Question 1

In the long run, a higher saving rate

Accepted Answer

A)  cannot increase the capital stock.
B)  increases the growth rate of income.
C)  increases the growth rate of productivity.
D)  None of the above is correct.E) All of the above
F) B) and C)

Question 2

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.E) None of the above
F) B) and D)

Question 3

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that

Accepted Answer

A)  real GDP per person must be higher in Oceania than in Freedonia.
B)  real GDP per person grew faster in Oceania than in Freedonia.
C)  the standard of living must be higher in Oceania than in Freedonia.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 4

Human capital is

Accepted Answer

A)  the same thing as technological knowledge.
B)  the same thing as labor.
C)  the tools and equipment operated by humans.
D)  knowledge and skills that workers have acquired.E) B) and C)
F) None of the above

Question 5

Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.

Accepted Answer

A)  Country A has higher productivity and higher real GDP per person than country B.
B)  Country A has lower productivity and lower real GDP per person than country B.
C)  Country A has higher productivity, but lower real GDP per person than country B.
D)  Country B has lower productivity, but higher real GDP per person than country B.E) B) and C)
F) B) and D)

Question 6

Of the following countries, which grew most slowly, in terms of real GDP per person, over the last 100 years?

Accepted Answer

A)  Brazil
B)  Mexico
C)  China
D)  United StatesE) None of the above
F) All of the above

Question 7

Productivity is the

Accepted Answer

A)  key determinant of living standards, and growth in productivity is the key determinant of growth in living standards.
B)  key determinant of living standards, but growth in productivity is not the key determinant of growth in living standards.
C)  not the key determinant of living standards, but growth in productivity is the key determinant of growth in living standards.
D)  not the key determinant of living standards, and growth in productivity is not the key determinant of growth in living standards.E) B) and C)
F) A) and D)

Question 8

In 2009, Modern Electronics, Inc. produced 60,000 calculators, employing 80 workers, each of whom worked 8 hours per day. In 2010, the same firm produced 76,500 calculators, employing 85 workers, each of whom worked 10 hours per day. Productivity at Modern Electronics

Accepted Answer

A)  decreased by 4%
B)  remained constant.
C)  increased by 8.33%
D)  increased by 27.50%E) A) and C)
F) A) and B)

Question 9

A country's human capital increases

Accepted Answer

A)  if its workers become better educated or healthier.
B)  only if its workers become better educated.
C)  only if its workers become healthier.
D)  None of the above is correct.E) C) and D)
F) None of the above

Question 10

If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity

Accepted Answer

A)  and real GDP per person rise.
B)  rises but real GDP per person falls.
C)  falls and real GDP per person rises.
D)  and real GDP per person fall.E) A) and B)
F) B) and D)

Question 11

Industrial machinery is an example of

Accepted Answer

A)  a factor of production that in the past was an output from the production process.
B)  physical capital.
C)  something that influences productivity.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 12

Which of the following statements is correct?

Accepted Answer

A)  In an economy-wide sense, property rights are an important prerequisite for the price system to work.
B)  Property rights give people the ability to exercise authority over the resources they own.
C)  Based on the available evidence, the existence of well-established and well-enforced property rights appears to be associated with an enhanced standard of living.
D)  All of the above are correct.E) A) and B)
F) None of the above

Question 13

Figure 12-1. 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 12-1. 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 growth rate of productivity.
B)  In the long run, a higher saving rate leads to a higher growth rate of income.
C)  Returns to capital become increasingly smaller as the amount of capital per worker increases.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 14

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 15

When a country removes trade barriers and imports appliances and exports engineering services,

Accepted Answer

A)  its growth slows.
B)  its productivity decreases.
C)  it is essentially transforming engineering services into appliances.
D)  its economic well-being decreases while that of the country that sells appliances increases.E) B) and C)
F) A) and D)

Question 16

Which of the following would not be considered physical capital?

Accepted Answer

A)  a new factory building
B)  a computer used to help Mercury Delivery Service keep track of its orders
C)  on-the-job training
D)  a desk used in an accountant's officeE) A) and B)
F) None of the above

Question 17

Productivity is defined as the quantity of

Accepted Answer

A)  labor required to produce a nation's GDP.
B)  labor required to produce one unit of goods and services.
C)  goods and services produced from each unit of labor input.
D)  goods and services produced per unit of time.E) A) and D)
F) B) and C)

Question 18

The one variable that stands out as the most significant explanation of large variations in living standards around the world is

Accepted Answer

A)  productivity.
B)  population.
C)  preferences.
D)  prices.E) B) and C)
F) A) and C)

Question 19

Which of the following would, by itself, reveal the most about a country's standard of living?

Accepted Answer

A)  its level of capital
B)  the number of hours worked
C)  its availability of natural resources
D)  its productivityE) B) and C)
F) A) and D)

Question 20

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

Accepted Answer

A)  represents the traditional view of the production process.
B)  is an assertion that capital is subject to diminishing returns.
C)  is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant.
D)  All of the above are correct.E) All of the above
F) None of the above

Exam 12: Production and Growth

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

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Industrial machinery is an example of

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"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

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Which of the following statements is correct?

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Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.

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Which of the following would not be considered physical capital?

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When a country removes trade barriers and imports appliances and exports engineering services,

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Which of the following would, by itself, reveal the most about a country's standard of living?

Correct AnswerverifiedShow Answer

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that

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Of the following countries, which grew most slowly, in terms of real GDP per person, over the last 100 years?

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Productivity is the

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Figure 12-1. 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 12-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

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The one variable that stands out as the most significant explanation of large variations in living standards around the world is

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Human capital is

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In 2009, Modern Electronics, Inc. produced 60,000 calculators, employing 80 workers, each of whom worked 8 hours per day. In 2010, the same firm produced 76,500 calculators, employing 85 workers, each of whom worked 10 hours per day. Productivity at Modern Electronics

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Productivity is defined as the quantity of

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In the long run, a higher saving rate

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If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity

Correct AnswerverifiedShow Answer

A country's human capital increases

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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