Question 1

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements about inputs is correct?

Accepted Answer

A)  A forest is an example of a natural resource; it is also an example of a renewable resource. 
B)  There is no distinction between human capital and technological knowledge. 
C)  Human capital is a non-produced factor of production. 
D)  Physical capital is a non-produced factor of production. 
A)  A forest is an example of a natural resource; it is also an example of a renewable resource. 
B)  There is no distinction between human capital and technological knowledge. 
C)  Human capital is a non-produced factor of production. 
D)  Physical capital is a non-produced factor of production.

Question 3

Foreign saving is used for domestic investment when foreigners engage in

Accepted Answer

A)  foreign direct investment. 
B)  foreign portfolio investment. 
C)  either foreign direct investment or foreign portfolio investment. 
D)  None of the above is correct. 
A)  foreign direct investment. 
B)  foreign portfolio investment. 
C)  either foreign direct investment or foreign portfolio investment. 
D)  None of the above is correct.

Question 4

Which of the following countries had the highest level of real GDP per person in 2010?

Accepted Answer

A)  Germany 
B)  Canada 
C)  United States 
D)  Japan 
A)  Germany 
B)  Canada 
C)  United States 
D)  Japan

Question 5

Which of the following is a determinant of productivity?

Accepted Answer

A)  human capital per worker 
B)  physical capital per worker 
C)  natural resources per worker 
D)  All of the above are correct. 
A)  human capital per worker 
B)  physical capital per worker 
C)  natural resources per worker 
D)  All of the above are correct.

Question 6

As of 2010, using real GDP per person as a measure, we would classify

Accepted Answer

A)  the United States and Mexico as advanced economies and Bangladesh as a middle-income country. 
B)  Canada as an advanced economy, Mexico as a middle-income country, and Pakistan as a poor country. 
C)  Japan and India as advanced economies and Mexico as a poor country. 
D)  Japan as an advanced economy, the United Kingdom as a middle-income country, and Argentina as a poor country. 
A)  the United States and Mexico as advanced economies and Bangladesh as a middle-income country. 
B)  Canada as an advanced economy, Mexico as a middle-income country, and Pakistan as a poor country. 
C)  Japan and India as advanced economies and Mexico as a poor country. 
D)  Japan as an advanced economy, the United Kingdom as a middle-income country, and Argentina as a poor country.

Question 7

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 8

Productivity

Accepted Answer

A)  is nearly the same across countries, and so provides no help explaining differences in the standard of living across countries. 
B)  explains very little of the differences in the standard of living across countries. 
C)  explains some, but not most of the differences in the standard of living across countries. 
D)  explains most of the differences in the standard of living across countries. 
A)  is nearly the same across countries, and so provides no help explaining differences in the standard of living across countries. 
B)  explains very little of the differences in the standard of living across countries. 
C)  explains some, but not most of the differences in the standard of living across countries. 
D)  explains most of the differences in the standard of living across countries.

Question 9

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 10

Table 25-1.
Athens and Troy both produce only ribs and baked potatoes.
  
-Refer to Table 25-1. Which of the following is correct?

Accepted Answer

A)  Both productivity and the standard of living are higher in Athens than Troy. 
B)  Productivity is higher in Athens while the standard of living is higher in Troy 
C)  Productivity is higher in Troy while the standard of living is higher in Athens. 
D)  Both productivity and the standard of living are higher in Troy than Athens. 
A)  Both productivity and the standard of living are higher in Athens than Troy. 
B)  Productivity is higher in Athens while the standard of living is higher in Troy 
C)  Productivity is higher in Troy while the standard of living is higher in Athens. 
D)  Both productivity and the standard of living are higher in Troy than Athens.

Question 11

Country A and country B both increase their capital stock by one unit. Output in country A increases by 12 while output in country B increases by 15. Other things the same, diminishing returns implies that country A is

Accepted Answer

A)  richer than Country B. If Country A adds another unit of capital, output will increase by more than 12 units. 
B)  richer than Country B. If Country A adds another unit of capital, output will increase by less than 12 units. 
C)  poorer than Country B. If Country A adds another unit of capital, output will increase by more than 12 units. 
D)  poorer than Country B. If Country A adds another unit of capital, output will increase by less than 12 units. 
A)  richer than Country B. If Country A adds another unit of capital, output will increase by more than 12 units. 
B)  richer than Country B. If Country A adds another unit of capital, output will increase by less than 12 units. 
C)  poorer than Country B. If Country A adds another unit of capital, output will increase by more than 12 units. 
D)  poorer than Country B. If Country A adds another unit of capital, output will increase by less than 12 units.

Question 12

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

Accepted Answer

A) True 
 B)False

Question 13

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

Accepted Answer

A)  10 reports 
B)  5 reports per client 
C)  1.25 reports per hour 
D)  1/4 report per hour 
A)  10 reports 
B)  5 reports per client 
C)  1.25 reports per hour 
D)  1/4 report per hour

Question 14

The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Accepted Answer

In the long run, a higher saving rate le

Question 15

Which of the following is not an example of physical capital?

Accepted Answer

A)  a new factory building 
B)  a delivery van 
C)  the knowledge of workers 
D)  the office chair in a lawyer's office 
A)  a new factory building 
B)  a delivery van 
C)  the knowledge of workers 
D)  the office chair in a lawyer's office

Question 16

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Accepted Answer

A)  10 percent 
B)  14 percent 
C)  17 percent 
D)  21 percent 
A)  10 percent 
B)  14 percent 
C)  17 percent 
D)  21 percent

Question 17

Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Accepted Answer

A)  Brazil 
B)  China 
C)  India 
D)  Pakistan 
A)  Brazil 
B)  China 
C)  India 
D)  Pakistan

Question 18

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 19

Which of the following will increase a country's real GDP per person?

Accepted Answer

A)  imposing restrictions on foreign trade and foreign investment 
B)  imposing restrictions on foreign trade and reducing restrictions on foreign investment 
C)  reducing restrictions on foreign trade and imposing restrictions on foreign investment 
D)  reducing restrictions on foreign trade and foreign investment 
A)  imposing restrictions on foreign trade and foreign investment 
B)  imposing restrictions on foreign trade and reducing restrictions on foreign investment 
C)  reducing restrictions on foreign trade and imposing restrictions on foreign investment 
D)  reducing restrictions on foreign trade and foreign investment

Question 20

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year?

Accepted Answer

A)  12 percent 
B)  10 percent 
C)  4 percent 
D)  2 percent 
A)  12 percent 
B)  10 percent 
C)  4 percent 
D)  2 percent

Exam 12: Production and Growth

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Which of the following statements about inputs is correct?

Foreign saving is used for domestic investment when foreigners engage in

Which of the following countries had the highest level of real GDP per person in 2010?

Which of the following is a determinant of productivity?

As of 2010, using real GDP per person as a measure, we would classify

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

Productivity

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.

Table 25-1. Athens and Troy both produce only ribs and baked potatoes. -Refer to Table 25-1. Which of the following is correct?

Country A and country B both increase their capital stock by one unit. Output in country A increases by 12 while output in country B increases by 15. Other things the same, diminishing returns implies that country A is

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Which of the following is not an example of physical capital?

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Accumulating capital

Which of the following will increase a country's real GDP per person?

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year?

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

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

Six Debates Over Macroeconomic Policy

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