Question 1

Japan's status as a rich nation is attributable to

Accepted Answer

A)  Japan's quantities of natural resources, but not to international trade. 
B)  international trade, but not to Japan's domestic quantities of natural resources. 
C)  the fact that Japanese productivity has remained nearly constant for more than 100 years. 
D)  the fact that the Japanese have downplayed the role of human capital in economic growth. 
A)  Japan's quantities of natural resources, but not to international trade. 
B)  international trade, but not to Japan's domestic quantities of natural resources. 
C)  the fact that Japanese productivity has remained nearly constant for more than 100 years. 
D)  the fact that the Japanese have downplayed the role of human capital in economic growth.

Question 2

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 3

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 4

Suppose that real GDP grew more in Country A than in Country B last year.

Accepted Answer

A)  Country A must have a higher standard of living than country B. 
B)  Country A's productivity must have grown faster than country B's. 
C)  Both of the above are correct. 
D)  None of the above are correct. 
A)  Country A must have a higher standard of living than country B. 
B)  Country A's productivity must have grown faster than country B's. 
C)  Both of the above are correct. 
D)  None of the above are correct.

Question 5

Why do we refer to physical capital as a produced factor of production?

Accepted Answer

Physical capital originates as

Question 6

Given that a country's real output has increased, in which of the following cases can we be sure that its productivity also has increased?

Accepted Answer

A)  The total number of hours worked rose. 
B)  The total number of hours worked stayed the same. 
C)  The total number of hours worked fell. 
D)  Both b and c are correct. 
A)  The total number of hours worked rose. 
B)  The total number of hours worked stayed the same. 
C)  The total number of hours worked fell. 
D)  Both b and c are correct.

Question 7

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N).
-Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it can be rewritten as

Accepted Answer

A)  Y/L = AF1, K/L, H/L, N/L) 
B)  Y/L = AFL, 1, H/L, N/L) 
C)  Y/L = AFL, K/L, 1, N/L) 
D)  Y/L = AFL, K/L, H/L, 1) 
A)  Y/L = AF1, K/L, H/L, N/L) 
B)  Y/L = AFL, 1, H/L, N/L) 
C)  Y/L = AFL, K/L, 1, N/L) 
D)  Y/L = AFL, K/L, H/L, 1)

Question 8

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N).
-Refer to Scenario 25-1. K represents the quantity of

Accepted Answer

A)  human capital only. 
B)  physical capital only. 
C)  human capital and physical capital combined. 
D)  nonrenewable natural resources. 
A)  human capital only. 
B)  physical capital only. 
C)  human capital and physical capital combined. 
D)  nonrenewable natural resources.

Question 9

Which of the following is correct?

Accepted Answer

A)  Countries with the highest growth rates over the last 120 years are the ones that had the highest level of real GDP 120 years ago. 
B)  Most countries have had little fluctuation around their average growth rates during the past 120 years. 
C)  The ranking of countries by income changes little over time. 
D)  Even though Japan had a higher growth rate of real GDP per person than the U.S. over the last 120 years, it's level of real GDP per person is less than that of the U.S. 
A)  Countries with the highest growth rates over the last 120 years are the ones that had the highest level of real GDP 120 years ago. 
B)  Most countries have had little fluctuation around their average growth rates during the past 120 years. 
C)  The ranking of countries by income changes little over time. 
D)  Even though Japan had a higher growth rate of real GDP per person than the U.S. over the last 120 years, it's level of real GDP per person is less than that of the U.S.

Question 10

The catch-up effect refers to the idea that poor countries, despite their best efforts, are not likely ever to experience the economic growth rates of wealthier countries.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Which of the following is a correct way to measure productivity?

Accepted Answer

A)  Divide the number of hours worked by the quantity of output. 
B)  Divide the quantity of output by the number of hours worked. 
C)  Determine how much output is produced in a given time. 
D)  Determine how much time it takes to produce a unit of output. 
A)  Divide the number of hours worked by the quantity of output. 
B)  Divide the quantity of output by the number of hours worked. 
C)  Determine how much output is produced in a given time. 
D)  Determine how much time it takes to produce a unit of output.

Question 13

Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy's discovery is

Accepted Answer

A)  physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. 
B)  physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer. 
C)  technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. 
D)  technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer. 
A)  physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. 
B)  physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer. 
C)  technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. 
D)  technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer.

Question 14

Which of the following would increase productivity?

Accepted Answer

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

Question 15

Over the last ten years productivity grew more slowly in Iberia than in Aire while the population and total hours worked remained the same in both countries. It follows that

Accepted Answer

A)  real GDP per person must be lower in Iberia than in Aire. 
B)  real GDP per person grew more slowly in Iberia than in Aire. 
C)  the standard of living must be higher in Iberia than in Aire. 
D)  All of the above are correct. 
A)  real GDP per person must be lower in Iberia than in Aire. 
B)  real GDP per person grew more slowly in Iberia than in Aire. 
C)  the standard of living must be higher in Iberia than in Aire. 
D)  All of the above are correct.

Question 16

Figure 25-1.
On the horizontal axis, K/L represents capital K) per worker L). On the vertical axis, Y/L represents output Y) per worker L).  
-Refer to Figure 25-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Accepted Answer

A)  In the long run, a higher saving rate leads to a higher level of productivity. 
B)  In the long run, a higher saving rate leads to a higher level of income. 
C)  In the long run, a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income. 
D)  All of the above are correct. 
A)  In the long run, a higher saving rate leads to a higher level of productivity. 
B)  In the long run, a higher saving rate leads to a higher level of income. 
C)  In the long run, a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income. 
D)  All of the above are correct.

Question 17

A basic principle of economics is that a country's standard of living depends on its

Accepted Answer

A)  quantity of physical capital. 
B)  abundance of natural resources. 
C)  ability to produce goods and services. 
D)  ability to thrive economically without having to interact with other countries. 
A)  quantity of physical capital. 
B)  abundance of natural resources. 
C)  ability to produce goods and services. 
D)  ability to thrive economically without having to interact with other countries.

Question 18

In 2010, real GDP per person in Bangladesh was

Accepted Answer

A)  about 3 times as high as it was in the U.S. in 1870. 
B)  about twice as high as it was in the U.S. in 1870. 
C)  about the same as it was in the U.S. in 1870. 
D)  less than it was in the U.S. in 1870. 
A)  about 3 times as high as it was in the U.S. in 1870. 
B)  about twice as high as it was in the U.S. in 1870. 
C)  about the same as it was in the U.S. in 1870. 
D)  less than it was in the U.S. in 1870.

Question 19

If a Japanese company opens a new factory in South Korea, it makes

Accepted Answer

A)  foreign direct investment. The factory will make a bigger impact on South Korea's GDP than on its GNP. 
B)  foreign direct investment. The factory will make a bigger impact on South Korea's GNP than on its GDP. 
C)  foreign portfolio investment. The factory will make a bigger impact on South Korea's GDP than on its GNP. 
D)  foreign portfolio investment. The factory will make a bigger impact on South Korea's GNP than on its GDP. 
A)  foreign direct investment. The factory will make a bigger impact on South Korea's GDP than on its GNP. 
B)  foreign direct investment. The factory will make a bigger impact on South Korea's GNP than on its GDP. 
C)  foreign portfolio investment. The factory will make a bigger impact on South Korea's GDP than on its GNP. 
D)  foreign portfolio investment. The factory will make a bigger impact on South Korea's GNP than on its GDP.

Question 20

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

Exam 12: Production and Growth

Japan's status as a rich nation is attributable to

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

An increase in capital will increase real GDP per person

Suppose that real GDP grew more in Country A than in Country B last year.

Why do we refer to physical capital as a produced factor of production?

Given that a country's real output has increased, in which of the following cases can we be sure that its productivity also has increased?

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N). -Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it can be rewritten as

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N). -Refer to Scenario 25-1. K represents the quantity of

Which of the following is correct?

The catch-up effect refers to the idea that poor countries, despite their best efforts, are not likely ever to experience the economic growth rates of wealthier countries.

The logic behind the catch-up effect is that

Which of the following is a correct way to measure productivity?

Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy's discovery is

Which of the following would increase productivity?

Over the last ten years productivity grew more slowly in Iberia than in Aire while the population and total hours worked remained the same in both countries. It follows that

Figure 25-1. On the horizontal axis, K/L represents capital K) per worker L). On the vertical axis, Y/L represents output Y) per worker L). -Refer to Figure 25-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

A basic principle of economics is that a country's standard of living depends on its

In 2010, real GDP per person in Bangladesh was

If a Japanese company opens a new factory in South Korea, it makes

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?"

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

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?"