Question 1

The term human capital can be used to describe

Accepted Answer

A)   technology.
B)   unskilled labor.
C)   expenditures that result in increased investment from abroad.
D)   health.E) A) and B)
F) C) and D)

Question 2

Which of the following is correct?

Accepted Answer

A)   If developing countries limit career and educational opportunities for women,birth rates are likely to be lower.
B)   Growth rates in developed and developing countries are nearly the same.
C)   Historically,in periods where the rate of population growth was high,so was the rate of growth in world real GDP per person.
D)   None of the above is correct.E) A) and B)
F) B) and C)

Question 3

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

Question 4

Which of the following is not correct?

Accepted Answer

A)   Across countries there are large differences in the average income per person.These differences are reflected in large differences in the quality of life.
B)   With a growth rate of about 2 percent per year,average income per person doubles about every 35 years.
C)   The ranking of countries by average income changes very little over time.
D)   In some countries real income per person has changed very little over many years.E) B) and C)
F) C) and D)

Question 5

If they could increase their growth rates slightly,countries with low income would catch up with rich countries in about ten years.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 25-1.An economy's production form takes the form Y = AF(L,K,H,N) .
-Refer to Scenario 25-1.Using the notation in the text,K represents the quantity of

Accepted Answer

A)   human capital only.
B)   physical capital only.
C)   human capital and physical capital combined.
D)   nonrenewable natural resources.E) All of the above
F) C) and D)

Question 7

Using the production function and notation in the text,H/L measures

Accepted Answer

A)   natural resources per worker.
B)   human capital per worker.
C)   output per worker.
D)   physical capital per worker.E) None of the above
F) A) and D)

Question 8

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth.The first is to increase barriers to trade.The second is to restrict foreign portfolio investment.Which of these policies would most economist think would promote growth?

Accepted Answer

A)   both the first and the second
B)   the first but not the second
C)   the second but not the first
D)   neither the first nor the secondE) All of the above
F) A) and B)

Question 9

Real Foods produced 400,000 cans of diced tomatoes in 2007 and 460,000 cans of diced tomatoes in 2008.They employed the same number of labor hours each year.Relative to their productivity in 2007,their productivity in 2008 was

Accepted Answer

A)   6 percent lower.
B)   unchanged.
C)   6 percent higher.
D)   15 percent higher.E) A) and D)
F) A) and C)

Question 10

Lower Equitorial and Upper Equitorial are the same except Lower Equitorial has a larger capital stock.Both countries undertake policies that raise their saving rates to the same higher level.We would expect that

Accepted Answer

A)   both countries would have permanent increases in their growth rates,but the increase would initially be larger in Lower Equitorial.
B)   both countries would have permanent increases in their growth rates,but the increase would initially be smaller in Upper Equitorial.
C)   both countries would have temporary increases in their growth rates,but the increase would be larger in Lower Equitorial.
D)   both countries would have temporary increases in their growth rates,but the increase would be smaller in Lower Equitorial.E) C) and D)
F) None of the above

Question 11

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

Question 12

In a market economy,scarcity of resources is most clearly reflected in

Accepted Answer

A)   supply.
B)   demand.
C)   market prices.
D)   the stock of the resource.E) A) and B)
F) A) and C)

Question 13

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 C)
F) A) and D)

Question 14

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

Question 15

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

Question 16

The catch-up effect refers to the idea that

Accepted Answer

A)   saving will always catch-up with investment spending.
B)   it is easier for a country to grow fast and so catch-up if it starts out relatively poor.
C)   population eventually catches-up with increased output.
D)   if investment spending is low,increased saving will help investment to "catch-up."E) A) and B)
F) None of the above

Question 17

All else equal,if there are diminishing returns,then which of the following is true if a country increases its capital by one unit?

Accepted Answer

A)   Output will rise by more than it did when the previous unit was added.
B)   Output will rise but by less than it did when the previous unit was added.
C)   Output will fall by more than it did when the previous unit was added.
D)   Output will fall but by less then it did when the previous unit was added.E) None of the above
F) All of the above

Question 18

If a good has become more scarce,then we know for sure that

Accepted Answer

A)   the demand for it increased.
B)   the supply of it decreased.
C)   either the demand for it increased or the supply of it decreased.
D)   both the supply of it and the demand for it decreased.E) B) and C)
F) All of the above

Question 19

If one wants to know how the material well-being of the average person has changed over time in a given country,one should look at the

Accepted Answer

A)   level of real GDP.
B)   growth rate of nominal GDP.
C)   growth rate of real GDP.
D)   growth rate of real GDP per person.E) A) and B)
F) A) and C)

Question 20

When Mexico experiences investment from abroad,it experiences,as a result,

Accepted Answer

A)   an increase in productivity.
B)   a decrease in Gross National Product (GNP) .
C)   lower wages for Mexican workers.
D)   None of the above is correct.E) C) and D)
F) A) and B)

Exam 25: Production and Growth

Real Foods produced 400,000 cans of diced tomatoes in 2007 and 460,000 cans of diced tomatoes in 2008.They employed the same number of labor hours each year.Relative to their productivity in 2007,their productivity in 2008 was

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

If they could increase their growth rates slightly,countries with low income would catch up with rich countries in about ten years.

Correct AnswerverifiedShow Answer

The term human capital can be used to describe

Correct AnswerverifiedShow Answer

If a good has become more scarce,then we know for sure that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Investment in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When Mexico experiences investment from abroad,it experiences,as a result,

Correct AnswerverifiedShow Answer

All else equal,if there are diminishing returns,then which of the following is true if a country increases its capital by one unit?

Correct AnswerverifiedShow Answer

The catch-up effect refers to the idea that

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Which of the following is not correct?

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Using the production function and notation in the text,H/L measures

Correct AnswerverifiedShow Answer

If one wants to know how the material well-being of the average person has changed over time in a given country,one should look at the

Correct AnswerverifiedShow Answer

Lower Equitorial and Upper Equitorial are the same except Lower Equitorial has a larger capital stock.Both countries undertake policies that raise their saving rates to the same higher level.We would expect that

Correct AnswerverifiedShow Answer

In a market economy,scarcity of resources is most clearly reflected in

Correct AnswerverifiedShow Answer

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth.The first is to increase barriers to trade.The second is to restrict foreign portfolio investment.Which of these policies would most economist think would promote growth?

Correct AnswerverifiedShow Answer

Scenario 25-1.An economy's production form takes the form Y = AF(L,K,H,N) . -Refer to Scenario 25-1.Using the notation in the text,K represents the quantity of

Correct AnswerverifiedShow Answer

Inward-oriented policies

Correct AnswerverifiedShow Answer

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