Ch. 12 Questions

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

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

a

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

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

a

Over the past century, ________ has experienced particularly strong growth, and ________ has experienced particularly weak growth. a. Japan, the United Kingdom b. the United Kingdom, Canada c. Canada, Japan d. Japan, Canada

a

Over the past century, real GDP per person in the United States has grown about _____ percent per year, meaning it has roughly doubled every _____ years. a. 2, 35 b. 5, 14 c. 2, 14 d. 5, 35

a

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

b

Because capital is subject to diminishing returns, higher saving and investment do not lead to higher a. income in the long run. b. growth in the long run. c. growth in the short run. d. income in the short run.

b

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

b

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

Which of the following statements is true? a. 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. c. Countries all have the same growth rate and level of output because any country can obtain the same factors of production. d. Countries may have a different level of income per person, but they all grow at the same rate.

b

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 are imperialists and have collected wealth from previous victories in war. c. they save and invest an unusually high percentage of their real income. d. they have enormous natural resources.

c

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

c

If a production function exhibits constant returns to scale, a. doubling all of the inputs less than doubles output due to diminishing returns. b. doubling all of the inputs more than doubles output due to the catch-up effect. 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

Most economists are ________ that natural resources will eventually limit economic growth. As evidence, they note that the prices of most natural resources, adjusted for overall inflation, have tended to ________ over time. a. concerned, rise b. concerned, fall c. not concerned, fall d. not concerned, rise

c

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

The world's rich countries, such as the United States and Germany, have income per person that is about _____ times income per person in the world's poor countries, such as Pakistan and India. a. 2 b. 30 c. 4 d. 10

d

Thomas Robert Malthus believed that population growth would a. eventually decline to sustainable levels, as birth control improved and people had smaller families. b. promote technological progress, because there would be more scientists and inventors. c. spread the capital stock too thinly across the labor force, lowering each worker's productivity. d. put stress on the economy's ability to produce food, dooming humans to remain in poverty

d

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

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

a

Increases in the amount of human capital in the economy tend to ________ real incomes because they increase the ________ of labor. a. decrease, bargaining power b. increase, productivity c. decrease, productivity d. increase, bargaining power

b

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

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

b

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

c

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

When the Japanese car maker Toyota expands one of its car factories in the United States, what is the likely impact of this event on the gross domestic product and gross national product of the United States? a. GDP rises and GNP falls. b. GNP rises and GDP falls. c. GDP and GNP both rise but GDP rises by more. d. GDP and GNP both rise but GNP rises by more.

c

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

c

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