Question 1

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina 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 B)
F) B) and D)

Question 2

Which of the following is true?

Accepted Answer

A)   Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production.
B)   Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.
C)   Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production.
D)   Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.E) B) and D)
F) A) and C)

Question 3

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

Question 4

In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in

Accepted Answer

A)   foreign portfolio investment.
B)   indirect domestic investment.
C)   foreign direct investment.
D)   foreign indirect investment.E) A) and B)
F) All of the above

Question 5

Consider the production function Y=2FL,K,H,N). Suppose F12,10,9,7)=100 and F24,20,18,14)=180. Does the production function have the property of constant returns to scale? Why or why not?

Accepted Answer

No, the production function does not hav...

Question 6

A forest is an example of a nonrenewable resource.

Accepted Answer

A) True 
 B)False

Question 7

Two countries with the same saving rates must have the same growth rate of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 8

Research suggests that taller workers tend to earn more income than shorter workers. What does this suggest about the relationship between workers' height and their productivity?

Accepted Answer

If taller workers' earnings ar...

Question 9

What are the long-run effects on productivity and income of an increase in the saving rate?

Accepted Answer

In the long run, a higher savi...

Question 10

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

Question 11

An important prerequisite for the price system to work is an economy-wide respect for _______ rights.

Accepted Answer

The answer of An important prerequisite for the price system...

Question 12

A rapid increase in the number of workers, other things the same, is likely in the short term to

Accepted Answer

A)   raise real GDP per person, but decrease real GDP.
B)   decrease both real GDP and real GDP per person.
C)   raise both real GDP and real GDP per person.
D)   raise real GDP, but decrease real GDP per person.E) B) and C)
F) C) and D)

Question 13

Which of the following is an observation made by economist Michael Kremer?

Accepted Answer

A)   World growth rates increased as the population increased.
B)   Technological progress allows for increasing population because of advances in agriculture.
C)   World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will decline.
D)   All of the above are observations made by Kremer.E) All of the above
F) B) and C)

Question 14

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity

Accepted Answer

A)   in the short run, but not in the long run.
B)   in the long run, but not in the short run.
C)   in both the short run and the long run.
D)   in neither the short run nor the long run.E) C) and D)
F) A) and B)

Question 15

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely

Accepted Answer

A)   have no affect on either real GDP nor productivity
B)   raise real GDP and productivity.
C)   raise real GDP but not productivity.
D)   raise productivity but not real GDP.E) A) and C)
F) A) and B)

Question 16

In determining living standards, productivity plays a key role

Accepted Answer

A)   for individuals, but not for nations.
B)   for nations, but not for individuals.
C)   for both nations and individuals.
D)   for neither nations nor individuals.E) A) and B)
F) All of the above

Question 17

According to research by Robert Fogel, what proportion of the increase in the standard of living in Britain between 1790 and 1980 can be accounted for by greater caloric intake?

Accepted Answer

A)   10 percent
B)   20 percent
C)   30 percent
D)   40 percentE) B) and D)
F) A) and D)

Question 18

Proprietary technology is knowledge that is

Accepted Answer

A)   known but no longer used much.
B)   known, but only recently discovered.
C)   known mostly by only those in a certain profession.
D)   known only by the company that discovered it.E) C) and D)
F) B) and C)

Question 19

Figure 25-1.
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 25-1. The curve becomes flatter as the amount of capital per worker increases because of

Accepted Answer

A)   increasing returns to capital.
B)   increasing returns to labor.
C)   diminishing returns to capital.
D)   diminishing returns to labor.E) A) and B)
F) B) and C)

Question 20

In a market economy, the real, or inflation-adjusted, price of a resource measures its

Accepted Answer

A)   contribution to revenue.
B)   relative scarcity.
C)   productivity.
D)   contribution to efficiency.E) B) and D)
F) All of the above

Exam 12: Production and Growth

Educational attainment tends to be

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Two countries with the same saving rates must have the same growth rate of real GDP per person.

Correct AnswerverifiedShow Answer

In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in

Correct AnswerverifiedShow Answer

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by

Correct AnswerverifiedShow Answer

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely

Correct AnswerverifiedShow Answer

Which of the following is true?

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Which of the following is an observation made by economist Michael Kremer?

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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

An important prerequisite for the price system to work is an economy-wide respect for _______ rights.

Correct AnswerverifiedShow Answer

Consider the production function Y=2FL,K,H,N). Suppose F12,10,9,7)=100 and F24,20,18,14)=180. Does the production function have the property of constant returns to scale? Why or why not?

Correct AnswerverifiedNo, the production function does not hav...View AnswerShow Answer

Research suggests that taller workers tend to earn more income than shorter workers. What does this suggest about the relationship between workers' height and their productivity?

Correct AnswerverifiedIf taller workers' earnings ar...View AnswerShow Answer

A rapid increase in the number of workers, other things the same, is likely in the short term to

Correct AnswerverifiedShow Answer

Figure 25-1. 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 25-1. The curve becomes flatter as the amount of capital per worker increases because of

Correct AnswerverifiedShow Answer

Proprietary technology is knowledge that is

Correct AnswerverifiedShow Answer

What are the long-run effects on productivity and income of an increase in the saving rate?

Correct AnswerverifiedIn the long run, a higher savi...View AnswerShow Answer

A forest is an example of a nonrenewable resource.

Correct AnswerverifiedShow Answer

In a market economy, the real, or inflation-adjusted, price of a resource measures its

Correct AnswerverifiedShow Answer

According to research by Robert Fogel, what proportion of the increase in the standard of living in Britain between 1790 and 1980 can be accounted for by greater caloric intake?

Correct AnswerverifiedShow Answer

In determining living standards, productivity plays a key role

Correct AnswerverifiedShow Answer

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity

Correct AnswerverifiedShow Answer

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No, the production function does not hav...
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If taller workers' earnings ar...
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In the long run, a higher savi...
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