Question 1

Which list contains, in this order, a country whose real GDP per person grew faster and one whose real GDP per person grew slower than real GDP per person in the U.S. over about the last 100 years?

Accepted Answer

A)   Bangladesh, India
B)   China, United Kingdom
C)   Japan, Brazil
D)   Pakistan, MexicoE) All of the above
F) C) and D)

Question 2

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

Accepted Answer

A)   is an assertion that production functions have the property of constant returns to scale.
B)   is consistent with the view that capital is subject to diminishing returns.
C)   is inconsistent with the view that it is easier for a country to grow fast if it starts out relatively poor.
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 3

If a country were to increase its saving rate, then in the long run it would also increase its

Accepted Answer

A)   level of income.
B)   growth rate of income.
C)   growth rate of productivity.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 4

Country A experienced a growth rate of real GDP per person of 2.5 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Accepted Answer

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

Question 5

An economy's production function has the constant­returns­to­scale property. If the economy's labor force doubled and all other inputs stayed the same, then real GDP would

Accepted Answer

A)   stay the same.
B)   increase by exactly 50 percent.
C)   increase by exactly 100 percent.
D)   increase, but not necessarily by either 50 percent or 100 percent.E) A) and B)
F) A) and C)

Question 6

All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more?

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) A) and D)
F) A) and C)

Question 7

A forest is an example of a nonrenewable resource.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about inputs is correct?

Accepted Answer

A)   A forest is an example of a natural resource; it is also an example of a renewable resource.
B)   There is no distinction between human capital and technological knowledge.
C)   Human capital is a non-produced factor of production.
D)   Physical capital is a non-produced factor of production.E) All of the above
F) A) and B)

Question 9

If per capita real income grows by 2 percent per year, then it will double in approximately 20 years.

Accepted Answer

A) True 
 B)False

Question 10

Other things the same, if a country raises its saving rate, when is growth of real GDP per person higher?

Accepted Answer

A)   as the economy moves toward the long run and in the long run.
B)   as the economy moves toward the long run, but not in the long run.
C)   in the long run, but not as the economy moves toward the long run.
D)   neither as the economy moves toward the long run, nor in the long run.E) B) and C)
F) A) and C)

Question 11

A nation's standard of living is determined by

Accepted Answer

A)   the percentage of its GDP that is accounted for by government purchases.
B)   the quantity of natural resources with which it is endowed.
C)   the productivity of its workers.
D)   factors and events that are beyond the nation's control.E) A) and B)
F) A) and C)

Question 12

Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should

Accepted Answer

A)   lend support to the invisible hand by maintaining property rights and political stability.
B)   lower barriers and impediments to free trade.
C)   encourage capital formation.
D)   target and subsidize specific industries important for technological progress.E) None of the above
F) All of the above

Question 13

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) A) and D)
F) None of the above

Question 14

When a society decides to increase its quantity of physical capital, the society

Accepted Answer

A)   can avoid the usual need to face trade-offs.
B)   is apparently not very concerned about its rate of economic growth in the future.
C)   is in effect deciding to consume fewer goods and services in the present.
D)   is in effect deciding to save less of its current income in the present.E) A) and D)
F) B) and C)

Question 15

A country's standard of living depends on its ability to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 16

Figure 25-1.
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 25-1. The curve becomes flatter as the amount of capital per worker increases because of

Accepted Answer

A)   increasing returns to capital.
B)   increasing returns to labor.
C)   diminishing returns to capital.
D)   diminishing returns to labor.E) A) and B)
F) All of the above

Question 17

Other things equal, the likelihood that a country will experience a relatively-high level of income is greater if the country

Accepted Answer

A)   pursues inward-oriented policies.
B)   has natural seaports.
C)   minimizes the role of the courts in its economy.
D)   enacts policies to encourage consumption and discourage saving.E) A) and B)
F) A) and D)

Question 18

What particularly important role do courts play in a market economy?

Accepted Answer

Courts enforce prope...

Question 19

Which of the following statements is correct?

Accepted Answer

A)   In 1870, real income per person was higher in the United States than in any other country at that time.
B)   Over about the last 100 years India experienced significantly higher growth of real income per person than did the United States.
C)   Over about the last 100 years the United States experienced significantly higher growth of real income per person than did Japan.
D)   None of the above are correct.E) B) and C)
F) All of the above

Question 20

The dictator of a country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

Accepted Answer

A)   reduce real GDP per person and productivity.
B)   reduce real GDP per person but not productivity.
C)   reduce productivity but not real GDP per person.
D)   None of the above is correct.E) B) and D)
F) A) and D)

Exam 25: Production and Growth

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

Correct AnswerverifiedShow Answer

When a society decides to increase its quantity of physical capital, the society

Correct AnswerverifiedShow Answer

Other things the same, if a country raises its saving rate, when is growth of real GDP per person higher?

Correct AnswerverifiedShow Answer

A forest is an example of a nonrenewable resource.

Correct AnswerverifiedShow Answer

An economy's production function has the constant­returns­to­scale property. If the economy's labor force doubled and all other inputs stayed the same, then real GDP would

Correct AnswerverifiedShow Answer

If a country were to increase its saving rate, then in the long run it would also increase its

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

All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more?

Correct AnswerverifiedShow Answer

Other things equal, the likelihood that a country will experience a relatively-high level of income is greater if the country

Correct AnswerverifiedShow Answer

What particularly important role do courts play in a market economy?

Correct AnswerverifiedCourts enforce prope...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A nation's standard of living is determined by

Correct AnswerverifiedShow Answer

Economists differ in their views of the role of the government in promoting economic growth. A controversial idea is that government should

Correct AnswerverifiedShow Answer

Which list contains, in this order, a country whose real GDP per person grew faster and one whose real GDP per person grew slower than real GDP per person in the U.S. over about the last 100 years?

Correct AnswerverifiedShow Answer

Figure 25-1. 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 25-1. The curve becomes flatter as the amount of capital per worker increases because of

Correct AnswerverifiedShow Answer

If per capita real income grows by 2 percent per year, then it will double in approximately 20 years.

Correct AnswerverifiedShow Answer

Country A experienced a growth rate of real GDP per person of 2.5 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Correct AnswerverifiedShow Answer

Which of the following statements about inputs is correct?

Correct AnswerverifiedShow Answer

A country's standard of living depends on its ability to produce goods and services.

Correct AnswerverifiedShow Answer

The dictator of a country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

Correct AnswerverifiedShow Answer

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An economy's production function has the constantreturnstoscale property. If the economy's labor force doubled and all other inputs stayed the same, then real GDP would

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Courts enforce prope...
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