Question 1

Increases in both human capital per worker and physical capital per worker increase productivity.

Accepted Answer

A) True 
 B)False

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

Question 3

Other things the same,a country that increases its savings rate will have

Accepted Answer

A)   higher future capital and higher future real GDP per person.
B)   higher future capital but not higher future real GDP per person.
C)   higher future real GDP per person but not higher future capital.
D)   neither higher future capital nor higher future real GDP per person.E) B) and C)
F) A) and D)

Question 4

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

Accepted Answer

Property rights are an important prerequ...

Question 5

Scenario 17-1.An economy's production form takes the form Y = AF(L,K,H,N) .
-Refer to Scenario 17-1.If the production function has the constant-returns-to-scale property,then it could be rewritten as

Accepted Answer

A)   Y/L = AF(1,K/L,H/L,N/L) 
B)   Y/L = AF(L,1,H/L,N/L) 
C)   Y/L = AF(L,K/L,1,N/L) 
D)   Y/L = AF(L,K/L,H/L,1) E) A) and D)
F) C) and D)

Question 6

Suppose that real GDP grew more in Country A than in Country B last year.

Accepted Answer

A)   Country A must have a higher standard of living than country B.
B)   Country A's productivity must have grown faster than country B's.
C)   Both of the above are correct.
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 7

If a production function has constant returns to scale,output can be doubled if

Accepted Answer

A)   labor alone doubles.
B)   all inputs but labor double.
C)   all of the inputs double.
D)   None of the above is correct.E) B) and D)
F) B) and C)

Question 8

Other things the same,if a country raises its saving rate,then in the long run

Accepted Answer

A)   both the level and growth rate of real GDP are unchanged.
B)   the level of real GDP is higher but the growth rate of real GDP is unchanged.
C)   both the level and growth rate of real GDP are higher.
D)   None of the above are correct.E) None of the above
F) C) and D)

Question 9

Human capital is the term economists use to refer to the knowledge and skills that workers acquire through education,training,and experience.

Accepted Answer

A) True 
 B)False

Question 10

A country experiencing a growth rate of 8% per year can go from being one of the poorest to one of the richest in how many generations?

Accepted Answer

A)   one
B)   two
C)   three
D)   fourE) C) and D)
F) A) and B)

Question 11

On a production function,as capital per worker increases,output per worker

Accepted Answer

A)   increases.This increase is larger at larger values of capital per worker.
B)   increases.This increase is smaller at larger values of capital per worker.
C)   decreases.This decrease is larger at larger value of capital per worker.
D)   decreases.This decrease is smaller at larger value of capital per worker.E) A) and B)
F) A) and C)

Question 12

If your company opens and operates a branch in a foreign country,your company engages in foreign direct investment.

Accepted Answer

A) True 
 B)False

Question 13

Educational attainment tends to be

Accepted Answer

A)   low in countries with high population growth.
B)   low in countries with low population growth.
C)   high in countries with high population growth.
D)   None of the above are true.E) B) and C)
F) None of the above

Question 14

Haley discovers a new way to design automobile engines so that they use less gasoline.Haley's finding is an example of

Accepted Answer

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

Question 15

Inward-oriented policies

Accepted Answer

A)   are generally supported by economists.
B)   are primarily concerned with the development of human capital.
C)   in some ways are like prohibiting the use of certain technologies.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 16

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has less capital and so less real GDP per person.Suppose that both increase their saving rate from 3 percent to 4 percent.In the long run

Accepted Answer

A)   both countries will have permanently higher growth rates of real GDP per person,and the growth rate will be higher in the country with more capital.
B)   both countries will have permanently higher growth rates of real GDP per person,and the growth rate will be higher in the country with less capital.
C)   both countries will have higher levels of real GDP per person,and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital.
D)   both countries will have higher levels of real GDP per person,and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.E) C) and D)
F) A) and D)

Question 17

Country A and country B are the same except country A has a capital stock of 5,000 a population of 12,000 and employment of 10,000.Country B has a capital stock of 8,000 and a population of 24,000 and employment of 20,000.

Accepted Answer

A)   Country A has a higher standard of living and country B will not catch up.
B)   Country A has a higher standard of living but country B will catch up.
C)   Country B has a higher standard of living and country A will not catch up.
D)   Country B has a higher standard of living but country A will catch up.E) A) and B)
F) A) and C)

Question 18

Country A has real GDP per person of 10,000 while country B has real GDP per person of 20,000.All else constant,country A will eventually have a higher standard of living than country B if

Accepted Answer

A)   the level of saving per person is 500 in country A and 750 in country B.
B)   the level of saving per person is 1,000 in country A and 1,800 in country B.
C)   Both of the above are correct.
D)   None of the above are correct.E) B) and C)
F) A) and C)

Question 19

Which of the following best describes the response of output as time passes to an increase in the saving rate?

Accepted Answer

A)   The growth rate of output does not change.
B)   The growth rate of output increases and gets even larger as time passes.
C)   The growth rate of output increases and does not change as time passes.
D)   The growth rate of output increases,but diminishes to its former level as time passes.E) A) and D)
F) C) and D)

Question 20

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 D)
F) None of the above

Exam 17: Production and Growth

Inward-oriented policies

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If a production function has constant returns to scale,output can be doubled if

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Suppose that real GDP grew more in Country A than in Country B last year.

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

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

Human capital is the term economists use to refer to the knowledge and skills that workers acquire through education,training,and experience.

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Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has less capital and so less real GDP per person.Suppose that both increase their saving rate from 3 percent to 4 percent.In the long run

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Which of the following best describes the response of output as time passes to an increase in the saving rate?

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Country A and country B are the same except country A has a capital stock of 5,000 a population of 12,000 and employment of 10,000.Country B has a capital stock of 8,000 and a population of 24,000 and employment of 20,000.

Correct AnswerverifiedShow Answer

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

Country A has real GDP per person of 10,000 while country B has real GDP per person of 20,000.All else constant,country A will eventually have a higher standard of living than country B if

Correct AnswerverifiedShow Answer

A country experiencing a growth rate of 8% per year can go from being one of the poorest to one of the richest in how many generations?

Correct AnswerverifiedShow Answer

Scenario 17-1.An economy's production form takes the form Y = AF(L,K,H,N) . -Refer to Scenario 17-1.If the production function has the constant-returns-to-scale property,then it could be rewritten as

Correct AnswerverifiedShow Answer

Educational attainment tends to be

Correct AnswerverifiedShow Answer

Haley discovers a new way to design automobile engines so that they use less gasoline.Haley's finding is an example of

Correct AnswerverifiedShow Answer

Other things the same,if a country raises its saving rate,then in the long run

Correct AnswerverifiedShow Answer

If your company opens and operates a branch in a foreign country,your company engages in foreign direct investment.

Correct AnswerverifiedShow Answer

"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

Other things the same,a country that increases its savings rate will have

Correct AnswerverifiedShow Answer

On a production function,as capital per worker increases,output per worker

Correct AnswerverifiedShow Answer

Increases in both human capital per worker and physical capital per worker increase productivity.

Correct AnswerverifiedShow Answer

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Property rights are an important prerequ...
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