Question 1

In 2009, the imaginary nation of Mainland had a population of 7,000 and real GDP of 210,000. In 2010 the population was 7,300 and real GDP of 223,380. Over the year in question, real GDP per person in Mainland 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) All of the above
F) B) and C)

Question 2

Other things the same, another unit of capital will increase output by more in a poor country than in a rich country.

Accepted Answer

A) True 
 B)False

Question 3

Over extended periods of time, population growth

Accepted Answer

A)   has no effect on the standard of living.
B)   has uncertain effects on the standard of living.
C)   clearly raises the standard of living.
D)   clearly lowers the standard of living.E) None of the above
F) A) and B)

Question 4

Human capital

Accepted Answer

A)   can be thought of, metaphorically, as the quality of society's textbooks, whereas technological knowledge can be thought of as the time that the population has devoted to reading textbooks.
B)   is more tangible than physical capital.
C)   is an input in the production of goods and services.
D)   is the same as the quantity of labor.E) None of the above
F) C) and D)

Question 5

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Accepted Answer

A)   raise productivity. Other things the same, this increase will be larger in a poor country.
B)   raise productivity. Other things the same, this increase will be larger in a rich country.
C)   reduce productivity. Other things the same, this decrease will be larger in a poor country.
D)   reduce productivity. Other things the same, this decrease will be larger in a rich country.E) None of the above
F) All of the above

Question 6

Other things the same, higher population growth

Accepted Answer

A)   raises the amount of physical capital per worker and there is some evidence that it raises the pace of technological progress.
B)   raises the amount of physical capital per worker, but there is some evidence that it reduces the pace of technological progress.
C)   reduces the amount of physical capital per worker, but there is some evidence that it raises the pace of technological progress.
D)   reduces the amount of physical capital per worker and there is some evidence that it reduces the pace of technological progress.E) A) and B)
F) A) and C)

Question 7

Last year real GDP per person in the imaginary nation of Olympus was 4,250. The year before it was 4,100. By about what percentage did Olympian real GDP per person grow during the period?

Accepted Answer

A)   1.6 percent
B)   2.5 percent
C)   3.7 percent
D)   6 percentE) A) and C)
F) A) and B)

Question 8

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

A)   not change.
B)   increase but not double.
C)   double.
D)   more than double.E) A) and C)
F) B) and C)

Question 9

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 10

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Accepted Answer

Once someone comes up with an idea it is...

Question 11

Real Foods produced 400,000 cans of diced tomatoes last year and 460,000 cans of diced tomatoes this year. It employed the same number of labor hours each year. Real Foods' productivity

Accepted Answer

A)   decreased 13%.
B)   was unchanged.
C)   increased 13%.
D)   increased 15%.E) B) and D)
F) None of the above

Question 12

Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.

Accepted Answer

A)   Country A has higher productivity and higher real GDP per person than country B.
B)   Country A has lower productivity and lower real GDP per person than country B.
C)   Country A has higher productivity, but lower real GDP per person than country B.
D)   Country B has lower productivity, but higher real GDP per person than country B.E) A) and D)
F) C) and D)

Question 13

For a given year, productivity in a particular country is most closely matched with that country's

Accepted Answer

A)   level of real GDP over that year.
B)   level of real GDP divided by hours worked over that year.
C)   growth rate of real GDP divided by hours worked over that year.
D)   growth rate of real GDP per person over that year.E) All of the above
F) None of the above

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

Question 15

Figure 25-1 
-Refer to Figure 21-1. In what way is the figure relevant to the catch-up effect?

Accepted Answer

The catch-up effect is observed when a r...

Question 16

Alexis and Tara both mine salt. Alexis mines 300 pounds in 20 hours. Tara mines 400 pounds in 40 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) None of the above
F) All of the above

Question 17

Which of the following statements is true?

Accepted Answer

A)   The quantity of natural resources per worker can influence productivity.
B)   Technological knowledge and human capital are closely related.
C)   Over long periods of time, the prices of most natural resources are stable or falling, relative to other prices.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 18

If natural resources had become scarcer, then we would expect their

Accepted Answer

A)   prices to have risen more than inflation as they have.
B)   prices to have risen more than inflation, but they have not.
C)   known quantities to have fallen as they have.
D)   known quantities to have fallen but they have not.E) All of the above
F) A) and D)

Question 19

Fretonia and Libstien are the same except Fretonia 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 Fretonia.
B)   both countries would have permanent increases in their growth rates, but the increase would initially be smaller in Fretonia.
C)   both countries would have temporary increases in their growth rates, but the increase would be larger in Fretonia.
D)   both countries would have temporary increases in their growth rates, but the increase would be smaller in Fretonia.E) A) and B)
F) B) and D)

Question 20

Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented policies.

Accepted Answer

A) True 
 B)False

Exam 7: Production and Growth

In 2009, the imaginary nation of Mainland had a population of 7,000 and real GDP of 210,000. In 2010 the population was 7,300 and real GDP of 223,380. Over the year in question, real GDP per person in Mainland grew by

Correct AnswerverifiedShow Answer

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

Other things the same, another unit of capital will increase output by more in a poor country than in a rich country.

Correct AnswerverifiedShow Answer

Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.

Correct AnswerverifiedShow Answer

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Correct AnswerverifiedShow Answer

Real Foods produced 400,000 cans of diced tomatoes last year and 460,000 cans of diced tomatoes this year. It employed the same number of labor hours each year. Real Foods' productivity

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a given year, productivity in a particular country is most closely matched with that country's

Correct AnswerverifiedShow Answer

Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented policies.

Correct AnswerverifiedShow Answer

If natural resources had become scarcer, then we would expect their

Correct AnswerverifiedShow Answer

Figure 25-1 -Refer to Figure 21-1. In what way is the figure relevant to the catch-up effect?

Correct AnswerverifiedThe catch-up effect is observed when a r...View AnswerShow Answer

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

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Last year real GDP per person in the imaginary nation of Olympus was 4,250. The year before it was 4,100. By about what percentage did Olympian real GDP per person grow during the period?

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Fretonia and Libstien are the same except Fretonia 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

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Correct AnswerverifiedShow Answer

Which of the following statements is true?

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At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Correct AnswerverifiedOnce someone comes up with an idea it is...View AnswerShow Answer

Human capital

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Other things the same, higher population growth

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Over extended periods of time, population growth

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The catch-up effect is observed when a r...
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Once someone comes up with an idea it is...
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