Question 1

Currently a country has real GDP per person of 500. Raising capital per worker by one would increase output per worker by 4. Other things the same, which of the following long-run combinations are consistent with the effects of this country increasing its saving rate?

Accepted Answer

A)  real GDP per person is 520 and raising capital per worker by one would increase output per worker by 3
B)  real GDP per person is 520 and raising capital per worker by one would increase output per worker by 5
C)  real GDP per person is 480 and raising capital per worker by one would increase output per worker by 3
D)  real GDP per person is 480 and raising capital per worker by one would increase output per worker by 5E) A) and D)
F) B) and C)

Question 2

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

Question 3

In the 19th century John Deere took out a patent on a newly designed plow that incorporated steel to make plowing faster. Many farmers bought plows from his company and he made millions. This example shows that patents turn an idea into a

Accepted Answer

A)  public good.
B)  societal good.
C)  private good.
D)  normal good.E) None of the above
F) B) and C)

Question 4

Last year the imaginary nation of Freedonia had a population of 2,800 and real GDP of 16,800,000. This year it had a population of 2,700 and real GDP of 15,390,000. About what was the growth rate of real GDP per person between last year and this year?

Accepted Answer

A)  -5.3 percent
B)  -5 percent
C)  5 percent
D)  5.3 percentE) A) and B)
F) A) and C)

Question 5

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 6

Randomized control trials can help economists evaluate the impact of global aid programs in the same way that doctors test drugs.

Accepted Answer

A) True 
 B)False

Question 7

The United Kingdom is

Accepted Answer

A)  an advanced economy, and over the past century its rate of economic growth has been higher than that of the United States.
B)  an advanced economy, and over the past century its rate of economic growth has been lower than that of the United States.
C)  a middle-income country, and over the past century its rate of economic growth has been higher than that of the United States.
D)  a middle-income country, and over the past century its rate of economic growth has been lower than that of the United States.E) A) and B)
F) A) and C)

Question 8

All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,

Accepted Answer

A)  the increase in output was greater for this year than last year.
B)  the increase in output was greater last year than this year.
C)  the increase in output is the same in both years.
D)  None of the above is necessarily correct.E) A) and B)
F) A) and C)

Question 9

Which of the following is correct?

Accepted Answer

A)  Countries with the highest growth rates over the last 120 years are the ones that had the highest level of real GDP 120 years ago.
B)  Most countries have had little fluctuation around their average growth rates during the past 120 years.
C)  The ranking of countries by income changes little over time.
D)  Even though Japan had a higher growth rate of real GDP per person than the U.S. over the last 120 years, it's level of real GDP per person is less than that of the U.S.E) C) and D)
F) None of the above

Question 10

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 11

If a production function has constant returns to scale, then if all inputs double so does production.

Accepted Answer

A) True 
 B)False

Question 12

According to the traditional view of the production function, which of the following values of the additions to output per worker would be consistent with moving from 5 to 6, and then from 6 to 7, and then from 7 to 8 units of capital per worker in that order?

Accepted Answer

A)  40, 40, 40
B)  40, 35, 38
C)  40, 34, 32
D)  40, 43, 48E) B) and D)
F) B) and C)

Question 13

The key determinant of the standard of living in a country is

Accepted Answer

A)  the amount of goods and services produced from each hour of a worker's time.
B)  the total amount of goods and services produced within the country.
C)  the total amount of its physical capital.
D)  its growth rate of real GDP.E) All of the above
F) B) and C)

Question 14

Indonesians, for example, have a lower standard of living than Americans because they have a lower level of productivity.

Accepted Answer

A) True 
 B)False

Question 15

How do outward-oriented policies affect a nation's productivity?

Accepted Answer

Most economists believe that poor nation...

Question 16

Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

Accepted Answer

A)  Popeye's production and productivity are greater than Wimpy's.
B)  Popeye's production is greater than Wimpy's, but his productivity is less.
C)  Wimpy's production and productivity are greater than Popeye's.
D)  Wimpy's production is greater than Popeye's, but his productivity is less.E) All of the above
F) B) and C)

Question 17

In recent decades, economic growth has been much more rapid in South Korea than in the United States. What is the likely explanation for this fact?

Accepted Answer

The likely explanati...

Question 18

Consider three imaginary countries. In Aire, saving amounts to $4,000 and consumption amounts to $12,000; in Bovina, saving amounts to $3,000 and consumption amounts to $24,000; and in Cartar, saving amounts to $10,000 and consumption amounts to $50,000. The saving rate is

Accepted Answer

A)  higher in Aire than in Cartar, and it is higher in Cartar than in Bovina.
B)  higher in Cartar than in Aire, and it is higher in Aire than in Bovina.
C)  higher in Cartar than in Bovina, and it is the same in Bovina and Aire.
D)  higher in Aire than in Bovina, and it is the same in Aire and Cartar.E) B) and C)
F) A) and D)

Question 19

Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy's discovery is

Accepted Answer

A)  physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce.
B)  physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer.
C)  technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce.
D)  technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer.E) B) and C)
F) A) and D)

Question 20

Which of the following is consistent with the catch-up effect?

Accepted Answer

A)  The United States had a higher growth rate before 1900 than after.
B)  After World War II the United States had lower growth rates than war-ravaged European countries.
C)  Although the United States has a relatively high level of output per person, its growth rate is rather modest compared to some countries.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Exam 25: Production and Growth

Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy's discovery is

Correct AnswerverifiedShow Answer

All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,

Correct AnswerverifiedShow Answer

The key determinant of the standard of living in a country is

Correct AnswerverifiedShow Answer

Currently a country has real GDP per person of 500. Raising capital per worker by one would increase output per worker by 4. Other things the same, which of the following long-run combinations are consistent with the effects of this country increasing its saving rate?

Correct AnswerverifiedShow Answer

Which of the following is consistent with the catch-up effect?

Correct AnswerverifiedShow Answer

Indonesians, for example, have a lower standard of living than Americans because they have a lower level of productivity.

Correct AnswerverifiedShow Answer

How do outward-oriented policies affect a nation's productivity?

Correct AnswerverifiedMost economists believe that poor nation...View AnswerShow Answer

In the 19th century John Deere took out a patent on a newly designed plow that incorporated steel to make plowing faster. Many farmers bought plows from his company and he made millions. This example shows that patents turn an idea into a

Correct AnswerverifiedShow Answer

Randomized control trials can help economists evaluate the impact of global aid programs in the same way that doctors test drugs.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

In recent decades, economic growth has been much more rapid in South Korea than in the United States. What is the likely explanation for this fact?

Correct AnswerverifiedThe likely explanati...View AnswerShow Answer

The United Kingdom is

Correct AnswerverifiedShow Answer

Last year the imaginary nation of Freedonia had a population of 2,800 and real GDP of 16,800,000. This year it had a population of 2,700 and real GDP of 15,390,000. About what was the growth rate of real GDP per person between last year and this year?

Correct AnswerverifiedShow Answer

Consider three imaginary countries. In Aire, saving amounts to $4,000 and consumption amounts to $12,000; in Bovina, saving amounts to $3,000 and consumption amounts to $24,000; and in Cartar, saving amounts to $10,000 and consumption amounts to $50,000. The saving rate is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a production function has constant returns to scale, then if all inputs double so does production.

Correct AnswerverifiedShow Answer

Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

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

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

Correct AnswerverifiedShow Answer

According to the traditional view of the production function, which of the following values of the additions to output per worker would be consistent with moving from 5 to 6, and then from 6 to 7, and then from 7 to 8 units of capital per worker in that order?

Correct AnswerverifiedShow Answer

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Most economists believe that poor nation...
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The likely explanati...
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