Question 1

Which of the following would decrease the likelihood that foreign business firms will invest in a country?

Accepted Answer

A)   a low corporate profit tax rate
B)   political stability
C)   a well-established legal system
D)   political instabilityE) A) and B)
F) A) and D)

Question 2

A reasonable measure of the standard of living in a country is

Accepted Answer

A)   real GDP per capita.
B)   nominal GDP per person.
C)   real GDP.
D)   the growth rate of nominal GDP per person.
E)   nominal GDP.F) None of the above
G) C) and E)

Question 3

An important link between politics and economics is that

Accepted Answer

A)   democracies are more productive than non-democracies.
B)   democracies must constantly make difficult budgetary choices.
C)   political instability is incompatible with long-term private investment.
D)   conservative governments tend to focus development on military industries.E) B) and C)
F) A) and D)

Question 4

Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labour productivity.

Accepted Answer

The standard of living is a measure of how well people live. Income per person is an important dimension of the standard of living and is positively correlated with other things such as nutrition and life expectancy that make people better off. Productivity measures how much people can produce in an hour. As productivity increases, people can produce more (and use less to produce the same amount) and so their standard of living increases.
The factors that determine labour productivity include the amounts of physical capital (equipment and structures), human capital (knowledge and skills), and natural resources available to workers, as well as the state of technological knowledge in society.

Question 5

To increase growth, governments should do all of the following except

Accepted Answer

A)   encourage foreigners to invest in your country.
B)   encourage saving and investment.
C)   nationalize major industries.
D)   encourage research and development.
E)   promote free trade.F) None of the above
G) C) and D)

Question 6

Compare and contrast the population theories of Thomas Malthus and Michael Kremer.

Accepted Answer

The difference is that Malthus predicted...

Question 7

Human capital is

Accepted Answer

A)   the capital, such as machinery, owned by humans.
B)   the amount of physical capital per person in the economy.
C)   the knowledge and skills that individual people have.
D)   the capital that has been produced by humans.E) A) and B)
F) None of the above

Question 8

Which of the following represents a productivity-enhancing investment in human capital?

Accepted Answer

A)   a new labour-saving technology
B)   a new health clinic
C)   a new factory that will employ 1,000 workers
D)   an increase in fringe benefits, such as paid vacations and overtime payE) A) and B)
F) All of the above

Question 9

The opportunity cost of growth is

Accepted Answer

A)   a reduction in current investment.
B)   a reduction in current consumption.
C)   a reduction in taxes.
D)   a reduction in current saving.E) None of the above
F) A) and B)

Question 10

If Toyota builds a new plant in the north of England,

Accepted Answer

A)   there has been an increase in foreign portfolio investment in the UK.
B)   once the plant starts producing cars UK GDP will rise less than UK GNP.
C)   once the plant starts producing cars UK GDP and GNP will both fall because some income from this investment will accrue to foreigners.
D)   once the plant starts producing cars UK GDP will rise more than UK GNP.E) All of the above
F) A) and B)

Question 11

Inward-oriented policies hold back economic growth because

Accepted Answer

A)   international trade leads to lower domestic employment.
B)   they encourage the brain drain.
C)   infant industries are unable to compete with the rest of the world.
D)   they do not allow a country to take advantage of the gains from trade.E) A) and B)
F) A) and C)

Question 12

For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except

Accepted Answer

A)   labour.
B)   physical capital/worker.
C)   human capital/worker.
D)   natural resources/worker.E) A) and B)
F) C) and D)

Question 13

Copper is an example of

Accepted Answer

A)   a renewable natural resource.
B)   human capital.
C)   physical capital.
D)   technology.
E)   a non-renewable natural resource.F) B) and E)
G) C) and D) E

Question 14

The United Kingdom should grow faster than Belgium because the United Kingdom has a larger economy.

Accepted Answer

A) True 
 B)False

Question 15

If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

Accepted Answer

A) True 
 B)False

Question 16

Most economists believe that inward-oriented policies that protect infant industries improve the growth rates of developing nations.

Accepted Answer

A) True 
 B)False  False

Question 17

If a production function exhibits constant returns to scale, doubling all of the inputs

Accepted Answer

A)   more than doubles output due to the catch-up effect.
B)   has absolutely no impact on output because output is constant.
C)   less than doubles output due to diminishing returns.
D)   doubles output.E) A) and D)
F) None of the above

Question 18

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Accepted Answer

Once someone comes up with an idea it is...

Question 19

Poor countries often have a difficult time attracting foreign direct investment funds because

Accepted Answer

A)   wages are low in poor countries.
B)   investment risks are quite low in poor countries so rates of return are low.
C)   property rights are not protected so investors fear their property may be confiscated.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 20

Suppose everyone working the land in Exland knows the usefulness of investing in land irrigation systems. Those who work the land may choose not to invest in these profitable irrigation systems as long as

Accepted Answer

A)   the investment is too expensive.
B)   the natural climate, such as abundant rain, makes the irrigation projects unnecessary.
C)   their property rights, with respect to the land, are subject to change.
D)   the government dictates the choice of investment.E) None of the above
F) A) and B)

Exam 22: Production and Growth

Which of the following would decrease the likelihood that foreign business firms will invest in a country?

Correct Answer
verified

A reasonable measure of the standard of living in a country is

Correct Answer
verified

An important link between politics and economics is that

Correct Answer
verified

Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labour productivity.

To increase growth, governments should do all of the following except

Correct Answer
verified

Compare and contrast the population theories of Thomas Malthus and Michael Kremer.

Correct Answer
verified
The difference is that Malthus predicted...
View Answer

Human capital is

Correct Answer
verified

Which of the following represents a productivity-enhancing investment in human capital?

Correct Answer
verified

The opportunity cost of growth is

Correct Answer
verified

If Toyota builds a new plant in the north of England,

Correct Answer
verified

Inward-oriented policies hold back economic growth because

Correct Answer
verified

For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except

Correct Answer
verified

Copper is an example of

Correct Answer
verified
E

The United Kingdom should grow faster than Belgium because the United Kingdom has a larger economy.

Correct Answer
verified

If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

Correct Answer
verified

Most economists believe that inward-oriented policies that protect infant industries improve the growth rates of developing nations.

Correct Answer
verified
False

If a production function exhibits constant returns to scale, doubling all of the inputs

Correct Answer
verified

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Correct Answer
verified
Once someone comes up with an idea it is...
View Answer

Poor countries often have a difficult time attracting foreign direct investment funds because

Correct Answer
verified

Suppose everyone working the land in Exland knows the usefulness of investing in land irrigation systems. Those who work the land may choose not to invest in these profitable irrigation systems as long as

Correct Answer
verified

Exam 22: Production and Growth

Which of the following would decrease the likelihood that foreign business firms will invest in a country?

Correct AnswerverifiedShow Answer

A reasonable measure of the standard of living in a country is

Correct AnswerverifiedShow Answer

An important link between politics and economics is that

Correct AnswerverifiedShow Answer

Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labour productivity.

To increase growth, governments should do all of the following except

Correct AnswerverifiedShow Answer

Compare and contrast the population theories of Thomas Malthus and Michael Kremer.

Correct AnswerverifiedThe difference is that Malthus predicted...View AnswerShow Answer

Human capital is

Correct AnswerverifiedShow Answer

Which of the following represents a productivity-enhancing investment in human capital?

Correct AnswerverifiedShow Answer

The opportunity cost of growth is

Correct AnswerverifiedShow Answer

If Toyota builds a new plant in the north of England,

Correct AnswerverifiedShow Answer

Inward-oriented policies hold back economic growth because

Correct AnswerverifiedShow Answer

For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except

Correct AnswerverifiedShow Answer

Copper is an example of

Correct AnswerverifiedE

The United Kingdom should grow faster than Belgium because the United Kingdom has a larger economy.

Correct AnswerverifiedShow Answer

If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

Correct AnswerverifiedShow Answer

Most economists believe that inward-oriented policies that protect infant industries improve the growth rates of developing nations.

Correct AnswerverifiedFalse

If a production function exhibits constant returns to scale, doubling all of the inputs

Correct AnswerverifiedShow Answer

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Correct AnswerverifiedOnce someone comes up with an idea it is...View AnswerShow Answer

Poor countries often have a difficult time attracting foreign direct investment funds because

Correct AnswerverifiedShow Answer

Suppose everyone working the land in Exland knows the usefulness of investing in land irrigation systems. Those who work the land may choose not to invest in these profitable irrigation systems as long as

Correct AnswerverifiedShow Answer

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Correct Answer
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The difference is that Malthus predicted...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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E

Correct Answer
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Correct Answer
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Correct Answer
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False

Correct Answer
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Correct Answer
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Once someone comes up with an idea it is...
View Answer

Correct Answer
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Correct Answer
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