Chapter 7: Sample Test ECON 100
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
labor.
To increase growth, governments should do all of the following except
nationalize major industries.
Our standard of living is most closely related to
our productivity because our income is equal to what we produce.
Which one is, at the very least, fundamentally necessary as a background in which the other policies may operate? why?
property rights and political stability
A reasonable measure of the standard of living in a country is
real GDP per person.
Which country is advancing most quickly? Why?
East Country because it has the higher growth rate.
Which of the following describes an increase in technological knowledge?
A farmer discovers that it is better to plant in the spring rather than in the fall.
If real GDP per person in 2006 is 18,073 and real GDP per person in 2007 is 18,635, what is the growth rate of real output over this period?
18635-18073/18073= 3.10 percent
If real GDP per person in North country next year is 15,918, what is its annual growth rate.
=15918-15468/15468= 2.9%
Why might investment in human capital and research and development fail to exhibit the same degree of diminishing return as investment in physical capital.
Human capital emits positive externality. Research and dev'l is public good after dissemination.
Would this country continue to see the same degree of benefits from an increase in capital investment forever? why?
No. Because of diminishing return of capital. The richest the country it slow down the growth. No. Because of the diminishing return capital add growth from increasing capital.
Which country is richest? Why?
North Country because it has the highest GDP per person.
Which of the following statements regarding the impact of population growth on productivity
Rapid population growth may promote technological progress, increasing productivity.
Which of the following expenditure to enhance productivity is most likely to emit a positive externality
Susan pays her college tuition.
Does a growing population enhance or inhibit growth in productivity? Explain
The answer is uncertain. A rapidly growing population may reduce productivity by stretching natural resources across more people. There's evidence that more technological progress takes place in areas with large population.
Which of the following is an example of foreign portfolio investment?
Toyota buys stock in Ford, and Ford uses the proceeds to build a new plant in Michigan.
Which country has the potential to grow most quickly? Why?
West Country because it is the poorest and could easily benefits additional capital. Trade restriction, corrupt or unstable government.
Which country would likely see the greatest benefits from an increase in capital investment? Why?
West Country because of catch-up-effect.
Copper is an example of
a nonrenewable natural resources
The opportunity cost of growth is
a reduction in current consumption.
Thomas Malthus argued that
an ever-increasing population is constrained only by the food supply, resulting in chronic famines.
Imagine a kitchen. It contains a cook, the cook's diploma, a recipe book, a stove and utensils, and some venison harvested from the open range. Link each object in the kitchen to a general category within the factors of production
cook = labor cook diploma = human capital recipe book = technology utensils = natural resources
Which of the following statement is true
countries have great variance in both the level and growth rate of GDP per person; thus, poor countries can become relatively rich over time.
If a production function exhibits constant return to scale
doubling all of the inputs doubles output.
List the policies governments might pursue to increase the productivity of their citizens.
encourage savings and investment
Madelyn goes to college and reads many books while at school. Her education increases which of the following factors of production
human capital
If Mazda builds a new plant in Illinois
in the future, U.S GDP will rise more than U.S GNP.
Which of the following government policies is LEAST likely to increase growth in Africa?
increase restrictions on the importing of Japanese automobiles and electronics
When a nation has very little GDP per person
it has the potential to grow relatively quickly due to "catch-up-effect.
Once a country is wealthy
it may be harder for it to grow quickly because of the diminishing returns to capital.
While the different factor of production exhibits different levels of durability, which one is special in that it does not wear out?
recipe book
Many East Asian countries are growing very quickly because
they save and invest an unusually high percentage of their GDP.