Question 1

In the long run, a higher saving rate

Accepted Answer

A)   cannot increase the capital stock.
B)   increases the growth rate of income.
C)   increases the growth rate of productivity.
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 2

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

Question 3

The dictator of a certain country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

Accepted Answer

A)   reduce real GDP per person and productivity.
B)   reduce real GDP per person but not productivity.
C)   reduce productivity but not real GDP per person.
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 4

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following correctly ranks the three countries, from highest to lowest, for percentage of high-school age children in school?

Accepted Answer

A)   United Kingdom, Mali, Mexico.
B)   Mexico, Mali, United Kingdom.
C)   United Kingdom, Mexico, Mali.
D)   Mali, Mexico, United Kingdom.E) A) and B)
F) All of the above

Question 6

Suppose that Slovenia undertakes a policy to increase its saving rate. This policy will likely

Accepted Answer

A)   have no impact on GDP growth.
B)   lead to higher GDP growth for a few years.
C)   lead to higher GDP growth for a period of several decades.
D)   lead to a permanently higher growth rate.E) A) and C)
F) B) and C)

Question 7

An understanding of the best ways to produce goods and services is called

Accepted Answer

A)   human capital.
B)   physical capital.
C)   technology.
D)   productivity.E) B) and C)
F) B) and D)

Question 8

Suppose over the last year that the price of recycled aluminum increased from $800 a ton to $900 a ton. Over the same time a measure of the overall price level increased from 120 to 130. The price of recycled aluminum increased by

Accepted Answer

A)   less than inflation, but this doesn't necessarily mean it became scarcer.
B)   less than inflation, and this means it became scarcer.
C)   more than inflation, and this means it became scarcer.
D)   more than inflation, but this doesn't necessarily mean that it become scarcer.E) All of the above
F) C) and D)

Question 9

If companies from foreign countries build and operate factories in China, then China's productivity

Accepted Answer

A)   and the wages of Chinese workers increase.
B)   increases but the wages of Chinese workers decrease.
C)   decreases but the wages of Chinese workers increase.
D)   and the wages of Chinese workers decrease.E) B) and C)
F) A) and B)

Question 10

Investment in

Accepted Answer

A)   physical capital, unlike investment in human capital, has an opportunity cost.
B)   physical capital, like investment in human capital, has an opportunity cost.
C)   human capital is particularly attractive because it involves no externalities.
D)   human capital has been shown to be relatively unimportant, relative to investment in physical capital, for a country's long-run economic success.E) All of the above
F) B) and C)

Question 11

Greg's Ice Cream produces 1120 gallons of ice cream per day. Each employed works seven hours and has productivity of 20 gallons an hour. How many employees does Greg's employ?

Accepted Answer

A)   160
B)   56
C)   8
D)   None of the above is correct.E) C) and D)
F) None of the above

Question 12

Last year real GDP per person in the imaginary nation of Olympus was 4,500. The year before it was 4,250. By about what percentage did Olympian real GDP per person grow during the period?

Accepted Answer

A)   4.6 percent
B)   5.2 percent
C)   5.9 percent
D)   6.5 percentE) None of the above
F) A) and C)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Countries with more than 80 percent of their population living within 100 kilometers of a coast will have an average GDP per person that is

Accepted Answer

A)   around four times a country with less than 20 percent of the population living near the coast.
B)   around ten times a country with less than 20 percent of the population living near the coast.
C)   around twenty times a country with less than 20 percent of the population living near the coast.
D)   around fifty times a country with less than 20 percent of the population living near the coast.E) C) and D)
F) B) and C)

Question 15

If an American-based firm opens and operates a new watch factory in Panama, then it is engaging in

Accepted Answer

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

Question 16

When a country removes trade barriers and imports appliances and exports engineering services,

Accepted Answer

A)   its growth slows.
B)   its productivity decreases.
C)   it is essentially transforming engineering services into appliances.
D)   its economic well-being decreases while that of the country that sells appliances increases.E) All of the above
F) A) and B)

Question 17

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following countries had the highest level of real GDP per person in 2008?

Accepted Answer

A)   Germany
B)   United Kingdom
C)   United States
D)   JapanE) B) and C)
F) A) and C)

Question 19

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Accepted Answer

A)   2 percent.
B)   5 percent.
C)   10 percent.
D)   15 percent.E) A) and D)
F) A) and C)

Question 20

Which of the following statements is not correct?

Accepted Answer

A)   The catch-up effect is based on the assumption of diminishing returns to capital.
B)   Investment in poor countries by citizens of rich countries is one way poor countries can learn new technologies.
C)   Malthus argued that charity and government aid was an effective way to reduce poverty.
D)   Peace and justice are keys to growth.E) C) and D)
F) A) and C)

Exam 7: Production and Growth

Which of the following correctly ranks the three countries, from highest to lowest, for percentage of high-school age children in school?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that Slovenia undertakes a policy to increase its saving rate. This policy will likely

Correct AnswerverifiedShow Answer

The dictator of a certain country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would

Correct AnswerverifiedShow Answer

Suppose over the last year that the price of recycled aluminum increased from $800 a ton to $900 a ton. Over the same time a measure of the overall price level increased from 120 to 130. The price of recycled aluminum increased by

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Last year real GDP per person in the imaginary nation of Olympus was 4,500. The year before it was 4,250. By about what percentage did Olympian real GDP per person grow during the period?

Correct AnswerverifiedShow Answer

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

Correct AnswerverifiedShow Answer

When a country removes trade barriers and imports appliances and exports engineering services,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Correct AnswerverifiedShow Answer

If companies from foreign countries build and operate factories in China, then China's productivity

Correct AnswerverifiedShow Answer

An understanding of the best ways to produce goods and services is called

Correct AnswerverifiedShow Answer

Which of the following countries had the highest level of real GDP per person in 2008?

Correct AnswerverifiedShow Answer

In the long run, a higher saving rate

Correct AnswerverifiedShow Answer

Greg's Ice Cream produces 1120 gallons of ice cream per day. Each employed works seven hours and has productivity of 20 gallons an hour. How many employees does Greg's employ?

Correct AnswerverifiedShow Answer

Countries with more than 80 percent of their population living within 100 kilometers of a coast will have an average GDP per person that is

Correct AnswerverifiedShow Answer

Investment in

Correct AnswerverifiedShow Answer

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Correct AnswerverifiedShow Answer

If an American-based firm opens and operates a new watch factory in Panama, then it is engaging in

Correct AnswerverifiedShow Answer

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