Question 1

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 2

Economist Robert Fogel focused on which of the following factors as one determinant of long-run economic growth?

Accepted Answer

A) education 
B) research and development 
C) nutrition 
D) trade restrictions 
A) education 
B) research and development 
C) nutrition 
D) trade restrictions

Question 3

"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 an unconventional view of the production process. 
B) is an assertion that capital is subject to increasing 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 an unconventional view of the production process. 
B) is an assertion that capital is subject to increasing 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 4

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 5

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 6

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 7

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

Accepted Answer

A) 2 percent. 
B) 5 percent. 
C) 10 percent. 
D) 15 percent. 
A) 2 percent. 
B) 5 percent. 
C) 10 percent. 
D) 15 percent.

Question 8

An increase in capital will increase real GNP per person

Accepted Answer

A) more in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. 
B) more in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment. 
C) less in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. 
D) less in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment. 
A) more in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. 
B) more in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment. 
C) less in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. 
D) less in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment.

Question 9

Which of the following countries achieved higher economic growth,in part by mandating a reduction in population growth?

Accepted Answer

A) Great Britain 
B) China 
C) Australia 
D) France 
A) Great Britain 
B) China 
C) Australia 
D) France

Question 10

Suppose a country increases trade restrictions.This country would be pursing an

Accepted Answer

A) inward policy,which most economists believe has beneficial effects on the economy. 
B) inward policy,which most economists believe has adverse effects on the economy. 
C) outward policy,which most economists believe has beneficial effects on the economy. 
D) outward policy,which most economists believe has adverse effects on the economy. 
A) inward policy,which most economists believe has beneficial effects on the economy. 
B) inward policy,which most economists believe has adverse effects on the economy. 
C) outward policy,which most economists believe has beneficial effects on the economy. 
D) outward policy,which most economists believe has adverse effects on the economy.

Question 11

According to studies using international data,an increase in the saving rate

Accepted Answer

A) does not increase the growth rate of output. 
B) increases the growth rate of output for a few years. 
C) increases the growth rate of output for about a decade. 
D) increases the growth rate of output for several decades. 
A) does not increase the growth rate of output. 
B) increases the growth rate of output for a few years. 
C) increases the growth rate of output for about a decade. 
D) increases the growth rate of output for several decades.

Question 12

The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries.She asks you to pick the one you think most likely explains her country's low growth.Which of the following contributes to low growth?

Accepted Answer

A) poorly enforced property rights 
B) outward-oriented trade policies 
C) policies that permit foreign investment 
D) All of the above are correct. 
A) poorly enforced property rights 
B) outward-oriented trade policies 
C) policies that permit foreign investment 
D) All of the above are correct.

Question 13

Country A and country B are the same except country A currently has more capital.Assuming diminishing returns,if both countries increase their capital by 100 units and other factors that determine output are unchanged,then

Accepted Answer

A) output in country A increases by more than in country B. 
B) output in country A increases by the same amount as in country B. 
C) output in country A increases by less than in country B. 
D) None of the above is necessarily correct. 
A) output in country A increases by more than in country B. 
B) output in country A increases by the same amount as in country B. 
C) output in country A increases by less than in country B. 
D) None of the above is necessarily correct.

Question 14

Investment in

Accepted Answer

A) physical capital,unlike investment in human capital,has an opportunity cost. 
B) physical capital,like investment in human capital,has an opportunity cost. 
C) human capital is particularly attractive because it involves no externalities. 
D) human capital has been shown to be relatively unimportant,relative to investment in physical capital,for a country's long-run economic success. 
A) physical capital,unlike investment in human capital,has an opportunity cost. 
B) physical capital,like investment in human capital,has an opportunity cost. 
C) human capital is particularly attractive because it involves no externalities. 
D) human capital has been shown to be relatively unimportant,relative to investment in physical capital,for a country's long-run economic success.

Question 15

Other things the same,an increase in population growth

Accepted Answer

A) increases capital per worker.Further,there is some evidence that a higher population growth rate may increase the pace of technological progress. 
B) increases capital per worker.However,there is some evidence that a higher population growth rate may decrease the pace of technological progress. 
C) decreases capital per worker.Further,there is some evidence that a higher population growth rate may decrease the pace of technological progress. 
D) decreases capital per worker.However,there is some evidence that a higher population growth rate may increase the pace of technological progress. 
A) increases capital per worker.Further,there is some evidence that a higher population growth rate may increase the pace of technological progress. 
B) increases capital per worker.However,there is some evidence that a higher population growth rate may decrease the pace of technological progress. 
C) decreases capital per worker.Further,there is some evidence that a higher population growth rate may decrease the pace of technological progress. 
D) decreases capital per worker.However,there is some evidence that a higher population growth rate may increase the pace of technological progress.

Question 16

Real GDP per person is $10,000 in Country A,$20,000 in Country B,and $30,000 in Country C.The saving rate increases by the same rate in all three countries.Other things equal,we would expect that

Accepted Answer

A) all three countries will grow at the same rate. 
B) Country A will grow the fastest. 
C) Country B will grow the fastest. 
D) Country C will grow the fastest. 
A) all three countries will grow at the same rate. 
B) Country A will grow the fastest. 
C) Country B will grow the fastest. 
D) Country C will grow the fastest.

Question 17

If a country were to increase its saving rate,then in the long run it would also increase its

Accepted Answer

A) level of income. 
B) growth rate of income. 
C) growth rate of productivity. 
D) All of the above are correct. 
A) level of income. 
B) growth rate of income. 
C) growth rate of productivity. 
D) All of the above are correct.

Question 18

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 country 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.

Question 19

According to research by Robert Fogel,people in Britain grew taller because of

Accepted Answer

A) genetics.However this increase in height had no effect on productivity. 
B) genetics.This increase in height is associated with higher productivity. 
C) higher caloric intake.However,this increase in height had no effect on productivity. 
D) higher caloric intake.This increase in height is associated with higher productivity. 
A) genetics.However this increase in height had no effect on productivity. 
B) genetics.This increase in height is associated with higher productivity. 
C) higher caloric intake.However,this increase in height had no effect on productivity. 
D) higher caloric intake.This increase in height is associated with higher productivity.

Question 20

If a country increases its saving rate,which of the following permanently grow at a higher rate?

Accepted Answer

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

Exam 12: Production and Growth: Economic Growth and Public Policy

Accumulating capital

Economist Robert Fogel focused on which of the following factors as one determinant of long-run economic growth?

"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

Which of the following is correct?

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

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

An increase in capital will increase real GNP per person

Which of the following countries achieved higher economic growth,in part by mandating a reduction in population growth?

Suppose a country increases trade restrictions.This country would be pursing an

According to studies using international data,an increase in the saving rate

Country A and country B are the same except country A currently has more capital.Assuming diminishing returns,if both countries increase their capital by 100 units and other factors that determine output are unchanged,then

Investment in

Other things the same,an increase in population growth

Real GDP per person is $10,000 in Country A,$20,000 in Country B,and $30,000 in Country C.The saving rate increases by the same rate in all three countries.Other things equal,we would expect that

If a country were to increase its saving rate,then in the long run it would also increase its

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 country to catch up?

According to research by Robert Fogel,people in Britain grew taller because of

If a country increases its saving rate,which of the following permanently grow at a higher rate?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B