Question 1

If there are diminishing returns to capital,then

Accepted Answer

A) capital produces fewer goods as it ages. 
B) old ideas are not as useful as new ones. 
C) increases in the capital stock eventually decrease output. 
D) increases in the capital stock increase output by ever smaller amounts. 
A) capital produces fewer goods as it ages. 
B) old ideas are not as useful as new ones. 
C) increases in the capital stock eventually decrease output. 
D) increases in the capital stock increase output by ever smaller amounts.

Question 2

An organization that tries to encourage the flow of investment to poor countries is the

Accepted Answer

A) World Bank. 
B) Organization of Less Developed Countries. 
C) Alliance of Developing Countries. 
D) International Development Alliance. 
A) World Bank. 
B) Organization of Less Developed Countries. 
C) Alliance of Developing Countries. 
D) International Development Alliance.

Question 3

Other things the same,if a country raises its saving rate,when is productivity growth higher?

Accepted Answer

A) as the economy moves toward the long run and in the long run. 
B) as the economy moves toward the long run,but not in the long run. 
C) in the long run,but not as the economy moves toward the long run. 
D) neither as the economy moves toward the long run,nor in the long run. 
A) as the economy moves toward the long run and in the long run. 
B) as the economy moves toward the long run,but not in the long run. 
C) in the long run,but not as the economy moves toward the long run. 
D) neither as the economy moves toward the long run,nor in the long run.

Question 4

The president of Suldinia,a developing country,proposes that his country needs to help domestic firms by reducing trade restrictions.

Accepted Answer

A) These are outward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia. 
B) These are outward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia. 
C) These are inward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia. 
D) These are inward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia. 
A) These are outward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia. 
B) These are outward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia. 
C) These are inward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia. 
D) These are inward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia.

Question 5

Other things the same,if a country raises its saving rate,when is growth of real GDP per person higher?

Accepted Answer

A) as the economy moves toward the long run and in the long run. 
B) as the economy moves toward the long run,but not in the long run. 
C) in the long run,but not as the economy moves toward the long run. 
D) neither as the economy moves toward the long run,nor in the long run. 
A) as the economy moves toward the long run and in the long run. 
B) as the economy moves toward the long run,but not in the long run. 
C) in the long run,but not as the economy moves toward the long run. 
D) neither as the economy moves toward the long run,nor in the long run.

Question 6

Outward-oriented policies

Accepted Answer

A) allow countries to take advantage of gains from trade. 
B) have generally led to high growth for the countries that pursued them. 
C) receive widespread support from economists. 
D) All of the above are correct. 
A) allow countries to take advantage of gains from trade. 
B) have generally led to high growth for the countries that pursued them. 
C) receive widespread support from economists. 
D) All of the above are correct.

Question 7

A country's human capital increases

Accepted Answer

A) if its workers become better educated or healthier. 
B) only if its workers become better educated. 
C) only if its workers become healthier. 
D) None of the above is correct. 
A) if its workers become better educated or healthier. 
B) only if its workers become better educated. 
C) only if its workers become healthier. 
D) None of the above is correct.

Question 8

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 9

Fretonia and Libstien are the same except Fretonia has a larger capital stock.Both countries undertake policies that raise their saving rates to the same higher level.We would expect that

Accepted Answer

A) both countries would have permanent increases in their growth rates,but the increase would initially be larger in Fretonia. 
B) both countries would have permanent increases in their growth rates,but the increase would initially be smaller in Fretonia. 
C) both countries would have temporary increases in their growth rates,but the increase would be larger in Fretonia. 
D) both countries would have temporary increases in their growth rates,but the increase would be smaller in Fretonia. 
A) both countries would have permanent increases in their growth rates,but the increase would initially be larger in Fretonia. 
B) both countries would have permanent increases in their growth rates,but the increase would initially be smaller in Fretonia. 
C) both countries would have temporary increases in their growth rates,but the increase would be larger in Fretonia. 
D) both countries would have temporary increases in their growth rates,but the increase would be smaller in Fretonia.

Question 10

When a country removes trade barriers and imports appliances and exports engineering services,

Accepted Answer

A) its growth slows. 
B) its productivity decreases. 
C) it is essentially transforming engineering services into appliances. 
D) its economic well-being decreases while that of the country that sells appliances increases. 
A) its growth slows. 
B) its productivity decreases. 
C) it is essentially transforming engineering services into appliances. 
D) its economic well-being decreases while that of the country that sells appliances increases.

Question 11

An increase in capital will increase real GDP per person

Accepted Answer

A) more in a poor country than a rich country.The increase in real GDP 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 GDP per person will be the same whether the addition to capital is from domestic or foreign investment. 
C) less in a poor country than a rich country.The increase in real GDP 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 GDP per person will be the same whether the addition to capital is from domestic or foreign investment. 
A) more in a poor country than a rich country.The increase in real GDP 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 GDP per person will be the same whether the addition to capital is from domestic or foreign investment. 
C) less in a poor country than a rich country.The increase in real GDP 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 GDP per person will be the same whether the addition to capital is from domestic or foreign investment.

Question 12

"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 13

Inward-oriented policies

Accepted Answer

A) are generally supported by economists. 
B) are primarily concerned with the development of human capital. 
C) in some ways are like prohibiting the use of certain technologies. 
D) All of the above are correct. 
A) are generally supported by economists. 
B) are primarily concerned with the development of human capital. 
C) in some ways are like prohibiting the use of certain technologies. 
D) All of the above are correct.

Question 14

The catch-up effect refers to the idea that

Accepted Answer

A) saving will always catch-up with investment spending. 
B) it is easier for a country to grow fast and so catch-up if it starts out relatively poor. 
C) population eventually catches-up with increased output. 
D) if investment spending is low,increased saving will help investment to "catch-up." 
A) saving will always catch-up with investment spending. 
B) it is easier for a country to grow fast and so catch-up if it starts out relatively poor. 
C) population eventually catches-up with increased output. 
D) if investment spending is low,increased saving will help investment to "catch-up."

Question 15

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

Accepted Answer

A) 5 percent.In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
B) 10 percent.In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
C) 5 percent.In less developed countries the gap between the wages of educated and uneducated workers is larger. 
D) 10 percent.In less developed countries the gap between the wages of educated and uneducated workers is larger. 
A) 5 percent.In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
B) 10 percent.In less developed countries the gap between the wages of educated and uneducated workers is smaller. 
C) 5 percent.In less developed countries the gap between the wages of educated and uneducated workers is larger. 
D) 10 percent.In less developed countries the gap between the wages of educated and uneducated workers is larger.

Question 16

Suppose an economy experiences an increase in its saving rate.The higher saving rate leads to a higher growth rate of productivity

Accepted Answer

A) in the short run,but not in the long run. 
B) in the long run,but not in the short run. 
C) in both the short run and the long run. 
D) in neither the short run nor the long run. 
A) in the short run,but not in the long run. 
B) in the long run,but not in the short run. 
C) in both the short run and the long run. 
D) in neither the short run nor the long run.

Question 17

In some countries it is time consuming and costly to establish ownership of property.Reforms to reduce these costs would likely

Accepted Answer

A) have no affect on either real GDP nor productivity 
B) raise real GDP and productivity. 
C) raise real GDP but not productivity. 
D) raise productivity but not real GDP. 
A) have no affect on either real GDP nor productivity 
B) raise real GDP and productivity. 
C) raise real GDP but not productivity. 
D) raise productivity but not real GDP.

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

If there are diminishing returns to capital,then

An organization that tries to encourage the flow of investment to poor countries is the

Other things the same,if a country raises its saving rate,when is productivity growth higher?

The president of Suldinia,a developing country,proposes that his country needs to help domestic firms by reducing trade restrictions.

Other things the same,if a country raises its saving rate,when is growth of real GDP per person higher?

Outward-oriented policies

A country's human capital increases

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

Fretonia and Libstien are the same except Fretonia has a larger capital stock.Both countries undertake policies that raise their saving rates to the same higher level.We would expect that

When a country removes trade barriers and imports appliances and exports engineering services,

An increase in capital will increase real GDP per person

"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

Inward-oriented policies

The catch-up effect refers to the idea that

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

Suppose an economy experiences an increase in its saving rate.The higher saving rate leads to a higher growth rate of productivity

In some countries it is time consuming and costly to establish ownership of property.Reforms to reduce these costs would likely

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

Measuring a Nations Income