macro chapter 25

A public policy that increases education increases labor productivity because it ...

increases human capital.

A public policy that increases saving and investment increases future labor productivity because the policy ...

increases the capital stock.

When China experiences investment from abroad, productivity rises, however the wages of Chinese workers fall. (true/false)

False

Bertha uses all of the following resources to prepare delicious breakfast meals at her café. Which of them is an example of technological knowledge? A Bertha's cooking skills. B Efficient commercial foodservice equipment that allows an increased number of servings per hour. Correct C Funds invested in the establishment. D Kitchen help.

B Efficient commercial foodservice equipment that allows an increased number of servings per hour.

Which of the following is correct? A Natural resources clearly place limits on growth; there is simply no way to reduce either the amount or type of natural resources needed to produce goods. B There is no debate about the effects of higher population growth on economic growth. C Economists argue that outward rather than inward policies are likely to promote economic growth. Correct D How much an increase in capital increases a country's output is independent of that country's current level of capital.

C Economists argue that outward rather than inward policies are likely to promote economic growth. Correct

Suppose that productivity grew more slowly in Country A than in Country B, while the population and total hours worked remained the same in both countries. A The standard of living must be the same in both countries. B Real GDP per person must be lower in Country A than in Country B. C Real GDP per person grew more slowly in Country A than in Country B. D The standard of living must be higher in Country A than in Country B.

C Real GDP per person grew more slowly in Country A than in Country B.

When China experiences investment from abroad,

China's productivity and the wages of Chinese workers increase.

which of the following is correct? A How much an increase in capital increases a country's output is independent of that country's current level of capital. B Natural resources clearly place limits on growth; there is simply no way to reduce either the amount or type of natural resources needed to produce goods. C There is no debate about the effects of higher population growth on economic growth. D Economists argue that outward rather than inward policies are likely to promote economic growth.

Economists argue that outward rather than inward policies are likely to promote economic growth.

What type productivity determinant represents: The accumulated bat making experience of the workforce

Technological Knowledge

In less developed countries, what does the term brain drain refer to?

The emigration of highly skilled workers to rich countries

The president of Suldinia, a developing country, proposes that his country needs to help domestic firms by reducing trade restrictions.

These are outward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia.

Which of the following is an accurate explanation of why the average American today is "richer" than the richest American 100 years ago?

Tremendous technological advances.

Which of the following statements is consistent with the fact that capital in an economy is subject to diminishing returns?

When workers have a relatively small quantity of capital, giving them an additional unit of capital increases their productivity by a relatively large amount.

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, an increase in population growth

decreases capital per worker. However, there is some evidence that a higher population growth rate may increase the pace of technological progress.

Other things the same, when an economy increases its saving rate, consumption increases now and production rises later. (true/false)

false

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity in the long-run. (true/false)

false

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will cause a decrease in the growth of real GDP per person for several decades. (true/false)

false

The traditional view of the production process is that capital is subject to constant returns. (true/false)

false

Suppose a European firm opens a new toy factory in China. This is an example of

foreign direct investment.

Greg learns how to bake from his grandmother. This is an example of...

human capital, but not technological knowledge.

A public policy that increases investment from abroad should...

increase future labor productivity because it increases the current capital stock.

Rapid population growth

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

An economy which consumes only what it produces has the standard of living that is tied to productivity. (true/false)

true

In the long run, the higher saving rate leads to a higher level of productivity and income but not to higher growth in these variables. (true/false)

true

The opening of a new American-owned factory in Algeria would tend to increase Algeria's GDP more than it increases Algeria's GNP because some of the income from the factory accrues to people who do not live in Algeria. (true/false)

true (GDP is income earned within a country by both residents and nonresidents, whereas gross national product (GNP) is the income earned by residents of a country while producing both at home and abroad)

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity in the short- run. (true/false)

true (The accumulation of capital is subject to diminishing returns: The more capital an economy has, the less additional output the economy gets from an extra unit of capital. As a result, although higher saving leads to higher growth for a period of time, growth eventually slows down as capital, productivity, and income rise.)