Question 1

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 2

Both the standard of living and the growth of real GDP per person vary widely across countries.

Accepted Answer

A) True 
 B)False

Question 3

Productivity can be computed as the number of hours worked divided by output.

Accepted Answer

A) True 
 B)False

Question 4

In order for the standard of living within a country to be enhanced over time, which of the following is essential?

Accepted Answer

A)  The role of the country's government in the economy must become larger. 
B)  The population of the country must increase. 
C)  More domestic natural resources must be discovered and used. 
D)  The level of productivity must increase. 
A)  The role of the country's government in the economy must become larger. 
B)  The population of the country must increase. 
C)  More domestic natural resources must be discovered and used. 
D)  The level of productivity must increase.

Question 5

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.

Question 6

A country experiencing a growth rate of 12% per year can go from being one of the poorest to one of the richest in how many generations?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  four 
A)  one 
B)  two 
C)  three 
D)  four

Question 7

Some data that at first might seem puzzling: The share of GDP devoted to investment was similar for the United States and South Korea from 1960-1991. However, during these same years South Korea had a 6 percent growth rate of average annual income per person, while the United States had only a 2 percent growth rate. If the saving rates were the same, why were the growth rates so different?

Accepted Answer

The explanation is based on the concept

Question 8

Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,275 a ton. Over the same time a measure of the overall price level increased from 150 to 156. The price of iron ore increased by

Accepted Answer

A)  less than inflation, so it became less scarce. 
B)  less than inflation, so it became more scarce. 
C)  more than inflation, so it became more scarce. 
D)  more than inflation, so it became less scarce. 
A)  less than inflation, so it became less scarce. 
B)  less than inflation, so it became more scarce. 
C)  more than inflation, so it became more scarce. 
D)  more than inflation, so it became less scarce.

Question 9

Some economists argue that it is possible to raise the standard of living 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 10

Which well­known economist from the past asserted that "the power of population is infinitely greater than the power in the earth to produce subsistence for man?"

Accepted Answer

The econom

Question 11

Which of the following provide benefits to society at large and not just to the persons) who pursues it?

Accepted Answer

A)  both technological knowledge that is a public good and education 
B)  technological knowledge that is a public good, but not education 
C)  education, but not technological knowledge that is a public good 
D)  neither education, nor technological knowledge that is a public good 
A)  both technological knowledge that is a public good and education 
B)  technological knowledge that is a public good, but not education 
C)  education, but not technological knowledge that is a public good 
D)  neither education, nor technological knowledge that is a public good

Question 12

The logic behind the catch-up effect is that

Accepted Answer

A)  workers in countries with low incomes will work more hours than workers in countries with high incomes. 
B)  the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. 
C)  new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. 
D)  None of the above is correct. 
A)  workers in countries with low incomes will work more hours than workers in countries with high incomes. 
B)  the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. 
C)  new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. 
D)  None of the above is correct.

Question 13

Nathan owns a bakery that bakes only cakes. All of his bakers work 8 hours per day. In 2011, he employed 5 bakers who produced a total of 200 cakes each day. In 2012, he employed 6 bakers who produced a total of 249 cakes each day. The bakery's productivity

Accepted Answer

A)  decreased by 2.33%. 
B)  increased by 2.33%. 
C)  increased by 3.75%. 
D)  increased by 24.50%. 
A)  decreased by 2.33%. 
B)  increased by 2.33%. 
C)  increased by 3.75%. 
D)  increased by 24.50%.

Question 14

All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,

Accepted Answer

A)  the increase in output was greater for this year than last year. 
B)  the increase in output was greater last year than this year. 
C)  the increase in output is the same in both years. 
D)  None of the above is necessarily correct. 
A)  the increase in output was greater for this year than last year. 
B)  the increase in output was greater last year than this year. 
C)  the increase in output is the same in both years. 
D)  None of the above is necessarily correct.

Question 15

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by

Accepted Answer

A)  2 percent, which is high compared to average U.S. growth over the last one-hundred years. 
B)  2 percent, which is about the same as average U.S. growth over the last one-hundred years. 
C)  4 percent, which is high compared to average U.S. growth over the last one-hundred years. 
D)  4 percent, which is about the same as average U.S. growth over the last one-hundred years. 
A)  2 percent, which is high compared to average U.S. growth over the last one-hundred years. 
B)  2 percent, which is about the same as average U.S. growth over the last one-hundred years. 
C)  4 percent, which is high compared to average U.S. growth over the last one-hundred years. 
D)  4 percent, which is about the same as average U.S. growth over the last one-hundred years.

Question 16

Which of the following is indicated by the data on real income per person for various countries over the past 100 or so years?

Accepted Answer

A)  If, in a relatively poor country, real income per person had grown by 3.5 percent per year for the last 100 years, it would be a relatively rich country today. 
B)  Rich countries became richer and poor countries became poorer. 
C)  In the United States, real income per person today is about four times as high as it was 120 years ago. 
D)  All of the above are correct. 
A)  If, in a relatively poor country, real income per person had grown by 3.5 percent per year for the last 100 years, it would be a relatively rich country today. 
B)  Rich countries became richer and poor countries became poorer. 
C)  In the United States, real income per person today is about four times as high as it was 120 years ago. 
D)  All of the above are correct.

Question 17

The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that

Accepted Answer

A)  most economists do not regard the availability of natural resources as a determinant of productivity. 
B)  the quantity of natural resources does not enter into any production function. 
C)  inflation-adjusted prices of most natural resources have been stable or fallen over time. 
D)  inflation-adjusted prices of most natural resources have risen over time. 
A)  most economists do not regard the availability of natural resources as a determinant of productivity. 
B)  the quantity of natural resources does not enter into any production function. 
C)  inflation-adjusted prices of most natural resources have been stable or fallen over time. 
D)  inflation-adjusted prices of most natural resources have risen over time.

Question 18

Which of the following is true?

Accepted Answer

A)  Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production. 
B)  Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. 
C)  Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production. 
D)  Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. 
A)  Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production. 
B)  Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. 
C)  Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production. 
D)  Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.

Question 19

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 20

In 2010, the typical Bangladeshi had about

Accepted Answer

A)  less than half the real income of a typical American a century ago. 
B)  about the same real income of a typical American a century ago. 
C)  2 times as much real income as that of a typical American a century ago. 
D)  4 times as much real income as that of a typical American a century ago. 
A)  less than half the real income of a typical American a century ago. 
B)  about the same real income of a typical American a century ago. 
C)  2 times as much real income as that of a typical American a century ago. 
D)  4 times as much real income as that of a typical American a century ago.

Exam 17: Production and Growth

An increase in capital will increase real GDP per person

Both the standard of living and the growth of real GDP per person vary widely across countries.

Productivity can be computed as the number of hours worked divided by output.

In order for the standard of living within a country to be enhanced over time, which of the following is essential?

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

A country experiencing a growth rate of 12% per year can go from being one of the poorest to one of the richest in how many generations?

Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,275 a ton. Over the same time a measure of the overall price level increased from 150 to 156. The price of iron ore increased by

Some economists argue that it is possible to raise the standard of living by reducing population growth. As an economist interested in incentives rather than coercion, what kind of policy would you recommend to slow population growth?

Which well­known economist from the past asserted that "the power of population is infinitely greater than the power in the earth to produce subsistence for man?"

Which of the following provide benefits to society at large and not just to the persons) who pursues it?

The logic behind the catch-up effect is that

Nathan owns a bakery that bakes only cakes. All of his bakers work 8 hours per day. In 2011, he employed 5 bakers who produced a total of 200 cakes each day. In 2012, he employed 6 bakers who produced a total of 249 cakes each day. The bakery's productivity

All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by

Which of the following is indicated by the data on real income per person for various countries over the past 100 or so years?

The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that

Which of the following is true?

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

In 2010, the typical Bangladeshi had about

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

Filters

Which wellknown economist from the past asserted that "the power of population is infinitely greater than the power in the earth to produce subsistence for man?"