Chapter 25: Production and Growth

When a nation has very little income per person,

it has the potential to grow relatively quickly due to the "catch-up effect."

Once a country is wealthy,

it may be harder for it to grow quickly because of the diminishing returns to capital

If real income per person in 2018 is $18,073 and real income per person in 2019 is $18,635, what is the growth rate of real income over this period?

3.1%

Which of the following describes an increase in technological knowledge?

A farmer discovers that it is better to plant in the spring rather than in the fall.

Which of the following expenditures to enhance productivity is most likely to emit a positive externality?

Susan pays her college tuition

T/F There is no evidence yet that rapid population growth stretches natural resources to the point that it limits growth in productivity. T/F Rapid population growth may dilute the capital stock, lowering productivity. T/F Rapid population growth may promote technological progress, increasing productivity.

T,T,T

Which of the following is an example of foreign portfolio investment?

Toyota buys stock in Ford, and Ford uses the proceeds to build a new plant in Michigan

T/F Countries have great variance in both the level and growth rate of income per person; thus, poor countries can become relatively rich over time.

True

The opportunity cost of growth is

a reduction in current consumption

Thomas Malthus argued that

an ever-increasing population is constrained only by the food supply, resulting in chronic famines.

If a production function exhibits constant returns to scale,

doubling all of the inputs doubles output

Madelyn goes to college and reads many books while at school. Her education increases which of the following factors of production?

human capital

If Mazda build a new plant in Illinois

in the future, U.S GDP will rise more than U.S. GNP

Which of the following government policies is least likely to increase growth in Africa?

increase restrictions on the importing of Japanese automobiles and electronics

For a given level of technology, we should expect an increase in labor productivity within a nation when there is an increase in each of the following except

labor

To increase growth, governments should do all of the following except

nationalize major industries

Copper is an example of

nonrenewable natural resource

Our standard of living is most closely related to

our productivity because our income is equal to what we produce

A reasonable measure of the standard of living in a country is

real income per person

China, Japan, and Brazil are growing very quickly because

they save and invest an unusually high percentage of their real income.