Macroeconomics Quiz C12

In the U.S., each additional year of schooling has historically raised a person's wage on average by about 2 percent. 5 percent. 10 percent. 15 percent.

10 percent.

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1. Reduce corruption in the legal system; 2. Reduce reliance on market forces because they allocate goods and services in an unfair manner; 3. Restrict investment in domestic industries by foreigners because they take some of the profits out of the country; 4. Encourage trade with neighboring countries; and 5. Increase the fraction of GDP devoted to consumption. How many of these measures will have a positive effect on growth? 1 2 3 4

2

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year? 12 percent 10 percent 4 percent 2 percent

2 percent

The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries. She asks you to pick the one you think most likely explains her country's low growth. Which of the following contributes to low growth? A. poorly enforced property rights B. outward-oriented trade policies C. policies that permit foreign investment D. All of the above are correct.

A. poorly enforced property rights

Inventors often obtain patents on new products and processes, thereby turning new ideas into A. private goods and increasing the incentive to engage in research. B. private goods but decreasing the incentive to engage in research. C. public goods and increasing the incentive to engage in research. D. public goods but decreasing the incentive to engage in research.

A. private goods and increasing the incentive to engage in research.

Which of the following is a correct way to measure productivity? A. Divide the number of hours worked by the quantity of output. B. Divide the quantity of output by the number of hours worked. C. Determine how much output is produced in a given time. D. Determine how much time it takes to produce a unit of output.

B. Divide the quantity of output by the number of hours worked.

In an economy where net exports are zero, if saving rises in some period, A. then in that period consumption and investment fall. B. consumption falls and investment rises. C. consumption rises and investment falls. D. consumption rises and investment falls.

B. consumption falls and investment rises.

Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future production from such an investment would A.bincrease U.S. GNP more than it would increase U.S. GDP. B. increase U.S. GDP more than it would increase U.S. GNP. C. not affect U.S. GNP, but would increase U.S. GDP. D. have no affect on U.S. GNP or GDP.

B. increase U.S. GDP more than it would increase U.S. GNP.

Suppose a country increases trade restrictions. This country would be pursing an A. inward policy, which most economists believe has beneficial effects on the economy. B. inward policy, which most economists believe has adverse effects on the economy. C. outward policy, which most economists believe has beneficial effects on the economy. D. outward policy, which most economists believe has adverse effects on the economy.

B. inward policy, which most economists believe has adverse effects on the economy.

Inward-oriented policies A. are generally supported by economists. B. are primarily concerned with the development of human capital. C. In some ways are like prohibiting the use of certain technologies All of the above are correct.

C. In some ways are like prohibiting the use of certain technologies

Educational attainment tends to be A. low in countries with high population growth. B. low in countries with low population growth. C. high in countries with high population growth. D. None of the above are true.

A. Low in countries with high population growth

All else equal, by saving more, a country A. has more resources for capital goods. The increase in capital raises productivity. B. has more resources for capital goods. The increase in capital reduces productivity. C. has fewer resources for capital goods. The decrease in capital raises productivity. D. has fewer resources for capital goods. The decrease in capital reduces productivity.

A. has more resources for capital goods. The increase in capital raises productivity.

Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth? A. Great Britan B. China C. Austrailia D. France

China

In the long run, a higher saving rate A. cannot increase the capital stock. B. increases the growth rate of income. C. increases the growth rate of productivity. D. None of the above is correct.

D. None of the above is correct.

Human capital is A. the same thing as technological knowledge. B. the same thing as labor. C. the tools and equipment operated by humans. D. knowledge and skills that workers have acquired.

D. knowledge and skills that workers have acquired.

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to increase barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies would most economist think would promote growth? A. both the first and the second B. the first but not the second C. the second but not the first D. neither the first nor the second

D. neither the first nor the second

Malthus predicted that the power of population A. was greater than the power of the earth to produce subsistence. His forecast was on the mark. B. was greater than the power of the earth to produce subsistence. His forecast was off the mark. C. was less than the power of the earth to produce subsistence. His forecast was on the mark. D. was less than the power of the earth to produce subsistence. His forecast was off the mark.

was greater than the power of the earth to produce subsistence. His forecast was on the mark.

An increase in capital will increase real GNP per person more in a poor country than a rich country. The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. A. more in a poor country than a rich country. The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment. B. more in a poor country than a rich country. The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment. C. less in a poor country than a rich country. The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. D. less in a poor country than a rich country. The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment.

A. more in a poor country than a rich country. The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment.

An increase in capital will increase real GDP per person A. more in a poor country than a rich country. The increase in real GDP per person will be larger if the addition to capital is from domestic rather than foreign investment. B. more in a poor country than a rich country. The increase in real GDP per person will be the same whether the addition to capital is from domestic or foreign investment. C. less in a poor country than a rich country. The increase in real GDP per person will be larger if the addition to capital is from domestic rather than foreign investment. D. less in a poor country than a rich country. The increase in real GDP per person will be the same whether the addition to capital is from domestic or foreign investment.

B. more in a poor country than a rich country. The increase in real GDP per person will be the same whether the addition to capital is from domestic or foreign investment.

Which of the following terms is used to refer to the ability of people to exercise authority over the resources they own? A. natural rights B. property rights C. input control D. collective control

B. property rights

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely A. have no affect on either real GDP nor productivity B. raise real GDP and productivity. C. raise real GDP but not productivity. D. raise productivity but not real GDP.

B. raise real GDP and productivity.

In a market economy, the real, or inflation-adjusted, price of a resource measures its A. contribution to revenue. B. relative scarcity. C. Productivity. D. contribution to efficiency.

B. relative scarcity

Which of the following lists contains, in this order, natural resources, human capital, and physical capital? A. For a shoe factory: leather, hand tools, the managers' knowledge of shoe making. B. For a steel mill: the blast furnaces, the workers, iron ore. C. For an airline: oil used to make jet fuel, the pilots' knowledge of flying, jets. D. None of the above is correct.

C. For an airline: oil used to make jet fuel, the pilots' knowledge of flying, jets.

Once an idea enters society's pool of knowledge, the idea becomes a A. societal good. B. private good. C. public good. D. proprietary good.

C. Public good

Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor county to catch up? A. The poor country has outward-oriented trade policies. B. The poor country allows foreign direct investment. C. The poor country has poorly developed property rights. D. All of the above are correct.

C. The poor country has poorly developed property rights.

The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in Turan will A. fall temporarily, but will return to where it was when the new owners learn how to farm. B. increase because the total amount of human capital in the country will increase as the new owners learn how to farm. C. fall and remain lower for a long time. D. not be affected unless widespread civil disorder or civil war results.

C. fall and remain lower for a long time.

Other things equal, relatively poor countries tend to grow A. slower than relatively rich countries; this is called the poverty trap. B. slower than relatively rich countries; this is called the fall-behind effect. C. faster than relatively rich countries; this is called the catch-up effect. D. faster than relatively rich countries; this is called the constant-returns-to-scale effect.

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

Which of the following are human capital and physical capital, respectively? A. for a brick layer: her bricks and her tools B. for a gas station: the pumps and the cash register C. for a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen D. for a medical office: the building and the doctors' knowledge of medicine

C. for a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen

Productivity is defined as the quantity of A. labor required to produce a nation's GDP. B. labor required to produce one unit of goods and services C. goods and services produced from each unit of labor input. D. goods and services produced per unit of time.

C. goods and services produced from each unit of labor input.

The return to schooling for society is higher than the return to schooling for the individual if A. the concept of diminishing returns applies to education. B. the concept of constant returns to scale applies to education. C. human capital conveys positive externalities. D. investment in human capital involves no opportunity costs.

C. human capital conveys positive externalities.