Question 1

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 2

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 long­run 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 long­run economic success.

Question 3

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Accepted Answer

A) True 
 B)False

Question 4

The level of real GDP person

Accepted Answer

A)  differs widely across countries, but the growth rate of real GDP per person is similar across countries. 
B)  is very similar across countries, but the growth rate of real GDP per person differs widely across countries. 
C)  and the growth rate of real GDP per person are similar across countries. 
D)  and the growth rate of real GDP per person vary widely across countries. 
A)  differs widely across countries, but the growth rate of real GDP per person is similar across countries. 
B)  is very similar across countries, but the growth rate of real GDP per person differs widely across countries. 
C)  and the growth rate of real GDP per person are similar across countries. 
D)  and the growth rate of real GDP per person vary widely across countries.

Question 5

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.

Question 6

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was Alpha Cabinet Company's productivity?

Accepted Answer

A)  1/8 cabinet per hour 
B)  8 hours per cabinet 
C)  40 cabinets 
D)  None of the above is correct. 
A)  1/8 cabinet per hour 
B)  8 hours per cabinet 
C)  40 cabinets 
D)  None of the above is correct.

Question 7

Suppose that an American opens and operates a candy factory in Finland. This is an example of

Accepted Answer

A)  foreign direct investment. American saving is used to finance Finish investment. 
B)  foreign direct investment. American saving is used to finance American investment. 
C)  foreign portfolio investment. American saving is used to finance Finish investment. 
D)  foreign portfolio investment. American saving is used to finance American investment. 
A)  foreign direct investment. American saving is used to finance Finish investment. 
B)  foreign direct investment. American saving is used to finance American investment. 
C)  foreign portfolio investment. American saving is used to finance Finish investment. 
D)  foreign portfolio investment. American saving is used to finance American investment.

Question 8

Which of the following statements is correct?

Accepted Answer

A)  Productivity is a determinant of human capital per worker. 
B)  Technological knowledge is a determinant of productivity. 
C)  Human capital and technological knowledge are the same thing. 
D)  All of the above are correct. 
A)  Productivity is a determinant of human capital per worker. 
B)  Technological knowledge is a determinant of productivity. 
C)  Human capital and technological knowledge are the same thing. 
D)  All of the above are correct.

Question 9

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 10

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 11

Among the following countries, which one has the highest level of real GDP per person but the lowest growth rate of real GDP per person over a very long period of time?

Accepted Answer

A)  the United Kingdom 
B)  Mexico 
C)  Argentina 
D)  China 
A)  the United Kingdom 
B)  Mexico 
C)  Argentina 
D)  China

Question 12

Which of the following is a good gauge of economic progress?

Accepted Answer

A)  the level of real GDP per person, but not the growth rate of real GDP per person 
B)  the level of real GDP per person and the growth rate of real GDP per person 
C)  the growth rate of real GDP per person, but not the level of real GDP per person 
D)  neither the level nor the growth rate of real GDP per person 
A)  the level of real GDP per person, but not the growth rate of real GDP per person 
B)  the level of real GDP per person and the growth rate of real GDP per person 
C)  the growth rate of real GDP per person, but not the level of real GDP per person 
D)  neither the level nor the growth rate of real GDP per person

Question 13

Explain the distinction between technological knowledge and human capital.

Accepted Answer

Technological knowledge refers

Question 14

If the best educated and most skilled persons leave a country, then in the short term this country's human capital per worker

Accepted Answer

A)  and physical capital per worker will increase. 
B)  and physical capital per worker will decrease. 
C)  will increase but physical capital per worker will decrease. 
D)  will decrease but physical capital per worker will increase. 
A)  and physical capital per worker will increase. 
B)  and physical capital per worker will decrease. 
C)  will increase but physical capital per worker will decrease. 
D)  will decrease but physical capital per worker will increase.

Question 15

The catch-up effect says that countries with low income can grow faster than countries with higher income.
However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

Accepted Answer

The argument that poor countries will te

Question 16

After adjusting for inflation, over time the prices of most natural resources have been

Accepted Answer

A)  steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling. 
B)  steady or falling, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing. 
C)  rising, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling. 
D)  rising, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing. 
A)  steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling. 
B)  steady or falling, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing. 
C)  rising, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling. 
D)  rising, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing.

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

Industrial machinery is an example of

Accepted Answer

A)  a factor of production that in the past was an output from the production process. 
B)  technological knowledge. 
C)  a production function. 
D)  an item which always has the property called constant returns to scale. 
A)  a factor of production that in the past was an output from the production process. 
B)  technological knowledge. 
C)  a production function. 
D)  an item which always has the property called constant returns to scale.

Question 19

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

Accepted Answer

A)  diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
B)  diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. 
C)  increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
D)  increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. 
A)  diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
B)  diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. 
C)  increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. 
D)  increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries.

Question 20

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.

Exam 17: Production and Growth

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

Investment in

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

The level of real GDP person

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

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was Alpha Cabinet Company's productivity?

Suppose that an American opens and operates a candy factory in Finland. This is an example of

Which of the following statements is correct?

Accumulating capital

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

Among the following countries, which one has the highest level of real GDP per person but the lowest growth rate of real GDP per person over a very long period of time?

Which of the following is a good gauge of economic progress?

Explain the distinction between technological knowledge and human capital.

If the best educated and most skilled persons leave a country, then in the short term this country's human capital per worker

After adjusting for inflation, over time the prices of most natural resources have been

Over extended periods of time, population growth

Industrial machinery is an example of

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

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

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 Costs of Production

Firms in Competitive Markets

Monopoly

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

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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