Question 1

In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in

Accepted Answer

A)   foreign portfolio investment.
B)   indirect domestic investment.
C)   foreign direct investment.
D)   foreign indirect investment. A

Question 2

Historically, the market prices of most natural resources (adjusted for inflation) have

Accepted Answer

A)   increased.
B)   remained stable.
C)   remained stable or decreased.
D)   decreased. C

Question 3

If a country's saving rate increases, then in the long run

Accepted Answer

A)   productivity is higher but real GDP per person is not higher.
B)   real GDP per person is higher but productivity is not higher.
C)   productivity and real GDP per person are both higher.
D)   neither productivity nor real GDP per person is higher. C

Question 4

Suppose a U.S. automaker builds and operates a new factory in Italy. Future production from such an investment will

Accepted Answer

A)   increase Italian GDP more than it increases Italian GNP.
B)   increase Italian GNP more than it increases Italian GDP.
C)   have no affect on Italian GNP, but will increase Italian GDP.
D)   have no affect on either Italian GDP or GNP.

Question 5

Once an idea enters society's pool of knowledge, the idea becomes a

Accepted Answer

A)   societal good.
B)   private good.
C)   public good.
D)   proprietary good.

Question 6

Historical trends in the prices of most natural resources compared to prices of other goods indicate that most natural resources have become scarcer over time.

Accepted Answer

A) True 
 B)False

Question 7

Proprietary technology is technology that is

Accepted Answer

A)   widely used because it is easy to learn.
B)   widely used because the government subsidizes its use.
C)   not widely used because people could, but have not, taken the time to learn how to apply it.
D)   not widely used because it is known or controlled only by the company that discovered it.

Question 8

Among the following countries, which one has the highest growth rate of real GDP per person over about the last 100 years?

Accepted Answer

A)   Argentina
B)   Mexico
C)   the United Kingdom
D)   the United States

Question 9

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.

Question 10

Which of the following lists contains, in this order, natural resources, human capital, and physical capital?

Accepted Answer

A)   For a restaurant: the land the restaurant was built on, the money it borrowed to buy supplies, the freezers where the chops and steaks are kept.
B)   For a furniture company: wood, the skills and knowledge of its workers, saws.
C)   For a railroad: fuel, railroad engines, railroad tracks.
D)   None of the above is correct.

Question 11

In what sense is capital accumulation costly to a society?

Accepted Answer

The answer of In what sense is capital accumulation costly...

Question 12

Greg's Ice Cream produces 1120 gallons of ice cream per day. Each employed works seven hours and has productivity of 20 gallons an hour. How many employees does Greg's employ?

Accepted Answer

A)   160
B)   56
C)   8
D)   None of the above is correct.

Question 13

In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500. Maconia had 5% growth in real GDP per person. In 2012 it had a population of 8,400. To the nearest dollar what was real GDP in Maconia in 2012?

Accepted Answer

A)   216,815
B)   221,025
C)   226,416
D)   None of the above is correct.

Question 14

Malthus predicted that the power of population

Accepted Answer

A)   was greater than the power of the earth to produce subsistence. His forecast was on the mark.
B)   was greater than the power of the earth to produce subsistence. His forecast was off the mark.
C)   was less than the power of the earth to produce subsistence. His forecast was on the mark.
D)   was less than the power of the earth to produce subsistence. His forecast was off the mark.

Question 15

Other things the same, a country that increases its saving rate increases

Accepted Answer

A)   its future productivity and future real GDP.
B)   neither its future productivity nor future real GDP.
C)   its future productivity, but not its future real GDP.
D)   its future real GDP, but not its future productivity.

Question 16

Consider the nations of Brazil, Mexico, and Pakistan. Over the past century, which of these three nations has experienced, by far, slower economic growth than the other two nations?

Accepted Answer

The answer of Consider the nations of Brazil, Mexico, and...

Question 17

List the four determinants of an economy's productivity.

Accepted Answer

The answer of List the four determinants of an economy's...

Question 18

Suppose a country reduces restrictions on how many hours people can work. If reducing these restrictions increase the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Accepted Answer

A)   productivity and output both rise.
B)   productivity rises and output falls.
C)   productivity falls and output rises.
D)   productivity and output fall.

Question 19

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

A)   not change.
B)   increase but not double.
C)   double.
D)   more than double.

Question 20

Which of the following is an example of human capital?

Accepted Answer

A)   the comfortable chair in your dorm room where you read economics texts
B)   the amount you get paid each week to work at the library
C)   the things you have learned this semester
D)   any capital goods that require a human to be present to operate

Exam 25: Production and Growth