Question 1

Which of the following is an example of human capital?

Accepted Answer

A)   a student loan
B)   knowledge learned from reading books
C)   training videos for new corporate employees
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 2

In a market economy, we know that a resource has become scarcer when

Accepted Answer

A)   its price rises relative to other prices.
B)   it is non-renewable and some of it is used.
C)   people search for substitutes.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 3

Why does a nation's standard of living depend on property rights?

Accepted Answer

Property rights are an important prerequ...

Question 4

The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a country with a relatively high level of capital per worker than in a country with a relatively low level of capital per worker.

Accepted Answer

A) True 
 B)False

Question 5

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Accepted Answer

A)   8
B)   12
C)   16
D)   None of the above is correct.E) C) and D)
F) A) and D)

Question 6

Other things the same, if a country increased its saving rate, in 40 years or so it would likely have

Accepted Answer

A)   higher productivity, and a higher growth rate of real GDP.
B)   higher productivity, but not a higher growth rate of real GDP.
C)   the same productivity and growth of real GDP it began with.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 7

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?

Accepted Answer

A)   Productivity will definitely fall.
B)   Productivity will definitely be unchanged.
C)   Productivity will definitely rise.
D)   None of the above are necessarily correct.E) B) and D)
F) C) and D)

Question 8

The catch-up effect refers to the idea that

Accepted Answer

A)   saving will always catch-up with investment spending.
B)   it is easier for a country to grow fast and so catch-up if it starts out relatively poor.
C)   population eventually catches-up with increased output.
D)   if investment spending is low, increased saving will help investment to "catch-up."E) C) and D)
F) None of the above

Question 9

If companies from foreign countries build and operate factories in China, then China's productivity

Accepted Answer

A)   and the wages of Chinese workers increase.
B)   increases but the wages of Chinese workers decrease.
C)   decreases but the wages of Chinese workers increase.
D)   and the wages of Chinese workers decrease.E) All of the above
F) A) and B)

Question 10

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 smudgingE) None of the above
F) B) and D)

Question 11

Senator Noitall says that in order to help poor countries develop, the United States should: 1. Encourage poor countries to allow U.S. and other foreign firms to build and operate businesses in their country; 2. Reduce or eliminate subsidizes to U.S. producers when poor countries have a comparative advantage producing those goods the U.S. subsidizes; 3. Work to promote political stability in poor countries; and 4. Reduce poor countries reliance on market forces in their economies. How many of these ideas are likely to help poor countries grow?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) A) and C)

Question 12

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Accepted Answer

A) True 
 B)False

Question 13

Country A experienced a growth rate of real GDP per person of 0.5 percent per year throughout the 1900's. In view of other countries' experiences, country A's growth was

Accepted Answer

A)   exceptionally high.
B)   moderately high.
C)   moderately low.
D)   exceptionally low.E) B) and C)
F) All of the above

Question 14

In 2010, income per person in the United States was about 14 times that in India.

Accepted Answer

A) True 
 B)False

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.E) A) and D)
F) B) and D)

Question 16

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

Question 17

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)   technological knowledge.
C)   a production function.
D)   an item which always has the property called constant returns to scale.E) A) and D)
F) A) and C)

Question 18

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

Accepted Answer

A)   output in country A increases by more than in country B.
B)   output in country A increases by the same amount as in country B.
C)   output in country A increases by less than in country B.
D)   None of the above is necessarily correct.E) A) and D)
F) All of the above

Question 19

In 2011 Buckeye Brewing produced 1,000 bottles of ginger ale each day. It employed 10 workers each working 8 hours a day. In 2012 it produced 960 bottles of ginger ale each day employing 8 workers who worked 8 hours each day. Productivity at Buckeye Brewing

Accepted Answer

A)   increased by 20%.
B)   increased by 16.67%.
C)   decreased by 1.67%.
D)   decreased by 40%.E) C) and D)
F) B) and C)

Question 20

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

Accepted Answer

A) True 
 B)False

Exam 12: Production and Growth

Country A experienced a growth rate of real GDP per person of 0.5 percent per year throughout the 1900's. In view of other countries' experiences, country A's growth was

Correct Answer
verified

Why does a nation's standard of living depend on property rights?

Correct Answer
verified
Property rights are an important prerequ...
View Answer

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?

Correct Answer
verified

If companies from foreign countries build and operate factories in China, then China's productivity

Correct Answer
verified

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

Correct Answer
verified

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Correct Answer
verified

In a market economy, we know that a resource has become scarcer when

Correct Answer
verified

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

Correct Answer
verified

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

Correct Answer
verified

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Correct Answer
verified

Industrial machinery is an example of

Correct Answer
verified

In 2010, income per person in the United States was about 14 times that in India.

Correct Answer
verified

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?

Correct Answer
verified

Other things the same, if a country increased its saving rate, in 40 years or so it would likely have

Correct Answer
verified

The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a country with a relatively high level of capital per worker than in a country with a relatively low level of capital per worker.

Correct Answer
verified

Which of the following is an example of human capital?

Correct Answer
verified

Correct Answer
verified

In 2011 Buckeye Brewing produced 1,000 bottles of ginger ale each day. It employed 10 workers each working 8 hours a day. In 2012 it produced 960 bottles of ginger ale each day employing 8 workers who worked 8 hours each day. Productivity at Buckeye Brewing

Correct Answer
verified

Correct Answer
verified

The catch-up effect refers to the idea that

Correct Answer
verified

Exam 12: Production and Growth

Country A experienced a growth rate of real GDP per person of 0.5 percent per year throughout the 1900's. In view of other countries' experiences, country A's growth was

Correct AnswerverifiedShow Answer

Why does a nation's standard of living depend on property rights?

Correct AnswerverifiedProperty rights are an important prerequ...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

If companies from foreign countries build and operate factories in China, then China's productivity

Correct AnswerverifiedShow Answer

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

Correct AnswerverifiedShow Answer

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Correct AnswerverifiedShow Answer

In a market economy, we know that a resource has become scarcer when

Correct AnswerverifiedShow Answer

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Correct AnswerverifiedShow Answer

Industrial machinery is an example of

Correct AnswerverifiedShow Answer

In 2010, income per person in the United States was about 14 times that in India.

Correct AnswerverifiedShow Answer

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?

Correct AnswerverifiedShow Answer

Other things the same, if a country increased its saving rate, in 40 years or so it would likely have

Correct AnswerverifiedShow Answer

The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a country with a relatively high level of capital per worker than in a country with a relatively low level of capital per worker.

Correct AnswerverifiedShow Answer

Which of the following is an example of human capital?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In 2011 Buckeye Brewing produced 1,000 bottles of ginger ale each day. It employed 10 workers each working 8 hours a day. In 2012 it produced 960 bottles of ginger ale each day employing 8 workers who worked 8 hours each day. Productivity at Buckeye Brewing

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The catch-up effect refers to the idea that

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Property rights are an important prerequ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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