Macro Economics Ch. 9

Foreign direct investment is: A. investment that occurs when a firm runs part of its operation abroad or invests in another company abroad. B. investment that occurs when a firm runs its operation domestically, and sells its product abroad. C. when foreign companies buy physical capital from the United States. D. when foreign companies buy and operate physical capital within the United States.

A

Increases in productivity per person lead to increases in per capita income, which we call: A. economic growth. B. GDP per capita. C. the GDP deflator. D. the producer productivity index.

A

Increases in productivity per person: A. is highly desirable, as it leads to economic growth. B. is unavoidable, and macroeconomists work to prevent it. C. can harm an economy if misallocated. D. is highly undesirable, as it leads to increases in GDP per capita.

A

Many governments actively work to: A. attract foreign direct investment, hoping it will build up their capital stock when domestic savings aren't sufficient. B. attract foreign direct investment, so that when foreign companies invest in local firms, they can transfer human capital to local managers. C. discourage foreign direct investment, in an effort to encourage locals to invest in their own economy. D. discourage foreign direct investment, in an effort to avoid "crowding out."

A

One explanation for the growth in the U.S. economy over the last 100 years is: A. a large increase in human capital. B. a rapid decline in human capital. C. a small, incremental increase in human capital. D. Human capital was not the cause of growth in the United States over the last 100 years.

A

Our measurement of output per worker is called: A. productivity. B. production growth rate. C. nominal output. D. None of these is true.

A

Output per person on a country level is another way to think about: A. real GDP per capita. B. nominal GDP. C. productivity. D. GDP growth rates.

A

Over the last three centuries, A. until the 1800s, real income per person barely changed at all. B. until the 1500s, real income per person barely changed at all. C. real income per person has steadily increased at an average rate of 2 percent D. real income per person has barely changed at all.

A

The convergence theory is also known as: A. the catch-up effect. B. Say's law. C. the income effect. D. Moore's law.

A

Often, improvements in technology: A. can lead to more improvements in technology. B. can lead to sustainable rates of growth in income for a country. C. can continuously increase the productivity of workers. D. All of these are true.

D

Which of the following is not considered a renewable resource? A. Fish in the ocean B. Sunlight C. Wind D. All of these are renewable resources.

D

According to the rule of 70, a country will double its real GDP per capita in 35 years if it grows at an average of ________ per year. A. 2 percent B. 3.5 percent C. 5 percent D. 7 percent

A

Economic growth means: A. healthier citizens. B. wealthier citizens. C. better-educated citizens. D. All of these are true.

A

Using public policy to promote health can contribute to growth because: A. workers who are in good health will be more productive and less likely to miss work days. B. workers who get free health care are more likely to be careless. C. workers who are in good health take more vacation days and are less likely to work. D. it allows the importation of more goods and services.

A

An example of a natural resource is: A. Michael Jordan's athletic ability. B. Farmer Joe's farm fields. C. Bill Gates' revolutionary iPod. D. All of these are examples of natural resources.

B

Diamonds are considered: A. a renewable resource. B. a nonrenewable resource. C. physical capital. D. technology.

B

Fossil fuels are considered: A. a renewable resource. B. a nonrenewable resource. C. physical capital. D. technology.

B

Household savings rates: A. were negative in China in 2005. B. were 38 percent in China in 2005. C. were fairly constant at about 8 percent in China from 2000 to 2010. D. have been roughly 10 percent for the last 30 years or so in China.

B

Human capital: A. is always increasing. B. can become outdated or deteriorate. C. is better when acquired as an adult. D. All of these are true.

B

Oil is considered: A. a renewable resource. B. a nonrenewable resource. C. physical capital. D. technology.

B

An example of a nonrenewable resource would be: A. trees. B. rivers. C. an oil deposit. D. All of these are examples of nonrenewable resources.

C

The fact that the United States has grown _______ per year for the last hundred years is ______________. A. 1 percent; alarming and needs to be altered B. 2 percent; alarming and needs to be altered C. 2 percent; impressive and hopefully will continue D. 3 percent; impressive and hopefully will continue

C

Which of the following is an example of human capital? A. The Internet B. The Google search engine on the Internet C. Your ability to use Google D. None of these is an example of human capital.

C

Which of the following is not a nonrenewable resource? A. Oil B. Coal C. Trees D. Natural gas

C

An example of human capital would be: A. an office chair. B. a training session on Excel. C. Excel software. D. All of these are examples of human capital.

B

An example of human capital would be: A. your computer. B. your writing skills. C. your desk. D. None of these is an example of human capital.

B

A phenomenon called Moore's law says: A. computing capacity has doubled every two years. B. physical capital will double every two years in countries with high rates of growth. C. 70 divided by the growth rate equals how long it will take a country to double its income level. D. 70 divided by the growth rate equals how long it will take a country to double its productive capacity.

A

An example of a renewable resource would be: A. trees. B. oxygen. C. fish in the ocean. D. All of these are examples of renewable resources.

D

An example of physical capital is: A. a factory. B. a computer. C. a pen. D. All of the items are examples of physical capital.

D

A century ago, the average person in America completed only around ____ years of school; today, the average is more than _____ years of school. A. 8; 12 B. 4; 8 C. 5; 10 D. 6; 12

A

A country's income is: A. dependent upon how productive its worker are. B. difficult to measure given current macroeconomic data. C. likely to increase if the country experiences high rates of inflation. D. None of these is true.

A

A nonrenewable resource: A. is a production input that comes from the earth. B. can be replenished naturally over time. C. Is used to regenerate an old piece of capital. D. All of these statements are true.

A

Trees are considered: A. a renewable resource. B. a nonrenewable resource. C. physical capital. D. technology.

A

According to convergence theory, countries that start out poor should initially grow: A. faster than ones that start out rich, but will eventually slow to the same growth rate. B. slower than ones that start out rich, but will eventually grow to the same growth rate. C. faster than ones that start out rich, and will eventually surpass their level of income. D. slower than ones that start out rich, and therefore will never reach a similar growth rate.

A

An example of U.S. foreign direct investment would be: A. a factory in Canada owned by a U.S. citizen. B. a factory in Japan owned by a Canadian citizen. C. a factory in New Mexico owned by a Japanese citizen. D. All of these are examples of foreign direct investment.

A

Countries that start with very little physical capital will get a: A. higher return from adding a unit of capital than a country that starts at a higher initial level will. B. lower return from adding a unit of capital than a country that starts at a higher initial level will. C. similar return from adding a unit of capital than a country that starts at a higher initial level will. D. higher return from adding a unit of capital the more natural resources they possess.

A

Effective, stable leadership is essential to: A. economic growth. B. discourage foreign direct investment from taking hold in a country. C. increasing human capital. D. increasing population size.

A

Ensuring that high-quality public education is freely available to all children is one of the most important ways that a country can: A. increase its stock of human capital. B. decrease its stock of human capital. C. decrease its productivity. D. increase its foreign direct investment.

A

FDI stands for: A. foreign direct investment. B. foreign domestic income. C. foreign direct income. D. foreign domestic investment.

A

Factories owned by U.S. firms on the Mexican side of the U.S.-Mexico border are: A. an important source of foreign direct investment in Mexico. B. not an example of foreign direct investment in Mexico. C. troubling for the Mexican government. D. harmful to Mexico's efforts to increase their economic growth.

A

Growth often requires: A. concurrent improvements in many aspects of the economy. B. governments to invest in one facet of the economy at a time, starting with education. C. governments to invest in one facet of the economy at a time, starting with basic infrastructure. D. governments to invest in one facet of the economy at a time, starting with leapfrog technology.

A

Household savings rates: A. vary enormously across countries. B. are remarkable similar across countries. C. seem to be similar for countries within the same continent. D. are impossible to compare across countries.

A

Household savings rates: A. were negative in the United States in 2005. B. were 38 percent in the United States in 2005. C. were fairly constant at about 5 percent in the United States from 2000 to 2010. D. have been roughly 15 percent in the United States for the last 30 years or so.

A

In the United States: A. about $400 billion a year goes into research and development. B. about $500 billion a year goes into research and development. C. about $200 billion a year goes into research and development. D. about $300 billion a year goes into research and development.

A

Of the $400 billion a year that goes into research and development in the United States, about: A. $50 billion of the investment takes place at universities and research institutes, and the rest is done by business. B. $100 billion of the investment is done by government funding, and the rest is done by business. C. $150 billion of the investment is done by business, and the rest is done by government funding. D. half of the investment takes place at universities and research institutes, and the rest is done by business.

A

The convergence theory is based on the idea of: A. decreasing marginal returns. B. decreasing income per capita. C. increasing rates of income per capita. D. increasing opportunity costs.

A

The poorer a country is: A. the more difficult it is to pay for things that will bring it out of poverty. B. the less they have to give up for the basic things that will bring them out of poverty. C. the easier it is to pay for things that will bring it out of poverty. D. the more they can invest in all the components of productivity at once.

A

The poverty trap refers to: A. poorer countries having a harder time buying the things that will end their poverty. B. richer countries spiraling downward into poverty if they invest in the wrong industries. C. richer countries spiraling downward into poverty if they fail to invest enough in physical capital. D. All of these describe the poverty trap.

A

The trade-off between physical capital and current consumption: A. is harder for poorer countries than rich ones. B. is easier for poorer countries than rich ones. C. involves giving up less current consumption for poor countries, since they have little. D. involves giving up more current consumption for rich countries, since they have so much.

A

Using public policy to promote health can: A. contribute to growth. B. take away resources from those that promote growth. C. hurt a country's chance of reaching high growth. D. discourage citizens from taking care of themselves.

A

We calculate the amount of physical capital in an economy by adding up the value of all: A. tools, equipment, and structures. B. skills and expertise of all employed people. C. skills and expertise of the working age population. D. technological capabilities used in production.

A

We can calculate how long a country will take to double its real GDP per capita using: A. its average growth rate. B. its GDP deflator. C. the CPI indexation factor. D. the GDP growth estimator.

A

We can roughly estimate how long it will take a country to double its real GDP per capita using the: A. rule of 70. B. rule of 60. C. growth estimator. D. GDP deflator.

A

When Skippy the sailor forgets how to tie a slip knot: A. his human capital decreases. B. his human capital increases. C. his human capital is unaffected. D. None of these is true.

A

When a country adds more capital to its existing stock: A. the additional productivity is less than the previous increases to productivity. B. the additional productivity is more than the previous increases to productivity. C. it experiences rapidly increasing rates of growth. D. it experiences rapid declines in its level of income.

A

When a country continually adds more capital to its existing stock: A. productivity will increase at a decreasing rate. B. productivity will increase at a decreasing rate. C. productivity will decrease at a decreasing rate. D. productivity will decrease at an increasing rate.

A

If a country has a high level of income, it: A. must be rapidly increasing its income each year. B. has large amounts of physical and human capital. C. must be maintaining all natural resources. D. must be increasing all its natural resources.

B

If a country's income level is high: A. it must have a high level of growth. B. it must have a high level of GDP per capita. C. it must be well-endowed with natural resources. D. All of these are true.

B

Many governments are currently investing in: A. more roadways. B. communications infrastructure. C. more ports, given the growing importance of international business. D. All of these are true.

B

Over the last 100 years or so, the U.S. economy has grown an average of: A. 1 percent annually. B. 2 percent annually. C. 3 percent annually. D. 4 percent annually.

B

The idea that governments can plan growth by setting industrial policies to encourage growth of certain industries: A. is a proven method for economic growth. B. is controversial. C. has worked for the majority of countries that have tried it. D. None of these is true.

B

When looking at real world data, we see that: A. the convergence theory holds nearly universally. B. the convergence theory holds for some countries, but not others. C. the convergence theory does not hold empirically. D. the convergence theory was proved false.

B

Which of the following would not be considered physical capital? A. An axe B. Fertile soil C. A factory D. A forklift

B

A reduction in current consumption to pay for the investment in capital intended to increase future production is known as the: A. consumption effect. B. substitution effect. C. investment trade-off. D. income effect.

C

121. An example of government investment in physical capital to increase business productivity is: A. roadways. B. bridges. C. sewer systems. D. All of these are examples of ways governments can increase productivity.

D

Domestic savings: A. is equal to domestic income minus consumption spending. B. comes from private households spending less than they earn. C. occurs when government revenues exceed noncapital expenditures. D. All of these are true.

D

For a country to acquire more physical capital: A. it must forgo current consumption. B. it faces the investment trade-off. C. it must pay for the investment by reducing current consumption. D. All of these are true.

D

Governments invest in infrastructure: A. to increase the productivity of businesses. B. to spur economic growth. C. to increase the growth rate of GDP per capita. D. All of these are reasons why the government provides infrastructure.

D

Governments: A. can use tax revenues to invest in physical capital. B. will fund underlying infrastructure to increase the productivity of business. C. encourage economic growth by investing in physical capital. D. All of these are true.

D

Household savings rates: A. vary enormously across countries. B. can be negative. C. are generally higher in China than in the United States. D. All of these are true.

D

If a country devotes its resources to acquiring more physical capital: A. it faces the investment trade-off. B. it will have more GDP per capita in the future. C. it will have less current consumption. D. All of these are true.

D

If a country devotes its resources to acquiring more physical capital: A. it will increase its productivity. B. it will decrease its current consumption. C. it will increase its output per person. D. All of these are true.

D

Industrial policies are: A. favorable tax policies to encourage private domestic investment in certain industries. B. favorable trade policies to encourage private investment in certain industries. C. government investments in certain industries to encourage growth in those industries. D. All of these are true.

D

One way the government can encourage economic growth is to: A. protect property rights. B. enforce contracts. C. ensure legal agreements will be upheld. D. All of these actions will encourage economic growth.

D

Protecting property rights: A. is essential to economic growth. B. encourages people to invest in capital. C. by governments will likely increase productivity. D. All of these are true.

D

Savings that pay for capital investment can come from: A. within a country. B. outside a country. C. domestic savings. D. All of these are true.

D

Some people attribute the rapid growth of the East Asian economies in the 1980s and 1990s to: A. the success of their "industrial policies." B. the governments picking industries to support with investments and favorable tax and trade policies. C. the governments planning for growth by investing in certain industries. D. All of these are true.

D

The convergence theory predicts that: A. even if countries differ in their rates of savings, population growth, and other features, they will still converge to the same growth rate, although not the same level of income. B. countries that start out poor should initially grow faster than ones that start out rich, but will eventually slow to the same growth rate. C. poor countries are not generally expected to sustain a high growth rate and surpass the existing rich countries. D. All of these are predicted by the convergence theory.

D

The convergence theory suggests: A. that poorer countries will grow faster than rich ones. B. all countries eventually will experience the same rate of growth. C. countries may have the same rate of growth but differing levels of income. D. All of these are true.

D

The enforcement of contracts by the government: A. encourages economic growth. B. allows people to enter into long-term investments more easily. C. can increase physical capital investment. D. All of these are true.

D

The factors that led a country to its current economic level: A. may be related to those that can lead to future growth. B. may not be related to those that can lead to future growth. C. can typically be identified by economists and policy makers. D. All of these are true.

D

The investment trade-off: A. is a reduction in current consumption to pay for the investment in capital intended to increase future production. B. is why countries don't devote all their resources to capital investment. C. defines the opportunity cost of capital investment. D. All of these are true.

D

The level of savings in an economy: A. can be an important determinant of future productivity. B. can be an important determinant of capital investment. C. can be a source of funding for physical capital. D. All of these are true.

D

Which of the following is considered a nonrenewable resource? A. Natural gas B. Sunlight C. Rivers D. Wind

A

Natural resources can be: A. renewable. B. nonrenewable. C. Both of these are true. D. Neither of these is true.

C

Education and training is a way to build: A. human capital. B. physical capital. C. technological capital. D. All of these could be true.

A

Productivity is generally measured as: A. output per worker. B. nominal output over time. C. real output over time. D. output per year.

A

Which of the following would not be considered physical capital? A. An optical lens B. A trained physicist C. A spotlight D. A clipboard

B

A renewable resource: A. can be replenished naturally over time. B. is used to regenerate an old piece of capital. C. is used when adopting new technology, and replacing old capital. D. cannot be replenished naturally over time.

A

According to the rule of 70, a country will double its real GDP per capita in 10 years if it: A. experiences 7 percent growth rate in GDP. B. has inflation of 7 percent. C. has a population growth rate of 7 percent. D. None of these is true.

A

According to the rule of 70, if a country grows at an average rate of 2 percent per year, what would happen after 35 years? A. The country's real GDP per capita would double. B. The country's nominal GDP would double. C. The country's real GDP would double. D. The country's nominal GDP per capita would double.

A

Altering the demographic of your workforce in a manner that increases the labor force, like raising a legal minimum retirement age, is likely to: A. lead to a higher level of income for a country. B. lead to a sustainable high rate of growth in income for a country. C. create more productive workers in all facets of the economy. D. All of these are true.

A

An example of a renewable resource would be: A. a river. B. coal. C. natural gas. D. All of these are examples of renewable resources.

A

An example of physical capital is: A. a tractor. B. a farmer. C. a high-yield seed varietal. D. All of these are examples of physical capital.

A

Computing capacity has approximately: A. doubled every two years since the invention of computers. B. tripled every two years since the invention of computers. C. doubled every five years since the invention of computers. D. tripled every three years since the invention of computers.

A

Countries with low levels of GDP per capita usually also have: A. low levels of schooling. B. high levels of schooling. C. mandatory military service. D. highly developed infrastructures.

A

Exploiting a nonrenewable natural resource is likely to: A. lead to a higher level of income for a country. B. lead to a sustainable high rate of growth in income for a country. C. create more productive workers in all facets of the economy. D. All of these are true.

A

Natural resources: A. are production inputs that come from the earth. B. are natural talents people are born with that make them productive. C. are physical structures that sit on the earth, improving it and making it more productive. D. None of these is true.

A

Physical capital is: A. the stock of equipment and structures that allow for the production of goods and services. B. the skills a human being acquires that enhances the available stock of equipment. C. the set of skills, knowledge, experience, and talent that determine the productivity of workers. D. All of these describe physical capital.

A

Rapid economic growth: A. is a modern phenomenon, happening only in the last century or two. B. has happened in various places around the world since the 1300s. C. has occurred since 1500, but backsliding has prevented real growth. D. is a modern phenomenon, happening only in the last decade or two.

A

Real income per person was the same until: A. the 1800s, when the Industrial Revolution caused it to grow. B. the 1500s, when the Renaissance caused it to grow. C. the 1900s, when wireless technology caused it to grow. D. Real income per person has been roughly the same for the last three centuries.

A

The convergence theory states that: A. poorer countries will grow faster than rich ones. B. rich countries will grow faster than poor ones. C. poor countries tend to converge together and stagnate. D. rich countries tend to leapfrog ahead maintaining the gap in global development.

A

The growth rate of real GDP per capita is best captured by: A. subtracting the percentage changes in both prices and population from the nominal GDP growth rate. B. subtracting the percentage changes in population from the nominal GDP growth rate, while dividing it by the inflation rate in order to hold prices constant. C. subtracting the percentage changes in prices from the nominal GDP growth rate. D. subtracting the percentage changes in population from the nominal GDP growth rate.

A

The middle class in China: A. outnumbers the entire population of the United States. B. is almost equal in size to the entire population of the United States. C. is about half the size of the population of the United States. D. None of these is true.

A

The only way that the family can consume more and enjoy a higher standard of living is: A. to increase the amount each person produces. B. to decrease the amount each person produces. C. to increase how many people are in the family. D. to increase both how many people are in the family, and the amount each one produces.

A

We can tell how much physical capital has been added to the economy by: A. taking into account both new investment and the retirement of older capital. B. adding up the value of all tools, equipment, and structures that have ever been built. C. counting the number of persons of working age. D. counting the number of persons of working age who are employed.

A

When a person is educated, they become: A. more productive to society, because they have more skills to apply to a job. B. less productive to society, because they stop working while in school. C. less productive to society, because they require higher pay per hour. D. more productive to society, because they learn how to be more productive in all jobs.

A

Where does the money for investment in physical capital come from? A. It largely comes from the savings of ordinary households. B. It largely comes from government subsidies. C. It largely comes from the reinvestment of funds from businesses. D. It largely comes from donation by foreign countries.

A

An example of the opportunity to gain human capital would be: A. a firm expanding and creating 20 more jobs. B. a firm offering on-the-job training. C. a firm starting a community garden for its employees. D. All of these are examples of human capital.

B

Real per capital GDP in the United States is: A. over three times what it was a century ago. B. over seven times what it was a century ago. C. over 30 times what it was a century ago. D. about the same as it was a century ago.

B

The rule of 70 estimates how long it will take a country to double its real GDP per capita by: A. dividing the average growth rate by 70. B. dividing 70 by the average growth rate. C. dividing the current real GDP per capita by 70. D. multiplying the average growth rate by 70 percent.

B

What types of capital can improve the productivity of workers? A. Technological and human B. Human and physical C. Physical and technological D. Human, technological, and physical capital are all determinants of productivity.

B

Creating economic growth: A. is well understood by macroeconomists. B. has two central tenets upon which the theory is based. C. involves savings, capital, labor, and technology. D. All of these are true.

C

If a country grows at an average rate of 3.5 percent per year, we can estimate it will double its: A. growth rate in 70 years. B. real GDP per capita in 70 years. C. real GDP per capita in 20 years. D. growth rate in 20 years.

C

Which of the following is not an example of human capital investment? A. A leadership training course B. A bachelor's degree C. Software with spell-check included D. All of these are examples of human capital investment.

C

Which of the following is not considered a renewable resource: A. fresh water. B. sunlight. C. oil. D. All of these are renewable resources.

C

A variable that is essential to economic growth is: A. savings. B. capital. C. technology. D. All of these are important to economic growth.

D

An example of a natural resources is: A. a river. B. a forest. C. a coal deposit. D. All of these are examples of natural resources.

D

An example of a nonrenewable resource would be: A. a computer. B. wireless technology. C. sunlight. D. None of these is considered a nonrenewable resource.

D

An example of acquiring human capital would be: A. taking an economics course. B. learning how to make chicken parmigiana. C. playing varsity soccer. D. All of these are examples of acquiring human capital.

D

An example of physical capital is: A. a construction worker's strength. B. a scientist's knowledge of cellular biology. C. Both of these are examples of physical capital. D. Neither of these are examples of physical capital.

D

An example of physical capital is: A. a tractor. B. a plow. C. a shovel. D. All of these are examples of physical capital.

D

An example of physical capital is: A. an office chair. B. a delivery truck. C. a piece of machinery. D. All of these are examples of physical capital.

D

Having more technology means: A. that the same inputs will produce more outputs. B. countries will be able to produce more with the same amount of physical capital. C. countries will be able to produce more with the same amount of human capital. D. All of these are true.

D

Human capital contributes to growth because it helps workers in the economy: A. produce more with the same amount of physical capital. B. work smarter. C. be more productive with their time. D. All of these are true.

D

Human capital is acquired through: A. education. B. training. C. job experience. D. All of these are ways to acquire human capital.

D

Human capital refers to: A. the skills that determine the productivity of workers. B. the work experience that determines the productivity of workers. C. the natural talent that determines the productivity of workers. D. All of these describe a facet of human capital.

D

If a country has a high level of income, it likely has: A. a highly productive work force. B. widespread access to technology. C. high levels of physical capital. D. All of these are true.

D

Increases in productivity per person lead to: A. increases in per capita income. B. economic growth. C. increases in GDP per capita. D. All of these are true.

D

Natural resources: A. are production inputs that come from the earth. B. include lakes, mineral deposits, forests, and so on. C. can be split into two categories: renewable or nonrenewable. D. All of these are true statements.

D

Estimations calculated using the rule of 70: A. make it easier to appreciate how small differences in growth rates can add up to huge differences in income over time. B. make it easier to appreciate how big differences in growth rates are needed to create any real difference in income over time. C. are simple to use, but make it difficult to see the relationship between growth rate and income over time. D. are simple to use, but give estimates that have been proven wrong in recent decades.

A

If a country has a high level of growth in income, it: A. must be rapidly increasing its GDP per capita. B. must have a high level of income. C. must have an equitable distribution of wealth. D. All of these are true.

A

If a country's income is rapidly increasing: A. it must have a high level of growth. B. it must have a high level of income. C. it must have a lot of room to expand. D. it must be well-endowed with natural resources.

A

In general, the number of years it will take for income to double at the current real growth rate is approximately: A. 70 divided by the growth rate. B. 50 divided by the growth rate. C. 7 times the growth rate. D. 5 times the growth rate.

A

The productivity of workers can depend upon which of the following? A. Physical capital B. Number of humans C. Number of businesses established D. All of these are determinants of productivity.

A

The purchasing power of the average person in the world today is: A. more than 30 times as high as it was 200 years ago. B. more than 20 times as high as it was 300 years ago. C. is about the same as it has been during the last two centuries. D. has increased steadily over the last two centuries.

A

The rule of 70 estimates how long it will take a country to: A. double its real GDP per capita. B. achieve zero inflation. C. reach its maximum production capacity. D. double its output.

A

Total changes in GDP over time: A. are bigger than the annual growth rate due to compounding. B. are smaller than the annual growth rate due to compounding. C. are smaller than the annual growth rate due to backsliding. D. are bigger than the annual growth rate due to population growth.

A

In the 1980s, Howard was one of the best car phone repairmen in his area. After staying home in the 1990s and early 2000s to take care of his children, Howard wants to go back to work in the phone repair business. Which of the following can be said about Howard? A. Because car phones are obsolete, Howard's human capital is less valuable. B. Howard's knowledge of how to repair car phones is obsolete, and his human capital is less valuable now than in 1980. C. Howard's ability to repair car phones represents an obsolete skill. D. All of these could be said about Howard.

D

The basic idea behind the convergence theory is: A. that countries starting at low levels of will tend to grow at much faster rates than those starting with high levels of income. B. each additional unit of capital provides larger gains when you're coming from behind. C. also the basic idea behind the catch-up effect. D. All of these are true.

D

The productivity of workers can depend on which of the following? A. Technology B. Human capital C. Physical capital D. All of these are determinants of productivity.

D

The productivity of workers can depend upon which of the following? A. Human capital B. Natural resources C. Technology D. All of these are determinants of productivity.

D

The value of human capital can decrease when: A. someone forgets how to do something that was valuable in their work. B. the skills someone possesses are no longer needed. C. machines can be taught to do what people used to have to do. D. All of these are examples of a decrease in human capital.

D

We can estimate that if a country grows at 7 percent per year, it will double its real GDP per capita in: A. 2 years. B. 20 years. C. 35 years. D. 10 years.

D