real GDP per person was $2417; in 2000 it was $24 672. What is Japan's annual growth rate of real GDP per person?

Accepted Answer

A)  9.2 per cent 
B)  4.76 per cent 
C)  9.8 per cent 
D)  10.2 per cent 
A)  9.2 per cent 
B)  4.76 per cent 
C)  9.8 per cent 
D)  10.2 per cent

Question 11

Countries have tried various methods to increase their living standards by reducing population growth. As an economist interested in incentives rather than coercion, what kind of policy would you recommend to slow population growth?

Accepted Answer

Since bearing a child has an opportunity

Question 12

Suppose that the average weekly income in a nation was $120 in 1952, and the growth rate of average income is 3.5 per cent per year. About how high will average national weekly income be in 2012?

Accepted Answer

Using the rule of 70, we determine that

Question 13

The word productivity refers to:

Accepted Answer

A)  the quantity of goods and services that a worker can produce in a year 
B)  the quantity of goods and services that a worker can produce in a day 
C)  the quantity of goods and services that a worker can produce for each hour of work 
D)  the quantity of goods and services that a nation produces in a year 
A)  the quantity of goods and services that a worker can produce in a year 
B)  the quantity of goods and services that a worker can produce in a day 
C)  the quantity of goods and services that a worker can produce for each hour of work 
D)  the quantity of goods and services that a nation produces in a year

Question 14

Given a production function Y = AF(L, K, H, N), where Y is the quantity of output, L is the quantity of labour, H is the quantity of human capital and N is the quantity of natural resources, what does A represent?

Accepted Answer

A)  Productivity growth 
B)  The physical capital per worker 
C)  The level of available production technology 
D)  Technological growth 
A)  Productivity growth 
B)  The physical capital per worker 
C)  The level of available production technology 
D)  Technological growth

Question 15

Australia's annual growth rate of real GDP per person was 2.08 per cent for the period 1950-2000. Which of the following statements is correct?

Accepted Answer

A)  This means that Australia's real GDP per person actually rose exactly 2.08 per cent every year 
B)  This means that Australia's real GDP per person actually rose less than 2.08 per cent every year 
C)  This means that Australia's real GDP per person actually rose more than 2.08 per cent every year 
D)  This does not mean that Australia's real GDP per person actually rose exactly 2.08 per cent every year 
A)  This means that Australia's real GDP per person actually rose exactly 2.08 per cent every year 
B)  This means that Australia's real GDP per person actually rose less than 2.08 per cent every year 
C)  This means that Australia's real GDP per person actually rose more than 2.08 per cent every year 
D)  This does not mean that Australia's real GDP per person actually rose exactly 2.08 per cent every year

Question 16

An economy can increase its real rate of economic growth by increasing consumption and debt creation.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would not be considered physical capital?
Which of the following would not be considered physical capital?

Accepted Answer

A)  Construction of a new factory 
B)  A desk used in an accountant's office 
C)  A new computer used in a restaurant 
D)  On-the-job training 
E)  All of the above are considered physical capital 
A)  Construction of a new factory 
B)  A desk used in an accountant's office 
C)  A new computer used in a restaurant 
D)  On-the-job training 
E)  All of the above are considered physical capital

Question 18

New Zealand was the first country to sign a free trade agreement with China. What would be the reason for this, from the point of view of both parties?

Accepted Answer

China would have to produce all its own

Question 19

Workers' productivity depends on technological knowledge and human capital.

Accepted Answer

A) True 
 B)False

Question 20

According to the rule of 70, if a variable grows at the rate of x% per year, then that variable doubles in approximately 70/x years.

Accepted Answer

A) True 
 B)False

Exam 26: Production and Growth

Which of the following statements is correct?

The catch-up effect is the idea that:

India, which has an open economy, suffered a spate of terrorist attacks in December 2008. How would the responses of both Indian savers and foreigners with savings invested in India expect to affect the value of investment in production? How would such a change affect Australia's trade with India?

Productivity measures the quality of goods and services that a worker can produce for each hour of work.

While Africa should have grown faster than other developing areas because of its relatively low income per head, it has grown more slowly. This was because some of its countries had policies of:

A capital investment that is owned and operated by a foreign entity is called:

Natural resources: Natural resources:

The rule of 70 refers to the compulsory retirement age of employees, as they are no longer as productive as they once were.

The term constant returns to scale refers to:

In 1950, Japan's real GDP per person was $2417; in 2000 it was $24 672. What is Japan's annual growth rate of real GDP per person?

Countries have tried various methods to increase their living standards by reducing population growth. As an economist interested in incentives rather than coercion, what kind of policy would you recommend to slow population growth?

Suppose that the average weekly income in a nation was $120 in 1952, and the growth rate of average income is 3.5 per cent per year. About how high will average national weekly income be in 2012?

The word productivity refers to:

Given a production function Y = AF(L, K, H, N), where Y is the quantity of output, L is the quantity of labour, H is the quantity of human capital and N is the quantity of natural resources, what does A represent?

Australia's annual growth rate of real GDP per person was 2.08 per cent for the period 1950-2000. Which of the following statements is correct?

An economy can increase its real rate of economic growth by increasing consumption and debt creation.

Which of the following would not be considered physical capital? Which of the following would not be considered physical capital?

New Zealand was the first country to sign a free trade agreement with China. What would be the reason for this, from the point of view of both parties?

Workers' productivity depends on technological knowledge and human capital.

According to the rule of 70, if a variable grows at the rate of x% per year, then that variable doubles in approximately 70/x years.

Ten Lessons From 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

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

Five Debates Over Macroeconomic Policy

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