Macro Ch 25

Which of the following describes an increase in technological knowledge? a. A farmer discovers that it is better to plant in the spring rather than in the fall. b. A farmer buys another tractor. c. A farmer hires another day laborer. d. A farmer sends his child to agricultural college, and the child returns to work on the farm.

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

Madelyn goes to college and reads many books while at school. Her education increases which of the following factors of production? a. human capital b. physical capital c. natural resources d. technology e. All of the above would be increased.

a. human capital

If Mazda builds a new plant in Illinois, a. in the future, U.S. GDP will rise more than U.S. GNP. b. in the future, U.S. GDP will rise less than U.S. GNP. c. in the future, U.S. GDP and GNP will both fall because some income from this investment will accrue to foreigners. d. there has been an increase in foreign portfolio investment in the United States. e. none of the above is true.

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

Which of the following statements is true? a. Countries all have the same growth rate and level of output because any country can obtain the same factors of production. b. Countries have great variance in both the level and growth rate of income per person; thus, poor countries can become relatively rich over time. c. Countries may have a different level of income per person, but they all grow at the same rate. d. Countries may have a different growth rate, but they all have the same level of income per person.

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

The opportunity cost of growth is a. a reduction in taxes. b. a reduction in current consumption. c. a reduction in current saving. d. a reduction in current investment.

b. a reduction in current consumption.

Which of the following government policies is least likely to increase growth in Africa? a. increase expenditures on public education b. increase restrictions on the importing of Japanese automobiles and electronics c. eliminate civil war d. reduce restrictions on foreign capital investment e. All of the above would increase growth.

b. increase restrictions on the importing of Japanese automobiles and electronics

Once a country is wealthy, a. it is nearly impossible for it to become relatively poorer. b. it may be harder for it to grow quickly because of the diminishing returns to capital. c. capital becomes more productive due to the "catch-up effect." d. it no longer needs any human capital. e. none of the above is true.

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

A reasonable measure of the standard of living in a country is a. the growth rate of nominal income per person. b. real income per person. c. real income. d. nominal income. e. nominal income per person.

b. real income per person.

China, Japan, and Brazil are growing very quickly because a. they have always been wealthy and will continue to be wealthy, which is known as the "snowball effect." b. they save and invest an unusually high percentage of their real income. c. they are imperialists and have collected wealth from previous victories in war. d. they have enormous natural resources.

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

Which of the following is an example of foreign portfolio investment? a. A naturalized U.S. citizen, who was originally born in Germany, buys stock in Ford, and Ford uses the proceeds to buy a new plant. b. Toyota builds a new plant in Tennessee. c. Toyota buys stock in Ford, and Ford uses the proceeds to build a new plant in Michigan. d. Ford builds a new plant in Michigan. e. None of the above is an example of foreign portfolio investment.

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

Thomas Malthus argued that a. technological progress will continuously generate improvements in productivity and living standards. b. labor is the only true factor of production. c. an ever-increasing population is constrained only by the food supply, resulting in chronic famines. d. private charities and government aid will improve the welfare of the poor. e. none of the above is true.

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

If a production function exhibits constant returns to scale, a. doubling all of the inputs more than doubles output due to the catch-up effect. b. doubling all of the inputs less than doubles output due to diminishing returns. c. doubling all of the inputs doubles output. d. doubling all of the inputs has absolutely no impact on output because output is constant.

c. doubling all of the inputs doubles output.

When a nation has very little income per person, a. it is doomed to being relatively poor forever. b. it must be a small nation. c. it has the potential to grow relatively quickly due to the "catch-up effect." d. an increase in capital will likely have little impact on output. e. none of the above is true.

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

Our standard of living is most closely related to a. how hard we work. b. our supply of natural resources because they limit production. c. our productivity because our income is equal to what we produce. d. our supply of capital because everything of value is produced by machinery.

c. our productivity because our income is equal to what we produce.

Which of the following statements regarding the impact of population growth on productivity is true? a. There is no evidence yet that rapid population growth stretches natural resources to the point that it limits growth in productivity. b. Rapid population growth may dilute the capital stock, lowering productivity. c. Rapid population growth may promote technological progress, increasing productivity. d. All of the above are true.

d. All of the above are true.

Which of the following expenditures to enhance productivity is most likely to emit a positive externality? a. General Motors buys a new drill press. b. Exxon leases a new oil field. c. Megabank buys a new computer. d. Susan pays her college tuition.

d. Susan pays her college tuition.

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 a. physical capital per worker. b. human capital per worker. c. natural resources per worker. d. labor.

d. labor.

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? a. 18.6 percent b. 2.5 percent c. 18.0 percent d. 5.62 percent e. 3.1 percent

e. 3.1 percent

Copper is an example of a. a renewable natural resource. b. human capital. c. physical capital. d. technology. e. a nonrenewable natural resource.

e. a nonrenewable natural resource.

To increase growth, governments should do all of the following except a. encourage saving and investment. b. encourage research and development. c. promote free trade. d. encourage foreigners to invest in your country. e. nationalize major industries.

e. nationalize major industries.