Question 1

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 2

Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,300 a ton. Over the same time a measure of the overall price level increased from 168 to 187. The price of iron ore increased by

Accepted Answer

A)   less than inflation, and this means it became relatively less scarce.
B)   less than inflation, and this means it became scarcer.
C)   more than inflation, and this means it became scarcer.
D)   more than inflation, but this doesn't necessarily mean that it become scarcer.E) B) and C)
F) B) and D)

Question 3

An increase in a country's saving rate permanently raises its productivity.

Accepted Answer

A) True 
 B)False

Question 4

In 2009, the imaginary nation of Mainland had a population of 6,000 and real GDP of 120,000. In 2010 the population was 6,200 and real GDP of 128,960. Over the year in question, real GDP per person in Mainland grew by

Accepted Answer

A)   2 percent, which is high compared to average U.S. growth over the last one-hundred years.
B)   2 percent, which is about the same as average U.S. growth over the last one-hundred years.
C)   4 percent, which is high compared to average U.S. growth over the last one-hundred years.
D)   4 percent, which is about the same as average U.S. growth over the last one-hundred years.E) A) and D)
F) A) and C) C

Question 5

Megan is a landscaper. Which of the following are included in her human capital?

Accepted Answer

A)   her knowledge of landscaping learned in college and her landscaping equipment
B)   her knowledge of landscaping learned in college, but not her landscaping equipment
C)   her landscaping equipment, but not her knowledge of landscaping learned in college
D)   neither her knowledge of landscaping learned in college nor her landscaping equipmentE) A) and C)
F) A) and B)

Question 6

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 things the Chef learned at Cooking School, the freezers where the chops and steaks are kept.
B)   For a furniture company: wood, the company cafeteria, saws.
C)   For a railroad: fuel, railroad engines, railroad tracks.
D)   None of the above is correct.E) A) and B)
F) All of the above

Question 7

Other things equal, relatively poor countries tend to grow

Accepted Answer

A)   slower than relatively rich countries; this is called the poverty trap.
B)   slower than relatively rich countries; this is called the fall-behind effect.
C)   faster than relatively rich countries; this is called the catch-up effect.
D)   faster than relatively rich countries; this is called the constant-returns-to-scale effect.E) B) and C)
F) A) and D)

Question 8

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) All of the above
F) A) and B)

Question 9

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 the last 100 years?

Accepted Answer

A)   China, Pakistan
B)   United Kingdom, China
C)   Pakistan, Argentina
D)   Argentina, JapanE) B) and C)
F) A) and B)

Question 10

The behavior of market prices over time indicates that natural resources are

Accepted Answer

A)   a limit to economic growth.
B)   unrelated to economic growth.
C)   not a limit to economic growth.
D)   the major determinant of productivity.E) None of the above
F) B) and D)

Question 11

Over the last 140 years or so, on average Canada's real GDP per-person grew faster than that of the U.K.

Accepted Answer

A) True 
 B)False

Question 12

Over the period 1890-2008, Japan experienced a 2.71 percent average annual growth rate of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 13

One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society

Accepted Answer

A)   conserve resources for future generations.
B)   sacrifice consumption goods and services now in order to enjoy more consumption in the future.
C)   recycle resources so that future generations can produce goods and services with the accumulated capital.
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 14

Other things the same, an economy's factors of production are likely to be used more effectively if there is an economywide respect for property rights.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not correct?

Accepted Answer

A)   Across countries there are large differences in the average income per person. These differences are reflected in large differences in the quality of life.
B)   With a growth rate of about 2 percent per year, average income per person doubles about every 35 years.
C)   The ranking of countries by average income changes very little over time.
D)   In some countries real income per person has changed very little over many years.E) None of the above
F) A) and D) C

Question 16

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

Question 17

Which of the following is generally an opportunity cost of investment in human capital?

Accepted Answer

A)   future job security
B)   forgone present wages
C)   increased earning potential
D)   All of the above are correct.E) A) and C)
F) A) and D) B

Question 18

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) C) and D)
F) B) and D)

Question 19

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.E) A) and B)
F) B) and C)

Question 20

In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the population by about a third. Assuming diminishing returns, the decrease in population should have

Accepted Answer

A)   increased productivity and real GDP per person.
B)   increased productivity but decreased real GDP per person.
C)   increased real GDP per person, but decreased productivity.
D)   decreased productivity and real GDP per person.E) B) and C)
F) None of the above

Exam 7: Production and Growth

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

Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,300 a ton. Over the same time a measure of the overall price level increased from 168 to 187. The price of iron ore increased by

Correct AnswerverifiedShow Answer

An increase in a country's saving rate permanently raises its productivity.

Correct AnswerverifiedShow Answer

In 2009, the imaginary nation of Mainland had a population of 6,000 and real GDP of 120,000. In 2010 the population was 6,200 and real GDP of 128,960. Over the year in question, real GDP per person in Mainland grew by

Correct AnswerverifiedC

Megan is a landscaper. Which of the following are included in her human capital?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things equal, relatively poor countries tend to grow

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 the last 100 years?

Correct AnswerverifiedShow Answer

The behavior of market prices over time indicates that natural resources are

Correct AnswerverifiedShow Answer

Over the last 140 years or so, on average Canada's real GDP per-person grew faster than that of the U.K.

Correct AnswerverifiedShow Answer

Over the period 1890-2008, Japan experienced a 2.71 percent average annual growth rate of real GDP per person.

Correct AnswerverifiedShow Answer

One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society

Correct AnswerverifiedShow Answer

Other things the same, an economy's factors of production are likely to be used more effectively if there is an economywide respect for property rights.

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedC

The catch-up effect refers to the idea that

Correct AnswerverifiedShow Answer

Which of the following is generally an opportunity cost of investment in human capital?

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the population by about a third. Assuming diminishing returns, the decrease in population should have

Correct AnswerverifiedShow Answer

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C

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C

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B

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