Question 1

An increase in the saving rate would, other things the same,

Accepted Answer

A)  increase growth more for a poor country than for a rich country, and raise growth permanently. 
B)  increase growth more for a poor country than for a rich country, but raise growth temporarily. 
C)  increase growth more for a rich country than for a poor country, and raise growth permanently. 
D)  increase growth more for a rich country than for a poor country, but raise growth temporarily. 
A)  increase growth more for a poor country than for a rich country, and raise growth permanently. 
B)  increase growth more for a poor country than for a rich country, but raise growth temporarily. 
C)  increase growth more for a rich country than for a poor country, and raise growth permanently. 
D)  increase growth more for a rich country than for a poor country, but raise growth temporarily.

Question 2

Other things equal, relatively poor countries tend to grow

Accepted Answer

A)  slower than relatively rich countries; this is called the poverty trap. 
B)  slower than relatively rich countries; this is called the fall-behind effect. 
C)  faster than relatively rich countries; this is called the catch-up effect. 
D)  faster than relatively rich countries; this is called the constant-returns-to-scale effect. 
A)  slower than relatively rich countries; this is called the poverty trap. 
B)  slower than relatively rich countries; this is called the fall-behind effect. 
C)  faster than relatively rich countries; this is called the catch-up effect. 
D)  faster than relatively rich countries; this is called the constant-returns-to-scale effect.

Question 3

Assuming diminishing returns,

Accepted Answer

A)  the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones. 
B)  the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones. 
C)  the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones. 
D)  the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones. 
A)  the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones. 
B)  the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones. 
C)  the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones. 
D)  the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.

Question 4

Since 1870 Canadian and U.S real GDP per person grew from below to above that in the United Kingdom. The explanation for this is likely that productivity grew faster in Canada and the U.S. than in the United Kingdom.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth?

Accepted Answer

A)  Great Britain 
B)  China 
C)  Australia 
D)  France 
A)  Great Britain 
B)  China 
C)  Australia 
D)  France

Question 6

If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment.

Accepted Answer

A) True 
 B)False

Question 7

In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the population by about a third. Assuming diminishing returns, the decrease in population should have

Accepted Answer

A)  increased productivity and real GDP per person. 
B)  increased productivity but decreased real GDP per person. 
C)  increased real GDP per person, but decreased productivity. 
D)  decreased productivity and real GDP per person. 
A)  increased productivity and real GDP per person. 
B)  increased productivity but decreased real GDP per person. 
C)  increased real GDP per person, but decreased productivity. 
D)  decreased productivity and real GDP per person.

Question 8

Ralph is a plumber. Which of the following are included in his human capital?

Accepted Answer

A)  the knowledge he learned on the job, and the tools he uses 
B)  the knowledge he learned on the job, but not the tools he uses 
C)  the tools he uses, but not the knowledge he learned on the job 
D)  neither the knowledge he learned on the job nor the tools he uses 
A)  the knowledge he learned on the job, and the tools he uses 
B)  the knowledge he learned on the job, but not the tools he uses 
C)  the tools he uses, but not the knowledge he learned on the job 
D)  neither the knowledge he learned on the job nor the tools he uses

Question 9

A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. An economist would

Accepted Answer

A)  agree with the report, and would point to rising natural resource prices as evidence. 
B)  agree with the report, but wouldn't think it was important because growth will not slow down for several centuries. 
C)  disagree with the report, in part because it ignores the mitigating effects of technological change. 
D)  disagree with the report because labor and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down. 
A)  agree with the report, and would point to rising natural resource prices as evidence. 
B)  agree with the report, but wouldn't think it was important because growth will not slow down for several centuries. 
C)  disagree with the report, in part because it ignores the mitigating effects of technological change. 
D)  disagree with the report because labor and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down.

Question 10

Investment from abroad

Accepted Answer

A)  is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries. 
B)  is viewed by economists as a way to increase growth. 
C)  often requires removing restrictions that governments have imposed on foreign ownership of domestic capital. 
D)  All of the above are correct. 
A)  is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries. 
B)  is viewed by economists as a way to increase growth. 
C)  often requires removing restrictions that governments have imposed on foreign ownership of domestic capital. 
D)  All of the above are correct.

Question 11

How would an economist typically assess the extent of economic progress in a nation?

Accepted Answer

An economist typical

Question 12

In the equation for the production function H/L represents

Accepted Answer

A)  natural resources per worker. 
B)  human capital per worker. 
C)  output per worker. 
D)  physical capital per worker. 
A)  natural resources per worker. 
B)  human capital per worker. 
C)  output per worker. 
D)  physical capital per worker.

Question 13

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 14

Human capital

Accepted Answer

A)  can be thought of, metaphorically, as the quality of society's textbooks, whereas technological knowledge can be thought of as the time that the population has devoted to reading textbooks. 
B)  is more tangible than physical capital. 
C)  is an input in the production of goods and services. 
D)  is the same as the quantity of labor. 
A)  can be thought of, metaphorically, as the quality of society's textbooks, whereas technological knowledge can be thought of as the time that the population has devoted to reading textbooks. 
B)  is more tangible than physical capital. 
C)  is an input in the production of goods and services. 
D)  is the same as the quantity of labor.

Question 15

If an inexpensive alternative to oil were found, the price of oil adjusted for inflation

Accepted Answer

A)  would decline as the alternative would reduce the demand for oil. 
B)  would decline as the alternative would reduce the supply of oil. 
C)  would increase as the alternative would increase the demand for oil. 
D)  would increase as the alternative would increase the supply of oil. 
A)  would decline as the alternative would reduce the demand for oil. 
B)  would decline as the alternative would reduce the supply of oil. 
C)  would increase as the alternative would increase the demand for oil. 
D)  would increase as the alternative would increase the supply of oil.

Question 16

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 17

In the production function Y = AF(L,K,H,N), Y represents the quantity of output; L represents the quantity of labor; K represents the quantity of physical capital; and N represents the quantity of natural resources. What does H represent?

Accepted Answer

H represen

Question 18

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 19

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

Accepted Answer

A)  fall to less than one-half of its former value. 
B)  fall, but it would still be greater than one-half of its former value. 
C)  stay the same. 
D)  rise but less than double. 
A)  fall to less than one-half of its former value. 
B)  fall, but it would still be greater than one-half of its former value. 
C)  stay the same. 
D)  rise but less than double.

Question 20

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

Accepted Answer

A)  decreasing returns to scale. 
B)  zero returns to scale. 
C)  constant returns to scale. 
D)  increasing returns to scale. 
A)  decreasing returns to scale. 
B)  zero returns to scale. 
C)  constant returns to scale. 
D)  increasing returns to scale.

Exam 25: Production and Growth

An increase in the saving rate would, other things the same,

Other things equal, relatively poor countries tend to grow

Assuming diminishing returns,

Since 1870 Canadian and U.S real GDP per person grew from below to above that in the United Kingdom. The explanation for this is likely that productivity grew faster in Canada and the U.S. than in the United Kingdom.

Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth?

If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment.

In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the population by about a third. Assuming diminishing returns, the decrease in population should have

Ralph is a plumber. Which of the following are included in his human capital?

Investment from abroad

How would an economist typically assess the extent of economic progress in a nation?

In the equation for the production function H/L represents

Productivity

Human capital

If an inexpensive alternative to oil were found, the price of oil adjusted for inflation

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

In the production function Y = AF(L,K,H,N), Y represents the quantity of output; L represents the quantity of labor; K represents the quantity of physical capital; and N represents the quantity of natural resources. What does H represent?

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

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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