Question 1

In 2009, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP grew by about 1.98%. Which of the following sets of growth rates is consistent with this growth in real GDP?

Accepted Answer

A)   1% population growth and 3% real GDP growth
B)   3% population growth and 1% real GDP growth
C)   3% population growth and 6% real GDP growth
D)   6% population growth and 3% real GDP growthE) A) and B)
F) A) and C)

Question 2

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

Accepted Answer

A)   1/3 laptop per hour
B)   3 hours per laptop
C)   1200 laptops
D)   400 laptopsE) None of the above
F) B) and C)

Question 3

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that

Accepted Answer

A)   real GDP per person must be higher in Oceania than in Freedonia.
B)   real GDP per person grew faster in Oceania than in Freedonia.
C)   the standard of living must be higher in Oceania than in Freedonia.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 4

If a country increases its saving rate, which of the following permanently grow at a higher rate?

Accepted Answer

A)   productivity and real GDP per person
B)   productivity but not real GDP per person
C)   real GDP per person but not productivity
D)   neither real GDP per person nor productivityE) A) and B)
F) A) and C)

Question 5

Countries with high population growth rates tend to have lower levels of educational attainment.

Accepted Answer

A) True 
 B)False

Question 6

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas

Accepted Answer

A)   private goods rather than public goods. This gives people more incentive to engage in research.
B)   private goods rather than public goods. This gives people less incentive to engage in research.
C)   public goods rather than private goods. This gives people more incentive to engage in research.
D)   public goods rather than private goods. This gives people more incentive to engage in private research.E) B) and C)
F) A) and D)

Question 7

If there are diminishing returns to capital, then

Accepted Answer

A)   capital produces fewer goods as it ages.
B)   old ideas are not as useful as new ones.
C)   increases in the capital stock eventually decrease output.
D)   increases in the capital stock increase output by ever smaller amounts.E) B) and C)
F) A) and B)

Question 8

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

Accepted Answer

A)   public good.
B)   societal good.
C)   private good.
D)   normal good.E) A) and B)
F) A) and C)

Question 9

The catch-up effect says that countries with low income can grow faster than countries with higher income. However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

Accepted Answer

The argument that poor countries will te...

Question 10

Alexis and Tara both mine salt. Alexis mines 400 pounds in 40 hours. Tara mines 300 pounds in 20 hours. Which of the following is correct?

Accepted Answer

A)   Alexis's productivity is greater than Tara's. This difference could be explained by Alexis having more physical capital than Tara.
B)   Alexis's productivity is greater than Tara's. This difference cannot be explained by a difference in the physical capital each has.
C)   Tara's productivity is greater than Alexis's. This difference could be explained by Tara having more physical capital than Alexis.
D)   Tara's productivity is greater than Alexis's. This difference cannot be explained by a difference in the physical capital each has.E) All of the above
F) A) and D)

Question 11

The president of Suldinia, a developing country, proposes that his country needs to help domestic firms by reducing trade restrictions.

Accepted Answer

A)   These are outward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia.
B)   These are outward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia.
C)   These are inward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia.
D)   These are inward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia.E) B) and D)
F) A) and D)

Question 12

After adjusting for inflation, over time the prices of most natural resources have been

Accepted Answer

A)   steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling.
B)   steady or falling, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing.
C)   rising, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling.
D)   rising, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing.E) None of the above
F) A) and B)

Question 13

Outward-oriented policies

Accepted Answer

A)   allow countries to take advantage of gains from trade.
B)   have generally led to high growth for the countries that pursued them.
C)   receive widespread support from economists.
D)   All of the above are correct.E) B) and C)
F) None of the above

Question 14

Assuming diminishing returns,

Accepted Answer

A)   the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones.
B)   the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones.
C)   the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones.
D)   the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.E) All of the above
F) C) and D)

Question 15

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Accepted Answer

A)   the production process cannot be enhanced by technological advances.
B)   no mathematical representation of the relevant production function can be formulated.
C)   the relevant production function has the limits-to-growth property.
D)   the relevant production function has the constant-returns-to-scale property.E) A) and B)
F) A) and C)

Question 16

Greater scarcity of a natural resource is indicated

Accepted Answer

A)   by an increase in the price of the resource, whether the price increase is less than or greater than the rate of inflation.
B)   only by an increase in the price of the resource that is less than the rate of inflation.
C)   only by an increase in the price of the resource that is greater than the rate of inflation.
D)   only by an increase in the price of the resource that is caused by a decrease in supply and is greater than the rate of inflation.E) B) and C)
F) A) and B)

Question 17

If an American-based firm opens and operates a service call center in Bulgaria, then it is engaging in

Accepted Answer

A)   foreign portfolio investment.
B)   foreign financial investment.
C)   foreign direct investment.
D)   indirect foreign investment.E) B) and C)
F) B) and D)

Question 18

Over the period 1960-1991,

Accepted Answer

A)   South Korea had a higher growth rate than the United States because it had a higher ratio of investment to GDP.
B)   the United States had a higher growth rate than South Korea because it had a higher ratio of investment to GDP.
C)   South Korea had a higher growth rate than the United States even though it had a similar ratio of investment to GDP.
D)   the United States had a higher growth rate than South Korea even though it had a similar ratio of investment to real GDP.E) A) and B)
F) None of the above

Question 19

Figure 7-1. 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 7-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Accepted Answer

A)   In the long run, a higher saving rate leads to a higher level of productivity.
B)   In the long run, a higher saving rate leads to a higher level of income.
C)   In the long run, a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 20

Which of the following best illustrates the human capital of a survivor stranded on an island?

Accepted Answer

A)   the fishing poles she has produced
B)   the invention of a better fishing lure
C)   the fresh fruit and fish on and around the island
D)   her previous training in a survival courseE) B) and C)
F) A) and B)

Exam 7: Production and Growth

Over the period 1960-1991,

Correct Answer
verified

Greater scarcity of a natural resource is indicated

Correct Answer
verified

If an American-based firm opens and operates a service call center in Bulgaria, then it is engaging in

Correct Answer
verified

Alexis and Tara both mine salt. Alexis mines 400 pounds in 40 hours. Tara mines 300 pounds in 20 hours. Which of the following is correct?

Correct Answer
verified

In 2009, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP grew by about 1.98%. Which of the following sets of growth rates is consistent with this growth in real GDP?

Correct Answer
verified

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

Correct Answer
verified

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that

Correct Answer
verified

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Correct Answer
verified

The president of Suldinia, a developing country, proposes that his country needs to help domestic firms by reducing trade restrictions.

Correct Answer
verified

Countries with high population growth rates tend to have lower levels of educational attainment.

Correct Answer
verified

Assuming diminishing returns,

Correct Answer
verified

Correct Answer
verified
The argument that poor countries will te...
View Answer

Which of the following best illustrates the human capital of a survivor stranded on an island?

Correct Answer
verified

Figure 7-1. 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 7-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Correct Answer
verified

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

Correct Answer
verified

If there are diminishing returns to capital, then

Correct Answer
verified

After adjusting for inflation, over time the prices of most natural resources have been

Correct Answer
verified

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas

Correct Answer
verified

If a country increases its saving rate, which of the following permanently grow at a higher rate?

Correct Answer
verified

Outward-oriented policies

Correct Answer
verified

Exam 7: Production and Growth

Over the period 1960-1991,

Correct AnswerverifiedShow Answer

Greater scarcity of a natural resource is indicated

Correct AnswerverifiedShow Answer

If an American-based firm opens and operates a service call center in Bulgaria, then it is engaging in

Correct AnswerverifiedShow Answer

Alexis and Tara both mine salt. Alexis mines 400 pounds in 40 hours. Tara mines 300 pounds in 20 hours. Which of the following is correct?

Correct AnswerverifiedShow Answer

In 2009, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP grew by about 1.98%. Which of the following sets of growth rates is consistent with this growth in real GDP?

Correct AnswerverifiedShow Answer

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

Correct AnswerverifiedShow Answer

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that

Correct AnswerverifiedShow Answer

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Correct AnswerverifiedShow Answer

The president of Suldinia, a developing country, proposes that his country needs to help domestic firms by reducing trade restrictions.

Correct AnswerverifiedShow Answer

Countries with high population growth rates tend to have lower levels of educational attainment.

Correct AnswerverifiedShow Answer

Assuming diminishing returns,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe argument that poor countries will te...View AnswerShow Answer

Which of the following best illustrates the human capital of a survivor stranded on an island?

Correct AnswerverifiedShow Answer

Figure 7-1. 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 7-1. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Correct AnswerverifiedShow Answer

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

Correct AnswerverifiedShow Answer

If there are diminishing returns to capital, then

Correct AnswerverifiedShow Answer

After adjusting for inflation, over time the prices of most natural resources have been

Correct AnswerverifiedShow Answer

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas

Correct AnswerverifiedShow Answer

If a country increases its saving rate, which of the following permanently grow at a higher rate?

Correct AnswerverifiedShow Answer

Outward-oriented policies

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The argument that poor countries will te...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified