Question 1

If a newly elected government takes actions that makes its country's courts more efficient and less corrupt, then

Accepted Answer

A)  producers will have greater confidence that they will benefit from their efforts. 
B)  producers are likely to be more specialized. 
C)  buyers and sellers will be more likely to honor contracts. 
D)  All of the above are correct.

Question 2

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

Accepted Answer

A)  its output would stay the same and so would its productivity. 
B)  its output and productivity would increase, but less than double. 
C)  its output and productivity would increase by more than double. 
D)  None of the above is correct.

Question 3

Economist Michael Kremer found that world growth rates fell as population increased.

Accepted Answer

A) True 
 B)False

Question 4

Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were

Accepted Answer

A)  public goods and proprietary knowledge. 
B)  public goods but not proprietary knowledge. 
C)  private goods and proprietary knowledge. 
D)  private goods but not proprietary knowledge.

Question 5

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.

Question 6

Countries with high population growth rates tend to have lower levels of educational attainment.

Accepted Answer

A) True 
 B)False

Question 7

A professor at a university finds a way to reduce the costs of producing automobile glass. The method is very easy for anyone to copy. A company develops a substance which prevents eyeglasses from smudging. It receives a patent on the formula. Which of these are common technological knowledge?

Accepted Answer

A)  the method to reduce costs of producing automobile glass, and the formula for the substance that prevents smudging 
B)  the method to reduce costs of producing automobile glass, but not the formula for the substance that prevents smudging 
C)  the formula for the substance that prevents smudging, but not the method to reduce costs of producing automobile glass 
D)  neither the method to reduce costs of producing automobile glass nor the formula for the substance that prevents smudging

Question 8

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

Accepted Answer

A)  one generation. In the last couple of decades China's growth rate has been higher than 12%. 
B)  one generation. However, in the last couple of decades not even China's growth rate has been this high. 
C)  three generations. In the last couple of decades China's growth rate has been higher than 12%. 
D)  three generations. However, in the last couple of decades not even China's growth rate has been this high.

Question 9

Countries that pursued outward-oriented policies in the 20th century

Accepted Answer

A)  experienced lower rates of economic growth than did countries that pursued inward-oriented policies. 
B)  experienced higher levels of political instability than did countries that pursued inward-oriented policies. 
C)  include Singapore, South Korea, and Taiwan. 
D)  All of the above are correct.

Question 10

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

Question 11

Over the past century in the United States, real GDP per person has grown, on average, by about

Accepted Answer

A)  1 percent per year. 
B)  2 percent per year. 
C)  3 percent per year. 
D)  5 percent per year.

Question 12

The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in Turan will

Accepted Answer

A)  fall temporarily, but will return to where it was when the new owners learn how to farm. 
B)  increase because the total amount of human capital in the country will increase as the new owners learn how to farm. 
C)  fall and remain lower for a long time. 
D)  not be affected unless widespread civil disorder or civil war results.

Question 13

Countries with more than 80 percent of their population living within 100 kilometers of a coast will have an average GDP per person that is

Accepted Answer

A)  around four times a country with less than 20 percent of the population living near the coast. 
B)  around ten times a country with less than 20 percent of the population living near the coast. 
C)  around twenty times a country with less than 20 percent of the population living near the coast. 
D)  around fifty times a country with less than 20 percent of the population living near the coast.

Question 14

In 2012, the imaginary nation of Dorados had a population of 8,000 and real GDP of 3,000,000. During the year its real GDP grew by about 2.9%. Which of the following sets of growth rates is consistent with this growth in real GDP?

Accepted Answer

A)  2% population growth and 6% real GDP growth 
B)  6% population growth and 2% real GDP growth 
C)  4% population growth and 7% real GDP growth 
D)  7% population growth and 4% real GDP growth

Question 15

The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries. She asks you to pick the one you think most likely explains her country's low growth. Which of the following contributes to low growth?

Accepted Answer

A)  poorly enforced property rights 
B)  outward-oriented trade policies 
C)  policies that permit foreign investment 
D)  All of the above are correct.

Question 16

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in are responsible for some of the differences in standards of living around the world.

Accepted Answer

The answer of Because of its vast oil reserves, Saudi...

Question 17

In the long run, a higher saving rate

Accepted Answer

A)  cannot increase the capital stock. 
B)  means that people must consume less in the future. 
C)  increases the level of productivity. 
D)  None of the above is correct.

Question 18

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

Question 19

Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

Accepted Answer

A)  Popeye's production and productivity are greater than Wimpy's. 
B)  Popeye's production is greater than Wimpy's, but his productivity is less. 
C)  Wimpy's production and productivity are greater than Popeye's. 
D)  Wimpy's production is greater than Popeye's, but his productivity is less.

Question 20

Country A had a population of 2,000, of whom 1,300 worked an average of 8 hours a day and had a productivity of 5.Country B had a population of 2,500, of whom 1,700 worked 8 hours a day and had productivity of 4. Country

Accepted Answer

A)  A had the higher level of real GDP and real GDP per person. 
B)  A had the higher level of real GDP and Country B had the higher level of real GDP per person 
C)  B had the higher level of real GDP and Country A had the higher level of real GDP per person 
D)  B had the higher level of real GDP and real GDP per person.

Exam 7: Production and Growth