Economic Growth Q's

Which of the following scenarios shows a production function at work?

You buy flour and eggs and bake a cake to sell in your bakery.

WinSun, a Chinese firm, began producing 3-D printed houses in late 2013. These houses were produced in a fraction of the time it would take to produce a house in the regular way and at a much lower cost. This is an example of:

an advance in technology leading to a rise in productivity.

The Ethiopian government announces a plan to allow foreign firms to operate in the Ethiopian telecommunications industry. This is an example of:

foreign direct investment.

Technological advancement can be shown by which of these production functions?

function shifting upwards

A negative shock causes a decrease in the level of technology in a country. Which of the following production functions shows the impact of this shock?

function shifts down

Technological advancement can be shown by which of these production functions?

function shifts upwards

The law of diminishing returns means that production functions:

have slopes that increase at a decreasing rate.

The catch-up effect would be largest in an economy where:

the initial level of capital is low.

Which of the following explains the shape of the aggregate production function?

the law of diminishing returns

The law of diminishing returns states that:

when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts.

Human capital refers to:

worker skills and knowledge.

Property rights refer to:

control over a tangible or intangible resource.

Which of the following is an example of regulatory institutions that protect property rights?

courts of law

One of the reasons that ideas can lead to sustainable and long-term economic growth is that they:

do not depreciate with use.

In Canada, the Ontario government provides a tax credit to firms that spend on scientific research and experimental development. This tax credit will:

shift these firms' production functions upward through innovation and creative ideas.

Consider the data in the table below. In 2017, the country with the highest economic growth rate was:

spain

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if:(i) human capital increases.(ii) labor productivity falls.(iii) the capital stock in the country depreciates.(iv) the depreciation rate increases.

(i)

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if:(i) more labor is employed.(ii) human capital is reduced.(iii) the dependency ratio rises.(iv) the capital stock stays constant.

(i) only

The Industrial Revolution led to:(i) increased intellectual pursuits.(ii) increased production of food.(iii) economic growth.(iv) a rise in inventions.

(i), (ii), (iii), and (iv)

Refer to the table below that shows data for Panama. What was Panama's economic growth rate between 2001 and 2002?

0.3%

Refer to the table below that shows data for Panama. What was Panama's economic growth rate between 2001 and 2002?

0.30%

Refer to the table below, which shows data for Ireland. What was the economic growth rate in Ireland in 2010?

1.37%

Refer to the table, which shows data for Ireland. Based only on the data in this table, in which year(s) did Ireland experience a fall in the standard of living?

2008 and 2009

Refer to the table below that shows data for Panama. What was Panama's economic growth rate between 2003 and 2004?

5.54%

Small differences in economic growth rates can lead to large differences in standards of living. Why is this the case?

Because of the cumulative effects of small differences in growth rates on real GDP over hundreds of years.

In many parts of the world, mobile health clinics travel to villages to treat patients, teach about good nutrition and hygiene, and carry out immunizations. How does this contribute to economic growth?

It helps maintain a healthy population, which leads to development of the labor resource.

The government removes an existing investment tax credit. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock decreases, and economic growth is negatively affected.

The government enacts regulation to institute enforceable property rights for business investment. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock increases, and economic growth is positively affected.

Suppose a lake is overfished until the fish stock is depleted. This is an example of:

a lack of established property rights.

With the advent of cloud computing, different units within a business now share data much more easily. The sharing of data with their suppliers and distributors is also much more streamlined. This is an example of:

a rise in technology leading to an increase in efficiency.

A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a smaller proportion

A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a smaller proportion.

A rise in population in a country:

boosts real GDP but not necessarily real GDP per person.

New ideas can generate unlimited economic growth because they:

can be freely shared, do not depreciate, and can generate further ideas.

If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing:

constant returns to scale.

A carpenter's shop doubles in size, buys twice the wood, hires a second carpenter, buys a second lathe, and then manages to produce 230% more furniture than it did before. The carpenter's shop is experiencing:

increasing returns to scale

If the standard of living rises in a country, we know that:

real GDP per person has increased.