Question 1

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. C

Question 2

If a country's saving rate declined,then other things the same,in the long run the country would have

Accepted Answer

A)  lower productivity,but not lower real GDP per person. 
B)  lower productivity and lower real GDP per person. 
C)  lower real GDP per person,but not lower productivity 
D)  neither lower productivity nor lower real GDP per person. 
A)  lower productivity,but not lower real GDP per person. 
B)  lower productivity and lower real GDP per person. 
C)  lower real GDP per person,but not lower productivity 
D)  neither lower productivity nor lower real GDP per person. B

Question 3

Some poor countries appear to be falling behind rather than catching up with rich countries.Which of the following could explain the failure of a poor county to catch up?

Accepted Answer

A)  The poor country has outward-oriented trade policies. 
B)  The poor country allows foreign direct investment. 
C)  The poor country has poorly developed property rights. 
D)  All of the above are correct. 
A)  The poor country has outward-oriented trade policies. 
B)  The poor country allows foreign direct investment. 
C)  The poor country has poorly developed property rights. 
D)  All of the above are correct. C

Question 4

Investment from abroad

Accepted Answer

A)  is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries. 
B)  is viewed by economists as a way to increase growth. 
C)  often requires removing restrictions that governments have imposed on foreign ownership of domestic capital. 
D)  All of the above are correct. 
A)  is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries. 
B)  is viewed by economists as a way to increase growth. 
C)  often requires removing restrictions that governments have imposed on foreign ownership of domestic capital. 
D)  All of the above are correct.

Question 5

Which of the following would not be considered physical capital?

Accepted Answer

A)  a new factory building 
B)  a computer used to help Mercury Delivery Service keep track of its orders 
C)  on-the-job training 
D)  a desk used in an accountant's office 
A)  a new factory building 
B)  a computer used to help Mercury Delivery Service keep track of its orders 
C)  on-the-job training 
D)  a desk used in an accountant's office

Question 6

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 7

In 2007,Angel Foods produced 300,000 bags of tortilla chips,employing 12,000 hours of labor.In 2008,Angel Foods produced 325,000 bags of tortilla chips,employing 13,000 hours of labor.Relative to their productivity in 2007,their productivity in 2008

Accepted Answer

A)  decreased by 2.1 percent. 
B)  was unchanged. 
C)  increased by 1.3 percent. 
D)  increased by 2.3 percent. 
A)  decreased by 2.1 percent. 
B)  was unchanged. 
C)  increased by 1.3 percent. 
D)  increased by 2.3 percent.

Question 8

Dilbert's Incorporated produced 5,000,000 units of accounting software in 2004.At the start of 2005 the pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000.These numbers indicate that productivity

Accepted Answer

A)  fell by 4%. 
B)  fell by 20%. 
C)  rose by 12%. 
D)  rose by 20%. 
A)  fell by 4%. 
B)  fell by 20%. 
C)  rose by 12%. 
D)  rose by 20%.

Question 9

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

Accepted Answer

A)  represents the traditional view of the production process. 
B)  is an assertion that capital is subject to diminishing returns. 
C)  is made under the assumption that the quantities of human capital,natural resources,and technology are being held constant. 
D)  All of the above are correct. 
A)  represents the traditional view of the production process. 
B)  is an assertion that capital is subject to diminishing returns. 
C)  is made under the assumption that the quantities of human capital,natural resources,and technology are being held constant. 
D)  All of the above are correct.

Question 10

The equipment and structures available to produce goods and services are called

Accepted Answer

A)  physical capital. 
B)  human capital. 
C)  the production function. 
D)  technology. 
A)  physical capital. 
B)  human capital. 
C)  the production function. 
D)  technology.

Question 11

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 12

Which of the following terms do we use to mean the same thing as physical capital?

Accepted Answer

A)  assembly line 
B)  manual labor 
C)  capital 
D)  factor of production 
A)  assembly line 
B)  manual labor 
C)  capital 
D)  factor of production

Question 13

The population growth rate tends to be higher in developed countries than in developing countries.

Accepted Answer

A) True 
 B)False

Question 14

The traditional view of the production process is that capital is subject to

Accepted Answer

A)  constant returns. 
B)  increasing returns. 
C)  diminishing returns. 
D)  diminishing returns for low levels of capital,and increasing returns for high levels of capital. 
A)  constant returns. 
B)  increasing returns. 
C)  diminishing returns. 
D)  diminishing returns for low levels of capital,and increasing returns for high levels of capital.

Question 15

Suppose a country imposes new restrictions on how many hours people can work.If these restrictions reduce the total number of hours worked in the economy,but all other factors that determine output are held fixed,then

Accepted Answer

A)  productivity and output both rise. 
B)  productivity rises and output falls. 
C)  productivity falls and output rises. 
D)  productivity and output fall. 
A)  productivity and output both rise. 
B)  productivity rises and output falls. 
C)  productivity falls and output rises. 
D)  productivity and output fall.

Question 16

In an economy where net exports are zero,if saving rises in some period,then in that period

Accepted Answer

A)  consumption and investment fall. 
B)  consumption falls and investment rises. 
C)  consumption rises and investment falls. 
D)  consumption rises and investment falls 
A)  consumption and investment fall. 
B)  consumption falls and investment rises. 
C)  consumption rises and investment falls. 
D)  consumption rises and investment falls

Question 17

Economists differ in their views of the role of the government in promoting economic growth.At the very least,the government should

Accepted Answer

A)  lend support to the invisible hand by maintaining property rights and political stability. 
B)  limit foreign investment to industries that don't already exist in the country. 
C)  impose trade restrictions to protect the interests of domestic producers and consumers. 
D)  subsidize key industries. 
A)  lend support to the invisible hand by maintaining property rights and political stability. 
B)  limit foreign investment to industries that don't already exist in the country. 
C)  impose trade restrictions to protect the interests of domestic producers and consumers. 
D)  subsidize key industries.

Question 18

The opening of a new American-owned factory in Egypt would tend to increase Egypt's GDP more than it increases Egypt's GNP because

Accepted Answer

A)  some of the income from the factory accrues to people who do not live in Egypt. 
B)  gross domestic product is income earned within a country by both residents and nonresidents,whereas gross national product is the income earned by residents of a country while producing both at home and abroad. 
C)  all of the income from the factory is included in Egypt's GDP. 
D)  All of the above are correct. 
A)  some of the income from the factory accrues to people who do not live in Egypt. 
B)  gross domestic product is income earned within a country by both residents and nonresidents,whereas gross national product is the income earned by residents of a country while producing both at home and abroad. 
C)  all of the income from the factory is included in Egypt's GDP. 
D)  All of the above are correct.

Question 19

Accumulating capital

Accepted Answer

A)  requires that society sacrifice consumption goods in the present. 
B)  allows society to consume more in the present. 
C)  decreases saving rates. 
D)  involves no tradeoffs. 
A)  requires that society sacrifice consumption goods in the present. 
B)  allows society to consume more in the present. 
C)  decreases saving rates. 
D)  involves no tradeoffs.

Question 20

Figure 25-1.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 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Accepted Answer

A)  In the long run,a higher saving rate leads to a higher level of productivity. 
B)  In the long run,a higher saving rate leads to a higher level of income. 
C)  In the long run,a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income. 
D)  All of the above are correct. 
A)  In the long run,a higher saving rate leads to a higher level of productivity. 
B)  In the long run,a higher saving rate leads to a higher level of income. 
C)  In the long run,a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income. 
D)  All of the above are correct.

Exam 25: Production and Growth

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

If a country's saving rate declined,then other things the same,in the long run the country would have

Some poor countries appear to be falling behind rather than catching up with rich countries.Which of the following could explain the failure of a poor county to catch up?

Investment from abroad

Which of the following would not be considered physical capital?

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

In 2007,Angel Foods produced 300,000 bags of tortilla chips,employing 12,000 hours of labor.In 2008,Angel Foods produced 325,000 bags of tortilla chips,employing 13,000 hours of labor.Relative to their productivity in 2007,their productivity in 2008

Dilbert's Incorporated produced 5,000,000 units of accounting software in 2004.At the start of 2005 the pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000.These numbers indicate that productivity

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

The equipment and structures available to produce goods and services are called

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?

Which of the following terms do we use to mean the same thing as physical capital?

The population growth rate tends to be higher in developed countries than in developing countries.

The traditional view of the production process is that capital is subject to

Suppose a country imposes new restrictions on how many hours people can work.If these restrictions reduce the total number of hours worked in the economy,but all other factors that determine output are held fixed,then

In an economy where net exports are zero,if saving rises in some period,then in that period

Economists differ in their views of the role of the government in promoting economic growth.At the very least,the government should

The opening of a new American-owned factory in Egypt would tend to increase Egypt's GDP more than it increases Egypt's GNP because

Accumulating capital

Figure 25-1.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 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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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