Question 1

The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Accepted Answer

In the long run, a higher saving rate le...

Question 2

Which of the following countries had the highest level of real GDP per person in 2010?

Accepted Answer

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

Question 3

The traditional view of the production process is that capital is subject to

Accepted Answer

A)   diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries.
B)   diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries.
C)   increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries.
D)   increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries.E) All of the above
F) A) and C)

Question 4

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Accepted Answer

A)   10 percent
B)   14 percent
C)   17 percent
D)   21 percentE) B) and C)
F) All of the above

Question 5

Which of the following is a determinant of productivity?

Accepted Answer

A)   human capital per worker
B)   physical capital per worker
C)   natural resources per worker
D)   All of the above are correct.E) All of the above
F) None of the above

Question 6

Country A and country B both increase their capital stock by one unit. Output in country A increases by 12 while output in country B increases by 15. Other things the same, diminishing returns implies that country A is

Accepted Answer

A)   richer than Country B. If Country A adds another unit of capital, output will increase by more than 12 units.
B)   richer than Country B. If Country A adds another unit of capital, output will increase by less than 12 units.
C)   poorer than Country B. If Country A adds another unit of capital, output will increase by more than 12 units.
D)   poorer than Country B. If Country A adds another unit of capital, output will increase by less than 12 units.E) A) and C)
F) B) and C)

Question 7

Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Accepted Answer

A)   Brazil
B)   China
C)   India
D)   PakistanE) B) and D)
F) A) and C)

Question 8

Productivity

Accepted Answer

A)   is nearly the same across countries, and so provides no help explaining differences in the standard of living across countries.
B)   explains very little of the differences in the standard of living across countries.
C)   explains some, but not most of the differences in the standard of living across countries.
D)   explains most of the differences in the standard of living across countries.E) A) and B)
F) B) and C)

Question 9

Which of the following statements about inputs is correct?

Accepted Answer

A)   A forest is an example of a natural resource; it is also an example of a renewable resource.
B)   There is no distinction between human capital and technological knowledge.
C)   Human capital is a non-produced factor of production.
D)   Physical capital is a non-produced factor of production.E) All of the above
F) A) and B)

Question 10

Foreign saving is used for domestic investment when foreigners engage in

Accepted Answer

A)   foreign direct investment.
B)   foreign portfolio investment.
C)   either foreign direct investment or foreign portfolio investment.
D)   None of the above is correct.E) B) and D)
F) B) and C)

Question 11

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Accepted Answer

A) True 
 B)False

Question 12

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

Accepted Answer

A)   10 reports
B)   5 reports per client
C)   1.25 reports per hour
D)   1/4 report per hourE) B) and D)
F) A) and B)

Question 13

Table 25-1.
Athens and Troy both produce only ribs and baked potatoes.
 
-Refer to Table 25-1. Which of the following is correct?

Accepted Answer

A)   Both productivity and the standard of living are higher in Athens than Troy.
B)   Productivity is higher in Athens while the standard of living is higher in Troy
C)   Productivity is higher in Troy while the standard of living is higher in Athens.
D)   Both productivity and the standard of living are higher in Troy than Athens.E) C) and D)
F) A) and B)

Question 14

Which of the following is not an example of physical capital?

Accepted Answer

A)   a new factory building
B)   a delivery van
C)   the knowledge of workers
D)   the office chair in a lawyer's officeE) A) and C)
F) B) and C)

Question 15

As of 2010, using real GDP per person as a measure, we would classify

Accepted Answer

A)   the United States and Mexico as advanced economies and Bangladesh as a middle-income country.
B)   Canada as an advanced economy, Mexico as a middle-income country, and Pakistan as a poor country.
C)   Japan and India as advanced economies and Mexico as a poor country.
D)   Japan as an advanced economy, the United Kingdom as a middle-income country, and Argentina as a poor country.E) None of the above
F) B) and C)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following will increase a country's real GDP per person?

Accepted Answer

A)   imposing restrictions on foreign trade and foreign investment
B)   imposing restrictions on foreign trade and reducing restrictions on foreign investment
C)   reducing restrictions on foreign trade and imposing restrictions on foreign investment
D)   reducing restrictions on foreign trade and foreign investmentE) None of the above
F) A) and D)

Question 18

Accumulating capital

Accepted Answer

A)   requires that society sacrifice consumption goods in the present.
B)   allows society to consume more in the present.
C)   decreases saving rates.
D)   involves no tradeoffs.E) A) and C)
F) B) and D)

Question 19

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year?

Accepted Answer

A)   12 percent
B)   10 percent
C)   4 percent
D)   2 percentE) None of the above
F) B) and C)

Question 20

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

Accepted Answer

A) True 
 B)False

Exam 12: Production and Growth

Country A and country B both increase their capital stock by one unit. Output in country A increases by 12 while output in country B increases by 15. Other things the same, diminishing returns implies that country A is

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Which of the following countries had the highest level of real GDP per person in 2010?

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Accumulating capital

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The traditional view of the production process is that capital is subject to

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Productivity

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Which of the following is a determinant of productivity?

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Table 25-1. Athens and Troy both produce only ribs and baked potatoes. -Refer to Table 25-1. Which of the following is correct?

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Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

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Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

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Which of the following is not an example of physical capital?

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The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Correct AnswerverifiedIn the long run, a higher saving rate le...View AnswerShow Answer

Which of the following statements about inputs is correct?

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As of 2010, using real GDP per person as a measure, we would classify

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Which of the following will increase a country's real GDP per person?

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Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

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Foreign saving is used for domestic investment when foreigners engage in

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Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

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One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Correct AnswerverifiedShow Answer

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year?

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

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In the long run, a higher saving rate le...
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