ECON CH 12

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

10

In 2012, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP per person grew by about 1.94%. Which of the following sets of growth rates is consistent with this growth in real GDP per person?

3 and 5

Nathan owns a bakery that bakes only cakes. All of his bakers work 8 hours per day. In 2011, he employed 5 bakers who produced a total of 200 cakes each day. In 2012, he employed 6 bakers who produced a total of 249 cakes each day. The bakery's productivity

3.75

constant returns to scale

Changing all inputs by the same percentage causes output to change by that percentage

Which of the following best describes the response of output as time passes to an increase in the saving rate?

The growth rate of output increases, but diminishes to its former level as time passes.

Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

Wimpy's production is greater than Popeye's, but his productivity is less

Outward-oriented policies

all of the above

Other things the same, if a country raises its saving rate, when is growth of real GDP per person higher?

as the economy moves toward the long run, but not in the long run

Technological knowledge refers to

available information on how to produce things.

A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are

common, but not proprietary, knowledge

Suppose over the last five years 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 138. The real price of recycled aluminum

decreased, less scarce

Other things the same, which of the following could explain an increase in productivity?

either an increase in human capital or an increase in physical capital

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

fall, but it would still be greater than one-half of its former value

Suppose that a country increased its saving rate. In the long run it would have

higher productivity, but another unit of capital would increase output by less than before.

Countries that have lower levels of real GDP per person than the United States

in some cases have growth rates that are higher than that of the United States and in other cases lower than that of the United States.

Inward-oriented policies

in some ways are like prohibiting the use of certain technologies

Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future production from such an investment will

increase U.S. GDP more than it increases U.S. GNP

According to studies using international data, an increase in the saving rate

increases the growth rate of output for several decades.

Human capital

is an input in the production of goods and services

When a society decides to increase its quantity of physical capital, the society

is in effect deciding to consume fewer goods and services in the present

If the price of a good has risen over time,

it has become more scarce only if the price adjusted for inflation has risen.

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

its output and productivity would increase, but less than double

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

level of real GDP divided by hours worked over that year

Educational attainment tends to be

low in countries with high population growth.

Rapid population growth

may depress economic prosperity by reducing the amount of capital which each worker has to work with.

If a country increases its saving rate, which of the following permanently grow at a higher rate?

neither real GDP per person nor productivity

The logic behind the catch-up effect is that

new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?

none of the above

Which of the following is an example of a nonrenewable resource?

oil

Investment in

physical capital, like investment in human capital, has an opportunity cost

In a market economy, we know that a resource has become scarcer when

prices rise relative to others

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

prices to have risen more than inflation, but they have not

Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were

private goods and proprietary knowledge

Productivity is the amount of goods and services

produced for each hour of a worker's time. It is linked to a nation's economic policies.

Your company discovers a better way to produce mousetraps, but your better methods are not apparent from the mousetraps themselves. Your knowledge of how to more efficiently produce mousetraps is

prop technical knowledge

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely

raise real GDP and productivity

In the long run, an increase in the saving rate

raises the levels of both productivity and income

In which of the following cases can we be certain that a natural resource has become scarcer? (2)

the demand for the resource has decreased and the supply of the resource is unchanged

In which of the following cases can we be certain that a natural resource has become scarcer?

the demand for the resource has increased and the supply has decreased

Other things the same, if a country raises its saving rate, then in the long run

the level of real GDP is higher but the growth rate of real GDP is unchanged.

Which of the following can be measured by the level of real GDP per person?

the standard of living but not productivity