Ch. 12 Macro Homework

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

10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger

Over the past century in the US, real GDP per person has grown, on average, by about

2 percent per year

Phoenix furniture uses 12 workers, each working eight hours, to produce 192 rocking chairs. What is Phoenix's productivity?

2 rocking chairs per hour

According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that they could not perform manual labor?

20 percent

According to the "Rule of 70" approximation technique, a country that experiences 3 percent annual growth for decades will have doubled its real out put in about

23 years

According to research by Robert Fogel, what proportion of the increase in the standard of living in Britain between 1790 and 1980 can be accounted for by greater caloric intake?

30 percent

In the production function, what symbol reflects the state of technology?

A

Which of the following pairs of terms refer to the same thing?

"capital" and "physical capital"

Last year the imaginary nation of Freedonia had a population of 2,800 and real GDP of 16,800,000. This year it had a population of 2700 and real GDP of 15,390,000. About what was the growth rate of real GDP per person between last year and this year?

-5%

All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?

Output will rise but by less than it did when the previous unit was added

Given that a country's real output has increased, in which of the following cases can we be sure that its productivity also has increased?

The total number of hours worked stayed the same or the total number of hours worked fell

If there are constant returns to scale, the production function can be written as

Y/L= A F(1,K/L,H/L,N/L)

Outward oriented policies

allow countries to take advantage of gains from trade, have generally led to high growth for the countries that pursued them, and receive widespread support from economists

Based on the available evidence, the existence of well-established and well-enforced property rights appears to be associated with

an enhanced standard of living

An increase in a country's population may contribute to the rate of technological progress because a larger population

brings with it more scientists, inventors, and engineers

Other things the same, when an economy increases its saving rate

consumption falls now and production rises later

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

double but productivity will not change

Property rights give people the ability to

exercise authority over the resources they own

Other things equal, relatively poor countries tend to grow

faster than relatively rich countries; this is called the catch-up effect

If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in

foreign direct investment

In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in

foreign portfolio investment

Productivity is defined as the quantity of

goods and services produced from each unit of labor input

Over extended periods of time, population growth

has uncertain effects on the standard of living

According to research by Robert Fogel, people in Britain grew taller because of

higher caloric intake. This increase in height is associated with higher productivity

Matt is going to college to become a pharmacist. What he learns about existing information increases

human capital but not technological knowledge

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

increase US GDP more than it increases US GNP

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

increase by 60%

"When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount." This statement

is consistent with the view that capital is subject to diminishing returns

The slope of the production function with capital per worker on the horizontal axis and output per worker on the vertical axis

is positive and gets flatter as capital per worker rises

Other things the same, a country that increases its saving rate increases

its future productivity and future real GDP

Human capital is the

knowledge and skills that workers acquire through education, training, and experience

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

The average income in a rich country is

more than 10 times that in a poor country. Further, people in rich countries have longer life expectancy.

The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called

natural resources

In the equation for the production function Y/L represents

productivity

The one variable that stands out as the most significant explanation of large variations in living standards around the world is

productivity

Suppose that a new government is elected in Eurnesia. The new government takes steps toward improving the court system and reducing government corruption. The citizens of Eurnesia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably

raise real GDP per person and productivity in Eurnesia

A nation's standard of living is best measured by its

real GDP per person

Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that

real GDP per person grew faster in Mapoli than in Romeria

Historically, the market prices of most natural resources (adjusted for inflation) have

remained stable or decreased

Thomas Malthus's predictions turned out to be wrong due to

technological advances such as those during the Industrial Revolution

An understanding of the best ways to produce goods and services is called

technology

What is a good gauge of economic progress?

the growth rate of real GDP per person, but not the level of real GDP per person

Ralph is a plumber. Which of the following are included in his human capital?

the knowledge he learned on the job, but not the tools he uses

In an economy wide sense, property rights are an important prerequisite for

the price system to work

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

the relevant production function has the constant returns to scale property

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

the standard of living, but not productivity

The Karmic Deed Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital?

the tables and chairs in the restaurant