ALL CHAPTER 25

Senator Noitall says that in order to help poor countries develop, the United States should: 1. Prevent U.S. corporations from investing in poor countries because they take profits that the poor countries should have; 2. Not import goods from poor countries that use child labor; 3. Work to promote political stability in poor countries; and 4. Reduce poor countries' reliance on market forces in their economies. How many of these ideas are likely to help poor countries grow? a. 1 b. 2 c. 3 d. 4

a. 1

Roughly what percentage of growth in real GDP per person in Britain between 1790 and 1980 was accounted for by improved nutrition according to the estimates of Robert Fogel? a. 30 percent b. 20 percent c. 10 percent d. 5 percent

a. 30 percent

If a country were to increase its saving rate, then in the long run it would also increase its a. level of income. b. growth rate of income. c. growth rate of productivity. d. All of the above are correct.

a. level of income.

Accumulating capital a. requires that society sacrifice consumption goods in the present. b. allows society to consume more in the present. c. decreases saving rates. d. involves no tradeoffs.

a. requires that society sacrifice consumption goods in the present.

Which of the following is correct? a. Countries with the highest growth rates over the last 100 years are the ones that had the highest level of real GDP 100 years ago. b. Most countries have had little fluctuation around their average growth rates during the past 100 years. c. The ranking of countries by income changes substantially over time. d. Over the last 100 years, Japan had the highest real GDP growth rate, and now has the highest real GDP per person.

c. The ranking of countries by income changes substantially over time.

If there are constant returns to scale, the production function can be written as a. xY = 2xAF(L, K, H, N). b. Y/L = A F(xL, xK, xH, xN). c. Y/L = A F( 1, K/L, H/L, N/L). d. L = AF(Y, K, H, N).

c. Y/L = A F( 1, K/L, H/L, N/L).

If a production function has constant returns to scale, output can be doubled if a. labor alone doubles. b. all inputs but labor double. c. all of the inputs double. d. None of the above is correct.

c. all of the inputs double.

50. Which of the following terms do we use to mean the same thing as physical capital? a. assembly line b. manual labor c. capital d. factor of production

c. capital

90. Thomas Edison received patents on many of his inventions. While the patents existed, his ideas were a. public goods and proprietary knowledge. b. public goods but not proprietary knowledge. c. private goods and proprietary knowledge. d. private goods but not proprietary knowledge.

c. private goods and proprietary knowledge.

The average amount of goods and services produced from each hour of a worker's time is called a. GDP. b. per capita GDP. c. productivity. d. technological knowledge.

c. productivity

68. In a market economy, we know that a resource has become scarcer when a. both the demand for the good and the supply of the good have increased. b. both the demand for the good and the supply of the good have decreased. c. the demand for the good has increased and the supply has decreased. d. the demand for the good has decreased and the supply has remained constant.

c. the demand for the good has increased and the supply has decreased. d. the demand for the good has decreased and the supply has remained constant.

56. Which of the following is a part of your economics professor's human capital? a. the things she learned at some prestigious university b. her copy of Mankiw's text c. her chalk holder d. All of the above are correct.

a. the things she learned at some prestigious university

Which of the following does the level of real GDP measure? a. total real income b. productivity c. the standard of living d. All of the above are correct.

a. total real income

Senator Smith says that in order to help poor countries develop, the United States should: 1. Prevent U.S. corporations from investing in poor countries because they take profits that the poor countries should have; 2. reduce or eliminate subsidizes to U.S. producers when poor countries have a comparative advantage producing those goods the U.S. subsidizes; 3. Work to promote political stability in poor countries; and 4. Reduce poor countries reliance on market forces in their economies. How many of these ideas are likely to help poor countries grow? a. 1 b. 2 c. 3 d. 4

b. 2

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? a. 1 b. 2 c. 3 d. 4

b. 2

Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth? a. Great Britain b. China c. Australia d. France

b. China

One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society a. conserve resources for future generations. b. sacrifice consumption goods and services now in order to enjoy more consumption in the future. c. recycle resources so that future generations can produce goods and services with the accumulated capital. d. None of the above is correct.

b. sacrifice consumption goods and services now in order to enjoy more consumption in the future.

Over the past century in the United States, real GDP per person has grown, on average, by about a. 1 percent per year. b. 2 percent per year. c. 3 percent per year. d. 5 percent per year.

b. 2 percent per year

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. Divide the quantity of output by the quantity of physical capital. d. Divide the change in the quantity of output by the change in the number of hours worked.

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

Which of the following pairs of countries experienced approximately the same rate of growth of real income per person over the last 100 or so years? a. Germany and Japan b. Indonesia and the United Kingdom c. the United States and Japan d. Mexico and Pakistan

b. Indonesia and the United Kingdom

70. 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.

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

c. 10 percent.

When a society decides to increase its quantity of physical capital, the society a. can avoid the usual need to face trade-offs. b. is apparently not very concerned about its rate of economic growth in the future. c. is in effect deciding to consume fewer goods and services in the present. d. is in effect deciding to save less of its current income in the present.

c. is in effect deciding to consume fewer goods and services in the present.

When a country removes trade barriers and imports toys and exports farm machinery, a. its growth slows. b. its productivity decreases. c. it is essentially transforming farm machinery into toys. d. its economic well-being decreases while that of the country that sells toys increases.

c. it is essentially transforming farm machinery into toys.

In countries that experience political instability, standards of living tend to be low because of a. violations of diminishing returns. b. excessive levels of caloric intake. c. lack of respect for property rights. d. attempts by government officials to thwart the catch-up effect.

c. lack of respect for property rights.

Outward-oriented policies a. allow countries to take advantage of gains from trade. b. have generally led to high growth for the countries that pursued them. c. receive widespread support from economists. d. All of the above are correct.

d. All of the above are correct.

Which of the following countries benefited significantly from the catch-up effect in the last half of the twentieth century? a. Ethiopia b. the United States c. Canada d. South Korea

d. South Korea

Which of the following best describes the response of output as time passes to an increase in the saving rate? a. The growth rate of output does not change. b. The growth rate of output increases and gets even larger as time passes. c. The growth rate of output increases and does not change as time passes. d. The growth rate of output increases, but diminishes to its former level as time passes.

d. The growth rate of output increases, but diminishes to its former level as time passes.

The term human capital can be used to describe a. technology. b. unskilled labor. c. expenditures that result in increased investment from abroad. d. health.

d. health.

Which of the following is an example of the "brain drain?" a. A country's most highly educated workers emigrate to rich countries. b. A country has such a poor educational system that human capital falls over time. c. The population of a country grows so fast that the educational system can't keep up. d. A country steals patented technology from another country.

a. A country's most highly educated workers emigrate to rich countries.

65. Which of the following is an example of a renewable natural resource? a. fish b. soybeans c. wood d. All of the above are correct.

d. All of the above are correct.

Which of the following provide benefits to society at large and not just to the person(s) who pursues it? a. both technological knowledge that is a public good and education b. technological knowledge that is a public good, but not education c. education, but not technological knowledge that is a public good d. neither education, nor technological knowledge that is a public good

a. both technological knowledge that is a public good and education

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.

Country A and country B are the same except country A currently has a lower level of capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then a. output in country A increases by more than in country B. b. output in country A increases by the same amount as in country B. c. output in country A increases by less than in country B. d. None of the above is necessarily correct.

a. output in country A increases by more than in country B.

Which of the following is not correct? a. China allows only one child per family and couples that violate this rule are subject to substantial fines. b. In developed countries, population growth is consistently about 3 percent per year; in developing countries it is consistently about 5 percent per year. c. Educational attainment tends to be lowest in countries with the highest population growth. d. Economists generally believe that a country that decreases a high population growth rate can increase its economic growth rate.

b. In developed countries, population growth is consistently about 3 percent per year; in developing countries it is consistently about 5 percent per year.

All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit? a. Output will rise by more than it did when the previous unit was added. b. Output will rise but by less than it did when the previous unit was added. c. Output will fall by more than it did when the previous unit was added. d. Output will fall but by less then it did when the previous unit was added.

b. Output will rise but by less than it did when the previous unit was added.

National defense and knowledge are generally considered to be a. private goods. b. public goods. c. proprietary goods. d. societal goods.

b. public goods.

All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year, a. the increase in output was greater for this year than last year. b. the increase in output was greater last year than this year. c. the increase in output is the same in both years. d. None of the above is necessarily correct.

b. the increase in output was greater last year than this year.

For a given year, productivity in a particular country is most closely matched with that country's a. level of real GDP over that year. b. level of real GDP divided by hours worked over that year. c. growth rate of real GDP divided by hours worked over that year. d. growth rate of real GDP per person over that year.

b. level of real GDP divided by hours worked over that year.

61. The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called a. physical capital. b. natural resources. c. human capital. d. technological knowledge.

b. natural resources.

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double? a. both output and productivity b. output, but not productivity c. productivity, but not output d. neither productivity nor output

b. output, but not productivity

46. The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called a. human capital. b. physical capital. c. natural resources. d. technological knowledge.

b. physical capital.

Other things the same, higher population growth a. raises the amount of physical capital per worker and there is some evidence that it raises the pace of technological progress. b. raises the amount of physical capital per worker, but there is some evidence that it reduces the pace of technological progress. c. reduces the amount of physical capital per worker, but there is some evidence that it raises the pace of technological progress. d. reduces the amount of physical capital per worker and there is some evidence that it reduces the pace of technological progress.

c. reduces the amount of physical capital per worker, but there is some evidence that it raises the pace of technological progress.

The average income in a rich country, such as the United States or Japan, is more than a. 3 times, but less than 5 times, the average income in a poor country, such as Indonesia or Nigeria. b. 5 times, but less than 10 times, the average income in a poor country, such as Indonesia or Nigeria. c. 10 times, but less than 20 times, the average income in a poor country, such as Indonesia or Nigeria. d. more than 20 times the average income in a poor country, such as Indonesia or Nigeria.

c. 10 times, but less than 20 times, the average income in a poor country, such as Indonesia or Nigeria.

Over the past century in the United States, average income as measured by real GDP per person has grown about a. 4 percent per year, which implies a doubling about every 18 years. b. 4 percent per year, which implies a doubling about every 8 years. c. 2 percent per year, which implies a doubling about every 35 years. d. 2 percent per year, which implies a doubling about every 18 years.

c. 2 percent per year, which implies a doubling about every 35 years.

During the past century the average growth rate of U.S. real GDP per person implies that it doubled, on average, about every a. 100 years. b. 70 years. c. 35 years. d. 25 years.

c. 35 years.

A barber shop produces 96 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 3 haircuts per hour of labor, then how many barbers does the shop employ? a. 2 b. 3 c. 4 d. 6

c. 4

Average income has been stagnant for many years in a. Ireland. b. Singapore. c. Ethiopia. d. All of the above are correct.

c. Ethiopia.

66. In a market economy, scarcity of resources is most clearly reflected in a. supply. b. demand. c. market prices. d. the stock of the resource.

c. market prices.

Which of the following is correct? a. There is no debate about the effects of higher population growth on economic growth. 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. How much an increase in capital increases a country's output is independent of that country's current level of capital. d. Economists argue that outward rather than inward policies are likely to promote economic growth.

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

All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase? a. Productivity will definitely fall. b. Productivity will definitely be unchanged. c. Productivity will definitely rise. d. None of the above are necessarily correct.

d. None of the above are necessarily correct.

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

You and your friend work together for 4 hours to produce a total of 12 futons. What is productivity? a. 12 futons b. 24 futons c. 3 futons per hour of labor d. 1.5 futons per hour of labor

d. 1.5 futons per hour of labor

37. Real Foods produced 400,000 cans of diced tomatoes in 2007 and 460,000 cans of diced tomatoes in 2008. They employed the same number of labor hours each year. Relative to their productivity in 2007, their productivity in 2008 was a. 6 percent lower. b. unchanged. c. 6 percent higher. d. 15 percent higher.

d. 15 percent higher.

Over the past 100 years, U.S. real GDP per person has doubled about every 35 years. If, in the next 100 years, it doubles every 25 years, then a century from now U.S. real GDP per person will be a. 4 times higher than it is now. b. 8 times higher than it is now. c. 12 times higher than it is now. d. 16 times higher than it is now.

d. 16 times higher than it is now.

Countries that grew the fastest over the last 100 or so years had growth rates of real income per person of about a. 0.5 percent per year. b. 1.5 percent per year. c. 2.0 percent per year. d. 2.5 percent per year.

d. 2.5 percent per year.

In the United States, as measured by real GDP per person, average income is about how many times as high as average income a century ago? a. 2 b. 4 c. 6 d. 8

d. 8

If a country's saving rate declined, then other things the same, in the long run the country would have a. lower productivity, but not lower real GDP per person. b. lower productivity and lower real GDP per person. c. lower real GDP per person, but not lower productivity d. neither lower productivity nor lower real GDP per person.

b. lower productivity and lower real GDP per person.

In the U.S., each additional year of schooling has historically raised a person's wage on average by about a. 5 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller. b. 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller. c. 5 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger. d. 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger.

d. 10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger.

If there are diminishing returns to capital, then a. capital produces fewer goods as it ages. b. old ideas are not as useful as new ones. c. increases in the capital stock eventually decrease output. d. increases in the capital stock increase output by ever smaller amounts.

d. increases in the capital stock increase output by ever smaller amounts.

91. The relationship between the quantity of output created and the quantity of inputs needed to create it is called a. the capital accumulation function. b. technological knowledge. c. the production function. d. human capital.

c. the production function.

48. Which of the following is physical capital? a. the strength of workers b. the knowledge of workers c. financial assets like cash and bonds d. the equipment in a factory

48. Which of the following is physical capital? a. the strength of workers b. the knowledge of workers c. financial assets like cash and bonds d. the equipment in a factory

72. Historically, the market prices of most natural resources (adjusted for inflation) have a. increased. b. remained stable. c. remained stable or decreased. d. decreased.

c. remained stable or decreased

On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions? a. A relatively simple way to increase growth rates permanently is to increase a country's saving rate. b. Growth is generally inhibited rather than promoted by policies like protective tariffs. c. Well-established property rights that are enforced by fair and efficient courts are important to economic growth. d. Countries with few domestic natural resources still have opportunities for economic growth.

a. A relatively simple way to increase growth rates permanently is to increase a country's saving rate.

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 true? a. Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production. b. Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. c. Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production. d. Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.

a. Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production.

An organization that tries to encourage the flow of investment to poor countries is the a. World Bank. b. Organization of Less Developed Countries. c. Alliance of Developing Countries. d. International Development Alliance.

a. World Bank.

Which of the following is an observation made by economist Michael Kremer? a. World growth rates increased as the population increased. b. Technological progress allows for increasing population because of advances in agriculture. c. World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will decline. d. All of the above are observations made by Kremer.

a. World growth rates increased as the population increased.

When Mexico experiences investment from abroad, it experiences, as a result, a. an increase in productivity. b. a decrease in Gross National Product (GNP). c. lower wages for Mexican workers. d. None of the above is correct.

a. an increase in productivity.

The traditional view of the production process is that capital is subject to a. diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. b. diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries. c. increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries. d. increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than in rich countries.

a. diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countries.

In the past there have been violent protests against the World Bank and the World Trade Organization. The protesters argued that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contended that these practices make rich countries richer and poor countries poorer. An economist would a. disagree with the protesters because these practices will help make both rich and poor countries richer. b. disagree with the protesters about free trade, but would agree with the protesters about corporate investment. c. disagree with the protesters about corporate investment, but would agree with the protesters about free trade. d. agree with the protesters.

a. disagree with the protesters because these practices will help make both rich and poor countries richer.

Suppose that an American opens and operates a candy factory in Finland. This is an example of a. foreign direct investment. American saving is used to finance Finish investment. b. foreign direct investment. American saving is used to finance American investment. c. foreign portfolio investment. American saving is used to finance Finish investment. d. foreign portfolio investment. American saving is used to finance American investment.

a. foreign direct investment. American saving is used to finance Finish investment.

In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in a. foreign portfolio investment. b. indirect domestic investment. c. foreign direct investment. d. foreign indirect investment.

a. foreign portfolio investment.

Other things the same, a country that increases its savings rate will have a. higher future capital and higher future real GDP per person. b. higher future capital but not higher future real GDP per person. c. higher future real GDP per person but not higher future capital. d. neither higher future capital nor higher future real GDP per person.

a. higher future capital and higher future real GDP per person.

74. Inward-oriented policies a. include imposing tariffs and other trade restrictions. b. have generally increased productivity and growth in the countries that pursued them. c. promote the production of goods and services that the country produces most efficiently. d. All of the above are correct.

a. include imposing tariffs and other trade restrictions.

Suppose U.S.-based Intel Corporation builds and operates a new computer chip factory in Honduras. Future production from such an investment would a. increase Honduran GDP more than it would increase Honduran GNP. b. increase Honduran GNP more than it would increase Honduran GDP. c. not affect Honduran GNP, but would increase Honduran GDP. d. have no affect on either Honduran GDP or GNP.

a. increase Honduran GDP more than it would increase Honduran GNP.

Other things the same, a country that increases its saving rate increases a. its future productivity and future real GDP. b. neither its future productivity nor future real GDP. c. its future productivity, but not its future real GDP. d. its future real GDP, but not its future productivity.

a. its future productivity and future real GDP.

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

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas a. private goods rather than public goods. This gives people more incentive to engage in research. b. private goods rather than public goods. This gives people less incentive to engage in research. c. public goods rather than private goods. This gives people more incentive to engage in research. d. public goods rather than private goods. This gives people more incentive to engage in private research.

a. private goods rather than public goods. This gives people more incentive to engage in research.

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a a. public good. b. societal good. c. private good. d. normal good.

a. public good.

Suppose that a new government is elected in Lawrencia. The new government takes steps toward improving the court system and reducing government corruption. The citizens of Lawrencia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably a. raise real GDP per person and productivity in Lawrencia. b. raise real GDP per person but not productivity in Lawrencia. c. raise productivity but not real GDP per person in Lawrencia. d. raise neither productivity nor real GDP per person in Lawrencia.

a. raise real GDP per person and productivity in Lawrencia.

The dictator of a certain country requires that companies planning to open or expand must pay a large fee to file an application one year prior to building new factories or expanding existing ones. Other things the same, in the long run this requirement would a. reduce real GDP per person and productivity. b. reduce real GDP per person but not productivity. c. reduce productivity but not real GDP per person. d. None of the above is correct.

a. reduce real GDP per person and productivity.

Studies on health, nutrition, and living standards suggest that a. short height can be an indicator of malnutrition. b. workers' height and their productivity are unrelated. c. nations' economic development and their workers' eating habits are unrelated. d. there is no causal link between nutrition and economic growth.

a. short height can be an indicator of malnutrition.

The catch-up effect can help explain a. the spectacular economic growth experienced by South Korea over the years 1960 to 1990. b. the spectacular economic growth experienced by the United States over the years 1960 to 1990. c. why the diminishing-returns property is no longer taken seriously by economists. d. why the World Bank is more inclined to encourage the flow of capital to advanced economies rather than to developing economies.

a. the spectacular economic growth experienced by South Korea over the years 1960 to 1990.

In 2007, the imaginary nation of Freedonia had a population of 2,700 and real GDP of 16,200,000. In 2008 it had a population of 2,500 and real GDP of 14,640,000. What was the growth rate of real GDP per person in Freedonia between 2007 and 2008? a. -2.4 percent b. -0.7 percent c. 4.4 percent d. 5.2 percent

a. -2.4 percent

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was their productivity? a. 1/8 cabinet per hour b. 8 hours per cabinet c. 40 cabinets d. None of the above is correct.

a. 1/8 cabinet per hour

In 2006 real GDP in the imaginary nation of Populia was 750 billion and the population was 3 million. In 2007 real GDP was 907.5 billion and the population was 3.3 million. What was the growth rate of real GDP per person during the year? a. 10 percent b. 14 percent c. 17 percent d. 21 percent

a. 10 percent

In some East Asian countries, average income, as measured by real GDP per person, has recently grown at an average annual rate that implies output will double about every a. 10 years. b. 15 years. c. 20 years. d. 25 years.

a. 10 years.

Cedar Valley Furniture uses 5 workers, each working 8 hours, to produce 80 rocking chairs. What is the productivity of these workers? a. 2 chairs per hour b. 10 chairs per hour c. 1 hour per chair d. 80 chairs

a. 2 chairs per hour

Refer to Scenario 25-1. In the production function, which variable would increase in value as technology improved? a. A b. K c. H d. N

a. A

Which of the following statements about inputs is correct? a. A forest is an example of a natural resource; it is also an example of a renewable resource. b. There is no distinction between human capital and technological knowledge. c. Human capital is a non-produced factor of production. d. Physical capital is a non-produced factor of production.

a. A forest is an example of a natural resource; it is also an example of a renewable resource

Which of the following countries had the highest growth rate over the last 100 or so years? a. Brazil b. Germany c. Canada d. United States

a. Brazil

Which list contains, in this order, a country whose real GDP per person grew faster and one whose real GDP per person grew slower than real GDP per person in the U.S. over the last 100 years? a. China, Pakistan b. United Kingdom, China c. Pakistan, Argentina d. Argentina, Japan

a. China, Pakistan

31. Which of the following is not correct? a. Countries that have had higher output growth per person have typically done so without higher productivity growth. b. A country's standard of living and its productivity are closely related. c. Productivity refers to output produced per hour of work. d. Increases in productivity can be used to increase output or leisure.

a. Countries that have had higher output growth per person have typically done so without higher productivity growth.

62. Which of the following lists contains, in this order, natural resources, human capital, and physical capital? a. For a restaurant: the land the restaurant was built on, the things the Chef learned at Cooking School, the freezers where the chops and steaks are kept. b. For a furniture company: wood, the company cafeteria, saws. c. For a railroad: fuel, railroad engines, railroad tracks. d. None of the above is correct.

a. For a restaurant: the land the restaurant was built on, the things the Chef learned at Cooking School, the freezers where the chops and steaks are kept.

Which of the following is indicated by the data on real income per person for various countries over the past 100 or so years? a. If, in a relatively poor country, real income per person had grown by 3.5 percent per year for the last 100 years, it would be a relatively rich country today. b. Rich countries became richer and poor countries became poorer. c. In the United States, real income per person today is about four times as high as it was 100 years ago. d. All of the above are correct.

a. If, in a relatively poor country, real income per person had grown by 3.5 percent per year for the last 100 years, it would be a relatively rich country today

Which of the following statements is correct? a. In 1870, real income per person was higher in the United Kingdom than in any other country at that time. b. Between 1870 and 2006, India experienced significantly stronger growth of real income per person than did the United States. c. Between 1870 and 2006, the United States experienced significantly stronger growth of real income per person than did Canada. d. All of the above are correct.

a. In 1870, real income per person was higher in the United Kingdom than in any other country at that time.

40. Dilbert's Incorporated produced 6,000,000 units of software in 2005. At the start of 2006 the pointy-haired boss raised employment from 10,000 total annual hours to 14,000 annual hours and production was 7,000,000 units. Based on these numbers what happened to productivity? a. It fell by about 16.7%. b. It stayed the same. c. It rose by about 16.7%. d. It rose by about 40%.

a. It fell by about 16.7%.

Which of the following countries had the lowest level of real GDP per person in 2006? a. Pakistan b. Indonesia c. Mexico d. China

a. Pakistan

35. In 8 hours, Sonja produces 8 units of goods and services. In 10 hours, Emma produces 9 units of goods and services. It follows that a. Sonja's productivity is higher than Emma's. b. Emma's productivity is higher than Sonja's. c. Emma's income per hour will be higher than Sonja's. d. Sonja's income per day will be higher than Emma's.

a. Sonja's productivity is higher than Emma's.

Which of the following statements is correct? a. The level of real GDP is a good gauge of economic prosperity, and the growth of real GDP is a good gauge of economic progress. b. The level of real GDP is a good gauge of economic progress, and the growth of real GDP is a good gauge of economic prosperity. c. The level of real GDP is a good gauge of economic prosperity, and the level of real GDP per person is a good gauge of economic progress. d. The level of real GDP is a good gauge of economic progress, and the level of real GDP per person is a good gauge of economic prosperity.

a. The level of real GDP is a good gauge of economic prosperity, and the growth of real GDP is a good gauge of economic progress.

Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it could be rewritten as a. Y/L = AF(1, K/L, H/L, N/L) b. Y/L = AF(L, 1, H/L, N/L) c. Y/L = AF(L, K/L, 1, N/L) d. Y/L = AF(L, K/L, H/L, 1)

a. Y/L = AF(1, K/L, H/L, N/L)

Industrial machinery is an example of a. a factor of production that in the past was an output from the production process. b. technological knowledge. c. a production function. d. an item which always has the property called constant returns to scale.

a. a factor of production that in the past was an output from the production process.

63. Which of the following is an example of a nonrenewable resource? a. coal b. honey c. livestock d. All of the above are correct.

a. coal

25. In 2007, Modern Electronics, Inc. produced 60,000 calculators, employing 80 workers, each of whom worked 8 hours per day. In 2008, the same firm produced 76,500 calculators, employing 85 workers, each of whom worked 10 hours per day. Between 2007 and 2008, productivity at Modern Electronics a. decreased by 4.00 percent. b. remained constant. c. increased by 8.33 percent. d. increased by 27.50 percent.

a. decreased by 4.00 percent.

100. Other things the same, which of the following could explain an increase in productivity? a. either an increase in human capital or an increase in physical capital b. an increase in human capital but not an increase in physical capital c. an increase in physical capital but not an increase in human capital d. neither an increase in human capital nor an increase in physical capital

a. either an increase in human capital or an increase in physical capital

You are told that Country A experienced growth of real GDP per person of 4 percent per year throughout the 1900s. In view of other countries' experience, you would have to characterize Country A's growth as a. exceptionally high. b. moderately high. c. moderateely low. d. exceptionally low.

a. exceptionally high.

58. Which of the following would be human capital and physical capital, respectively? a. for an accounting firm, the accountants' knowledge of tax laws and computer software b. for a grocery store, grocery carts and shelving c. for a school, chalkboard and desks d. for a library, the building and the reference librarians' knowledge of the Internet

a. for an accounting firm, the accountants' knowledge of tax laws and computer software

81. In the country of Suchnott, the price of silver increased from $30 per ounce to $32 per ounce during a time when the overall price level increased by 5 percent. During this period, the real price of silver a. increased. b. decreased. c. stayed the same. d. might have increased, decreased or stayed the same; more information is needed to be sure.

a. increased.

67. In a market economy, we know that a resource has become scarcer when a. its price rises relative to other prices. b. it is non-renewable and some of it is used. c. people search for substitutes. d. All of the above are correct.

a. its price rises relative to other prices.

32. Productivity is the a. key determinant of living standards, and growth in productivity is the key determinant of growth in living standards. b. key determinant of living standards, but growth in productivity is not the key determinant of growth in living standards. c. not the key determinant of living standards, but growth in productivity is the key determinant of growth in living standards. d. not the key determinant of living standards, and growth in productivity is not the key determinant of growth in living standards.

a. key determinant of living standards, and growth in productivity is the key determinant of growth in living standards.

92. An understanding of the best ways to produce goods and services is called a. human capital. b. physical capital. c. technology. d. productivity.

c. technology

83. Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,300 a ton. Over the same time a measure of the overall price level increased from 168 to 187. The price of iron ore increased by a. less than inflation, and this means it became relatively less scarce. b. less than inflation, and this means it became scarcer. c. more than inflation, and this means it became scarcer. d. more than inflation, but this doesn't necessarily mean that it become scarcer.

a. less than inflation, and this means it became relatively less scarce.

45. The equipment and structures available to produce goods and services are called a. physical capital. b. human capital. c. the production function. d. technology.

a. physical capital.

What term do economists use to describe the relationship between the quantity of inputs used and the quantity of output produced? a. production function b. input function c. capital function d. returns to scale

a. production function

The one variable that stands out as the most significant explanation of large variations in living standards around the world is a. productivity. b. population. c. preferences. d. prices.

a. productivity.

Using the notation and production function in the text, Y/L is a. productivity. b. output. c. the availability of natural resources. d. the amount of human capital.

a. productivity.

84. After adjusting for inflation, over time the prices of most natural resources have been a. steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling. b. steady or falling, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing. c. rising, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling. d. rising, meaning that their supplies are dwindling more rapidly than our ability to conserve them is growing.

a. steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling

41. The key determinant of a the standard of living in a country is a. the amount of goods and services produced from each hour of a worker's time. b. the total amount of goods and services produced within the country. c. the total amount of its physical capital. d. its growth rate of real GDP.

a. the amount of goods and services produced from each hour of a worker's time.

49. Which of the following would be considered physical capital? a. the refrigerators at Uncle Bob's restaurant b. rivers on which goods are transported c. the skills and knowledge of a lawyer d. All of the above are correct.

a. the refrigerators at Uncle Bob's restaurant

77. If an inexpensive alternative to oil were found, the price of oil adjusted for inflation a. would decline as the alternative would reduce the demand for oil. b. would decline as the alternative would reduce the supply of oil. c. would increase as the alternative would increase the demand for oil. d. would increase as the alternative would increase the supply of oil.

a. would decline as the alternative would reduce the demand for oil.

51. Human capital is the a. knowledge and skills that workers acquire through education, training, and experience. b. stock of equipment and structures that is used to produce goods and services. c. total number of hours worked in an economy. d. same thing as technological knowledge.

a.knowledge and skills that workers acquire through education, training, and experience.

In 1870, the richest country in the world was a. the United States. b. Spain. c. the United Kingdom. d. Germany.

c. the United Kingdom.

According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that they could not perform manual labor? a. 40 percent b. 20 percent c. 10 percent d. 5 percent

b. 20 percent

All else equal, which of the following would tend to cause real GDP per person to rise? a. a change from outward-oriented policies to inward-oriented policies b. an increase in investment in human capital c. a weakening of property rights d. All of the above are correct.

b. an increase in investment in human capital

In an economy where net exports are zero, if saving rises in some period, then in that period a. 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.

Which of the following is generally an opportunity cost of investment in human capital? a. future job security b. forgone present wages c. increased earning potential d. All of the above are correct.

b. forgone present wages

Over extended periods of time, population growth a. has no effect on the standard of living. b. has uncertain effects on the standard of living. c. clearly raises the standard of living. d. clearly lowers the standard of living.

b. has uncertain effects on the standard of living.

Suppose that a country increased its saving rate. In the long run it would have a. higher productivity, and another unit of capital would increase output by more than before. b. higher productivity, but another unit of capital would increase output by less than before. c. lower productivity, and another unit of capital would increase output by more than before. d. lower productivity, but another unit of capital would increase output by less than before.

b. higher productivity, but another unit of capital would increase output by less than before.

Other things the same, if a country increased its saving rate, in 40 years or so it would likely have a. higher productivity, and a higher growth rate of real GDP. b. higher productivity, but not a higher growth rate of real GDP. c. the same productivity and growth of real GDP it began with. d. None of the above is correct.

b. higher productivity, but not a higher growth rate of real GDP.

Suppose Japanese-based Sony Corporation builds and operates a new digital camera factory in the United States. Future production from such an investment would a. increase 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.

An increase in the saving rate would, other things the same, a. increase growth more for a poor country than for a rich country, and raise growth permanently. b. increase growth more for a poor country than for a rich country, but raise growth temporarily. c. increase growth more for a rich country than for a poor country, and raise growth permanently. d. increase growth more for a rich country than for a poor country, but raise growth temporarily.

b. increase growth more for a poor country than for a rich country, but raise growth temporarily.

On a production function, as capital per worker increases, output per worker a. increases. This increase is larger at larger values of capital per worker. b. increases. This increase is smaller at larger values of capital per worker. c. decreases. This decrease is larger at larger value of capital per worker. d. decreases. This decrease is smaller at larger value of capital per worker.

b. increases. This increase is smaller at larger values of capital per worker.

"When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount." This statement a. is an assertion that production functions have the property of constant returns to scale. b. is consistent with the view that capital is subject to diminishing returns. c. is inconsistent with the view that it is easier for a country to grow fast if it starts out relatively poor. d. All of the above are correct.

b. is consistent with the view that capital is subject to diminishing returns.

The slope of the production function with capital per worker on the horizontal axis and output per worker on the vertical axis a. is positive and gets steeper as capital per worker rises. b. is positive and gets flatter as capital per worker rises. c. is negative and gets steeper as capital per worker rises. d. is negative and gets flatter as capital per worker rises.

b. is positive and gets flatter as capital per worker rises.

The catch-up effect refers to the idea that a. saving will always catch-up with investment spending. b. it is easier for a country to grow fast and so catch-up if it starts out relatively poor. c. population eventually catches-up with increased output. d. if investment spending is low, increased saving will help investment to "catch-up."

b. it is easier for a country to grow fast and so catch-up if it starts out relatively poor.

It has been suggested that a possible benefit of rapid population growth is the likelihood that when there are more people, then there are more a. teachers, and so students acquire more knowledge and skills. b. people to discover things, and so technological progress is rapid. c. savers, and so capital per worker tends to increase over time. d. consumers, and so economic growth is more rapid.

b. people to discover things, and so technological progress is rapid.

Investment in a. physical capital, unlike investment in human capital, has an opportunity cost. b. physical capital, like investment in human capital, has an opportunity cost. c. human capital is particularly attractive because it involves no externalities. d. human capital has been shown to be relatively unimportant, relative to investment in physical capital, for a country's long-run economic success.

b. physical capital, like investment in human capital, has an opportunity cost.

Suppose Turkey increases its saving rate. In the long run a. the growth rates of productivity and real GDP per person increase. b. productivity and real GDP per person increase. c. the growth rate of productivity increases, and real GDP per person increases. d. productivity increases, and the growth rate of real GDP per person increases.

b. productivity and real GDP per person increase.

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 the long run, an increase in the saving rate a. doesn't change the level of productivity or income. b. raises the levels of both productivity and income. c. raises the level of productivity but not the level of income. d. raises the level of income but not the level of productivity.

b. raises the levels of both productivity and income.

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 4 percent to 7 percent. Over the next ten years we would expect that a. the growth rate will not change in either country. b. the country that started with less capital per worker will grow faster. c. the country that started with more capital per worker will grow faster. d. both countries will grow and at the same rate.

b. the country that started with less capital per worker will grow faster.

Other things the same, if a country raises its saving rate, then in the long run a. both the level and growth rate of real GDP are unchanged. b. the level of real GDP is higher but the growth rate of real GDP is unchanged. c. both the level and growth rate of real GDP are higher. d. None of the above are correct.

b. the level of real GDP is higher but the growth rate of real GDP is unchanged.

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.

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

Over the last century, U.S. real GDP per person grew at a rate of about a. 2 percent per year, so that it is now 2 times as high as it was a century ago. b. 2 percent per year, so that it is now 8 times as high as it was a century ago. c. 4 percent per year, so that it is now 2 times as high as it was a century ago. d. 4 percent per year, so that it is now 8 times as high as it was a century ago.

b. 2 percent per year, so that it is now 8 times as high as it was a century ago.

In 2006, the imaginary nation of Viloxia had a population of 5,000 and real GDP of 500,000. In 2007 it had a population of 5,100 and real GDP of 520,200. Over the year in question, real GDP per person in Viloxia grew by a. 2 percent, which is high compared to average U.S. growth over the last one-hundred years. b. 2 percent, which is about the same as average U.S. growth over the last one-hundred years. c. 4 percent, which is high compared to average U.S. growth over the last one-hundred years. d. 4 percent, which is about the same as average U.S. growth over the last one-hundred years.

b. 2 percent, which is about the same as average U.S. growth over the last one-hundred years.

11. In 2006, the typical Bangladeshi had about a. 1/5 the real income of a typical American a century ago. b. 2/3 the real income of a typical American a century ago. c. 2 times as much real income as that of a typical American a century ago. d. 4 times as much real income as that of a typical American a century ago.

b. 2/3 the real income of a typical American a century ago.

Which of the following statements is true? a. Productivity is calculated as hours worked divided by output produced. b. Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers. c. Trends in the market prices of most resources indicate that they have become increasingly scarce over time. d. All of the above are correct.

b. Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers.

3. As of 2006, using real GDP per person as a measure, we would classify a. the United States and Mexico as advanced economies and Bangladesh as a middle-income country. b. Canada as an advanced economy, Mexico as a middle-income country, and Mali as a poor country. c. Japan and India as advanced economies and Mexico as a poor country. d. Japan as an advanced economy, the United Kingdom as a middle-income country, and Argentina as a poor country.

b. Canada as an advanced economy, Mexico as a middle-income country, and Mali as a poor country.

Consider two countries. Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods. a. Country A has higher productivity and higher real GDP per person than country B. b. Country A has lower productivity and lower real GDP per person than country B. c. Country A has higher productivity, but lower real GDP per person than country B. d. Country B has lower productivity, but higher real GDP per person than country B.

b. Country A has lower productivity and lower real GDP per person than country B.

93. Suppose that over the last ten years productivity grew faster in Oceania than in Freedonia and the population of both countries was unchanged. a. It follows that real GDP per person must be higher in Oceania than in Freedonia. b. It follows that real GDP per person grew faster in Oceania than in Freedonia. c. It follows that the standard of living must be higher in Oceania than in Freedonia. d. All of the above are correct.

b. It follows that real GDP per person grew faster in Oceania than in Freedonia.

74. Which of the following statements is true? a. Natural resources per worker influence productivity only when those natural resources are renewable. b. The prices of most natural resources are stable or falling relative to other prices. c. Technology requires greater use of natural resources. d. The terms human capital and technological knowledge are used interchangeably.

b. The prices of most natural resources are stable or falling relative to other prices.

36. Mary looks over reports on four of her workers. Jack made 25 baskets in 5 hours. Walter made 36 baskets in 6 hours. Rudy made 40 baskets in 10 hours. Sam made 22 baskets in four hours. Who has the greatest productivity? a. Jack b. Walter c. Rudy d. Sam

b. Walter

27. Workland has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final goods. Laborland has a population of 5,000, of whom 4,000 work 12 hours a day to produce a total of 120,000 final goods. a. Workland has higher productivity and higher real GDP per person than Laborland. b. Workland has higher productivity but lower real GDP per person than Laborland. c. Workland has lower productivity but higher real GDP per person than Laborland. d. Workland has lower productivity and lower real GDP per person than Laborland.

b. Workland has higher productivity but lower real GDP per person than Laborland.

Technological knowledge refers to a. human capital. b. available information on how to produce things. c. resources expended transmitting society's understanding to the labor force. d. All of the above are technological knowledge.

b. available information on how to produce things.

28. Country A has a population of 1,000, of whom 700 worked an average of 8 hours a day and had a productivity of 2.5. Country B has a population of 800, of whom 560 worked 8 hours a day and had productivity of 3.0. The country with the higher real GDP was a. country A, and the country with higher real GDP per person was country A. b. country A, and the country with higher real GDP per person was country B. c. country B, and the country with higher real GDP per person was country A. d. country B, and the country with higher real GDP per person was country B.

b. country A, and the country with higher real GDP per person was country B.

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would a. fall to less than one-half of its former value. b. fall, but it would still be greater than one-half of its former value. c. stay the same. d. rise but less than double.

b. fall, but it would still be greater than one-half of its former value.

Despite its status as one of the richest countries in the world, Japan a. has a very low level of productivity. b. has few natural resources. c. has very little human capital. d. engages in a relatively small amount of international trade.

b. has few natural resources

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same, a. its output would stay the same and so would its productivity. b. its output and productivity would increase, but less than double. c. its output and productivity would increase by more than double. d. None of the above is correct.

b. its output and productivity would increase, but less than double.

Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then if we know the values of A, K/L, H/L, and N/L, we also know the value of a. output. b. labor productivity. c. A. d. All of the above are correct.

b. labor productivity

An economy's production form takes the form Y = AF(L, K, H, N). 114. Refer to Scenario 25-1. Using the notation in the text, K represents the quantity of a. human capital only. b. physical capital only. c. human capital and physical capital combined. d. nonrenewable natural resources.

b. physical capital only.

76. If natural resources had become scarcer, then we would expect their a. prices to have risen more than inflation as they have. b. prices to have risen more than inflation, but they have not. c. known quantities to have fallen as they have. d. known quantities to have fallen but they have not.

b. prices to have risen more than inflation, but they have not.

The quantity of goods and services produced from each unit of labor input is called a. standard of living. b. productivity. c. capitalized quantity. d. the knowledge base.

b. productivity

98. Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then a. productivity and output both rise. b. productivity rises and output falls. c. productivity falls and output rises. d. productivity and output fall.

b. productivity rises and output falls.

53. Which of the following is human capital? a. a student loan b. understanding how to use a company's accounting software c. training videos for new corporate employees d. All of the above are correct.

b. understanding how to use a company's accounting software

38. In 2007, Angel Foods produced 300,000 bags of tortilla chips, employing 12,000 hours of labor. In 2008, Angel Foods produced 325,000 bags of tortilla chips, employing 13,000 hours of labor. Relative to their productivity in 2007, their productivity in 2008 a. decreased by 2.1 percent. b. was unchanged. c. increased by 1.3 percent. d. increased by 2.3 percent.

b. was unchanged.

In the long run, a higher saving rate a. cannot increase the capital stock. b. means that people must consume less in the future. c. increases the level of productivity. d. None of the above is correct.

c. increases the level of productivity.

If Dark Nights, a U.S.manufacturer of winter clothing, opens a new factory in Austria, then a. Austrian GNP increases by more than Austrian GDP, which includes income earned by foreigners working in Austria. b. Austrian GNP increases by more than Austrian GDP, which excludes income earned by foreigners working in Austria. c. Austrian GNP increases by less than Austrian GDP, which includes income earned by foreigners working in Austria. d. Austrian GNP increases by less than Austrian GDP, which excludes income earned by foreigners working in Austria.

c. Austrian GNP increases by less than Austrian GDP, which includes income earned by foreigners working in Austria.

Which of the following is correct? a. If developing countries limit career and educational opportunities for women, birth rates are likely to be lower. b. Growth rates in developed and developing countries are nearly the same. c. Historically, in periods where the rate of population growth was high, so was the rate of growth in world real GDP per person. d. None of the above is correct.

c. Historically, in periods where the rate of population growth was high, so was the rate of growth in world real GDP per person.

Which of the following statements is not correct? a. The catch-up effect is based on the assumption of diminishing returns to capital. b. Investment in poor countries by citizens of rich countries is one way poor countries can learn new technologies. c. Malthus argued that charity and government aid was an effective way to reduce poverty. d. Peace and justice are keys to growth.

c. Malthus argued that charity and government aid was an effective way to reduce poverty.

Over the period 1960-1991, a. South Korea had a higher growth rate than the United States because it had a higher ratio of investment to GDP. b. the United States had a higher growth rate than South Korea because it had a higher ratio of investment to GDP. c. South Korea had a higher growth rate than the United States even though it had a similar ratio of investment to GDP. d. the United States had a higher growth rate than South Korea even though it had a similar ratio of investment to real GDP.

c. South Korea had a higher growth rate than the United States even though it had a similar ratio of investment to GDP.

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 traditional view of the production process is that capital is subject to a. constant returns. b. increasing returns. c. diminishing returns. d. diminishing returns for low levels of capital, and increasing returns for high levels of capital.

c. diminishing returns.

Foreign saving is used for domestic investment when foreigners engage in a. foreign direct investment. b. foreign portfolio investment. c. either foreign direct investment or foreign portfolio investment. d. None of the above is correct.

c. either foreign direct investment or foreign portfolio investment.

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.

If an American-based firm opens and operates a new watch factory in Panama, then it is engaging in a. foreign portfolio investment. b. foreign financial investment. c. foreign direct investment. d. indirect foreign investment.

c. foreign direct investment.

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.

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. d. All of the above are correct.

c. in some ways are like prohibiting the use of certain technologies.

Countries that pursued outward-oriented policies in the 20th century a. experienced lower rates of economic growth than did countries that pursued inward-oriented policies. b. experienced higher levels of political instability than did countries that pursued inward-oriented policies. c. include Singapore, South Korea, and Taiwan. d. All of the above are correct.

c. include Singapore, South Korea, and Taiwan.

Suppose that Slovenia undertakes a policy to increase its saving rate. This policy will likely a. have no impact on GDP growth. b. lead to higher GDP growth for a few years. c. lead to higher GDP growth for a period of several decades. d. lead to a permanently higher growth rate.

c. lead to higher GDP growth for a period of several decades.

The logic behind the catch-up effect is that a. workers in countries with low incomes will work more hours than workers in countries with high incomes. b. the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. c. new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. d. None of the above is correct.

c. new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

Economist Robert Fogel focused on which of the following factors as one determinant of long-run economic growth? a. education b. research and development c. nutrition d. trade restrictions

c. nutrition

Suppose a country reduces 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.

c. outward policy, which most economists believe has beneficial effects on the economy.

Patents turn new ideas into a. public goods, and increase the incentive to engage in research. b. public goods, but decrease the incentive to engage in research. c. private goods, and increase the incentive to engage in research. d. private goods, but decrease the incentive to engage in research.

c. private goods, and increase the incentive to engage in research.

If a country's saving rate increases, then in the long run a. productivity is higher but real GDP per person is not higher. b. real GDP per person is higher but productivity is not higher. c. productivity and real GDP per person are both higher. d. neither productivity nor real GDP per person is higher.

c. productivity and real GDP per person are both higher.

Once an idea enters society's pool of knowledge, the knowledge becomes a a. societal good. b. private good. c. public good. d. proprietary good.

c. public good.

30. Last year real GDP per person in the imaginary nation of Olympus was 4,500. The year before it was 4,250. By about what percentage did Olympian real GDP per person grow during the period? a. 4.6 percent b. 5.2 percent c. 5.9 percent d. 6.5 percent

c. 5.9 percent

In recent decades, average income in some East Asian countries, such as South Korea, Singapore, and Taiwan, has risen about a. 2 percent per year. b. 4 percent per year. c. 7 percent per year. d. 10 percent per year.

c. 7 percent per year.

Over the last 100 years which of the following had growth rates higher than that of the United States? a. the United Kingdom b. Bangladesh c. Brazil d. None of the above is correct.

c. Brazil

34. Waldo works eight hours and produces 7 units of goods per hour. Emerson works six hours and produces 10 units of goods per hour. a. Waldo's productivity and output are greater than Emerson's. b. Waldo's productivity is greater than Emerson's but his output is less. c. Emerson's productivity and output are greater than Waldo's. d. Emerson's productivity is greater than Waldo's but his output is less.

c. Emerson's productivity and output are greater than Waldo's.

Average income has been stagnant for many years in a. Argentina. b. Singapore. c. Nigeria. d. All of the above are correct.

c. Nigeria

Which of the following is correct? a. Although levels of real GDP per person vary substantially from country to country, the growth rate of real GDP per person is similar across countries. b. Productivity is not closely linked to government policies. c. The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress. d. Productivity may be measured by the growth rate of real GDP per person.

c. The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress.

Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5 billion. Which of the following changes in population is consistent with a 5 percent growth rate of real GDP per person over the last year? a. The population decreased from 88 million to 84 million. b. The population decreased from 75 million to 73 million. c. The population increased from 45 million to 50 million. d. The population increased from 60 million to 62 million.

c. The population increased from 45 million to 50 million.

Which of the following is not correct? a. Across countries there are large differences in the average income per person. These differences are reflected in large differences in the quality of life. b. With a growth rate of about 2 percent per year, average income per person doubles about every 35 years. c. The ranking of countries by average income changes very little over time. d. In some countries real income per person has changed very little over many years.

c. The ranking of countries by average income changes very little over time

73. The behavior of market prices over time indicates that natural resources a. are a limit to economic growth. b. are unrelated to economic growth. c. are not a limit to economic growth. d. are the major determinant of productivity.

c. are not a limit to economic growth.

99. Which of the following would be considered physical capital? a. the available knowledge on how to make semiconductors b. a taxi-cab driver's knowledge of the fastest routes to take c. bulldozers, backhoes and other construction equipment d. All of the above are correct.

c. bulldozers, backhoes and other construction equipment

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has a. decreasing returns to scale. b. zero returns to scale. c. constant returns to scale. d. increasing returns to scale.

c. constant returns to scale.

78. A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. An economist would a. agree with the report, and would point to rising natural resource prices as evidence. b. agree with the report, but wouldn't think it was important because growth will not slow down for several centuries. c. disagree with the report, in part because it ignores the mitigating effects of technological change. d. disagree with the report because labor and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down.

c. disagree with the report, in part because it ignores the mitigating effects of technological change.

If your firm's production function has constant returns to scale, and if you doubled all your inputs, then your firm's output would a. not change. b. increase, but by less than double. c. double. d. more than double.

c. double.

79. If a good has become more scarce, then we know for sure that a. the demand for it increased. b. the supply of it decreased. c. either the demand for it increased or the supply of it decreased. d. both the supply of it and the demand for it decreased.

c. either the demand for it increased or the supply of it decreased.

59. Which of the following would be human capital and physical capital, respectively? a. for an accounting firm, the accountants' knowledge of tax laws and the number of hours worked by those accountants b. for a grocery store, grocery carts and cash registers. c. for a restaurant, the chefs' knowledge about preparing food and equipment in the kitchen d. for a library, the building and the reference librarians' knowledge of the Internet

c. for a restaurant, the chefs' knowledge about preparing food and equipment in the kitchen

In determining living standards, productivity plays a key role a. for individuals, but not for nations. b. for nations, but not for individuals. c. for both nations and individuals. d. for neither nations nor individuals.

c. for both nations and individuals

Nathan owns a bakery that bakes only cakes. All of his bakers work 8 hours per day. In 2006, he employed 5 bakers and they produced 200 cakes each day. In 2007, he employed 6 bakers and they produced 249 cakes each day. In Nathan's bakery, productivity a. decreased by 2.33 percent between 2006 and 2007. b. increased by 2.33 percent between 2006 and 2007. c. increased by 3.75 percent between 2006 and 2007. d. increased by 24.50 percent between 2006 and 2007.

c. increased by 3.75 percent between 2006 and 2007.

The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that a. most economists do not regard the availability of natural resources as a determinant of productivity. b. the quantity of natural resources does not enter into any production function. c. inflation-adjusted prices of natural resources are stable or falling over time. d. inflation-adjusted prices of natural resources are rising over time.

c. inflation-adjusted prices of natural resources are stable or falling over time.

Technological knowledge a. is the same thing as human capital. b. can be discovered but it can never be kept secret. c. is a determinant of productivity. d. does not play a role in the relationship that economists call the production function.

c. is a determinant of productivity.

69. If the price of a good has risen over time, a. it must have become more scarce. b. it must have become less scarce. c. it has become more scarce only if the price adjusted for inflation has risen. d. it has become less scarce only if the price adjusted for inflation has risen.

c. it has become more scarce only if the price adjusted for inflation has risen

29. Last year a country had 800 workers who worked an average of 8 hours and produced 12,800 units. This year the country had 1000 workers who worked an average of 8 hours and produced 14,000 units. This country's productivity was a. higher this year than last year. A possible source of this change in productivity is a change in the size of the capital stock. b. higher this year than last year. A change in the size of the capital stock does not affect productivity. c. lower this year than last year. A possible source of this change in productivity is a change in the size of the capital stock. d. lower this year than last year. A change in the size of the capital stock does not affect productivity.

c. lower this year than last year. A possible source of this change in productivity is a change in the size of the capital stock.

64. Which of the following is an example of a renewable natural resource? a. the knowledge possessed by scientists b. carpenters' labor services c. lumber d. All of the above are correct.

c. lumber

82. Suppose over the last year that the price of recycled aluminum increased from $800 a ton to $900 a ton. Over the same time a measure of the overall price level increased from 120 to 130. The price of recycled aluminum increased by a. less than inflation, but this doesn't necessarily mean it became scarcer. b. less than inflation, and this means it became scarcer. c. more than inflation, and this means it became scarcer. d. more than inflation, but this doesn't necessarily mean that it become scarcer.

c. more than inflation, and this means it became scarcer.

47. Which of the following would not be considered physical capital? a. a new factory building b. a computer used to help Mercury Delivery Service keep track of its orders c. on-the-job training d. a desk used in an accountant's office

c. on-the-job training

71. Greater scarcity of a natural resource is indicated a. by an increase in the price of the resource, whether the price increase is less than or greater than the rate of inflation. b. only by an increase in the price of the resource that is less than the rate of inflation. c. only by an increase in the price of the resource that is greater than the rate of inflation. d. only by an increase in the price of the resource that is caused by a decrease in supply and is greater than the rate of inflation.

c. only by an increase in the price of the resource that is greater than the rate of inflation.

88. Your company discovers a better way to produce mousetraps, but your better methods are not apparent from the mousetraps themselves. Your knowledge of how to more efficiently produce mousetraps is a. common technological knowledge. b. common, but not technological, knowledge. c. proprietary technological knowledge. d. proprietary, but not technological, knowledge.

c. proprietary technological knowledge

Productivity is defined as a. the amount of difficulty that is involved in producing a given quantity of goods and services. b. the quantity of labor that is required to produce one unit of goods and services. c. the quantity of goods and services produced from each unit of labor input. d. the quantity of goods and services produced over a given amount of time.

c. the quantity of goods and services produced from each unit of labor input.

44. The Peapod Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital? a. the owner's knowledge of how to prepare vegetarian entrees b. the money in the owner's account at the bank from which she borrowed money c. the tables and chairs in the restaurant d. the land the restaurant was built on

c. the tables and chairs in the restaurant

Which of the following is considered human capital? a. the comfortable chair in your dorm room where you read economics texts b. the amount you get paid each week to work at the library c. the things you have learned this semester d. any capital goods that require a human to be present to operate

c. the things you have learned this semester

57. Which of the following is human capital? a. textbooks b. hand held power tools c. understanding how to repair cars d. All of the above are correct.

c. understanding how to repair cars

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement a.e represents the traditional view of the production process. b. is an assertion that capital is subject to diminishing returns. c. is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant. d. All of the above are correct.

d. All of the above are correct.

Educated people may generate ideas that increase production. These ideas a. produce a return to society from education that is greater than the return to the individual. b. could justify government subsides for education. c. are external benefits of education. d. All of the above are correct.

d. All of the above are correct.

Investment from abroad a. is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries. b. is viewed by economists as a way to increase growth. c. often requires removing restrictions that governments have imposed on foreign ownership of domestic capital. d. All of the above are correct.

d. All of the above are correct.

The opening of a new American-owned factory in Egypt would tend to increase Egypt's GDP more than it increases Egypt's GNP because a. some of the income from the factory accrues to people who do not live in Egypt. b. gross domestic product is income earned within a country by both residents and nonresidents, whereas gross national product is the income earned by residents of a country while producing both at home and abroad. c. all of the income from the factory is included in Egypt's GDP. d. All of the above are correct.

d. All of the above are correct.

Which of the following is consistent with the catch-up effect? a. The United States had a higher growth rate before 1900 than after. b. After World War II the United States had lower growth rates than war-ravaged European countries. c. Although the United States has a relatively high level of output per person, its growth rate is rather modest compared to some countries. d. All of the above are correct.

d. All of the above are correct.

Which of the following statements is correct? a. In an economy-wide sense, property rights are an important prerequisite for the price system to work. b. Property rights give people the ability to exercise authority over the resources they own. c. Based on the available evidence, the existence of well-established and well-enforced property rights appears to be associated with an enhanced standard of living. d. All of the above are correct.

d. All of the above are correct.

Real GDP per person is $30,000 in Country A, $20,000 in Country B, and $11,000 in Country C. Saving per person is $1,000 in all three countries. Other things equal, we would expect that a. all three countries will grow at the same rate. b. Country A will grow the fastest. c. Country B will grow the fastest. d. Country C will grow the fastest.

d. Country C will grow the fastest.

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.

The president of Improvia, a developing country, proposes that his country needs to help domestic firms by imposing trade restrictions. a. These are outward-oriented policies and most economists believe they would have beneficial effects on growth in Improvia. b. These are outward-oriented policies and most economists believe they would have adverse effects on growth in Improvia. c. These are inward-oriented policies and most economists believe they would have beneficial effects on growth in Improvia. d. These are inward-oriented policies and most economists believe they would have adverse effects on growth in Improvia.

d. These are inward-oriented policies and most economists believe they would have adverse effects on growth in Improvia.

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has less capital and so less real GDP per person. Suppose that both increase their saving rate from 3 percent to 4 percent. In the long run a. both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with more capital. b. both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with less capital. c. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital. d. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.

d. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.

Lower Equitorial and Upper Equitorial are the same except Lower Equitorial has a larger capital stock. Both countries undertake policies that raise their saving rates to the same higher level. We would expect that a. both countries would have permanent increases in their growth rates, but the increase would initially be larger in Lower Equitorial. b. both countries would have permanent increases in their growth rates, but the increase would initially be smaller in Upper Equitorial. c. both countries would have temporary increases in their growth rates, but the increase would be larger in Lower Equitorial. d. both countries would have temporary increases in their growth rates, but the increase would be smaller in Lower Equitorial.

d. both countries would have temporary increases in their growth rates, but the increase would be smaller in Lower Equitorial.

Consider three imaginary countries. In Old York, saving amounts to $3,000 and consumption amounts to $7,000; in New Frank, saving amounts to $2,000 and consumption amounts to $8,000; and in Ganzee, saving amounts to $4,500 and consumption amounts to $10,500. The saving rate is a. higher in Old York than in Ganzee, and it is higher in Ganzee than in New Frank. b. higher in New Frank than in Ganzee, and it is higher in Ganzee than in Old York. c. higher in Ganzee than in New Frank, and it is the same in New Frank and Old York. d. higher in Old York than in New Frank, and it is the same in Old York and Ganzee.

d. higher in Old York than in New Frank, and it is the same in Old York and Ganzee.

Rapid population growth a. was hailed by Thomas Robert Malthus as the key to future economic growth. b. tends to lead to higher levels of educational attainment. c. is the main reason that less developed nations are poor. d. may depress economic prosperity by reducing the amount of capital which each worker has to work with.

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

If a country's saving rate increases, then in the long run a. both productivity growth and income growth increase. b. only productivity growth increases. c. only income growth increases. d. neither productivity growth nor income growth increase.

d. neither productivity growth nor income growth increase.

A rapid increase in the number of workers, other things the same, is likely in the short term to a. raise real GDP per person, but decrease real GDP. b. decrease both real GDP and real GDP per person. c. raise both real GDP and real GDP per person. d. raise real GDP, but decrease real GDP per person.

d. raise real GDP, but decrease real GDP per person.

The traditional view that the production process has diminishing returns implies that a. the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones. b. the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones. c. the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones. d. the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.

d. the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones.

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? a. 12 percent b. 10 percent c. 4 percent d. 2 percent

d. 2 percent

80. Which of the following best states economists' understanding of the facts concerning the relationship between natural resources and economic growth? a. A country with no or few domestic natural resources is destined to be poor. b. Differences in natural resources have virtually no role in explaining differences in standards of living. c. Some countries can be rich mostly because of their natural resources and countries without natural resources need not be poor, but can never have very high standards of living. d. Abundant domestic natural resources may help make a country rich, but even countries with few natural resources can have high standards of living.

d. Abundant domestic natural resources may help make a country rich, but even countries with few natural resources can have high standards of living.

Which of the following items plays a role in determining productivity? a. physical capital b. natural resources c. technological knowledge d. All of the above are correct.

d. All of the above are correct

33. Both Tom and Jerry work 10 hours a day. Tom can produce six baskets of goods per hour while Jerry can produce four baskets of the same goods per hour. It follows that Tom's a. productivity is greater than Jerry's. b. output is greater than Jerry's. c. standard of living is higher than Jerry's. d. All of the above are correct.

d. All of the above are correct.

42. Which of the following is a determinant of productivity? a. human capital per worker b. physical capital per worker c. natural resources per worker d. All of the above are correct.

d. All of the above are correct.

60. Natural resources a. are inputs provided by nature. b. are inputs such as land, rivers, and mineral deposits. c. take two forms: renewable and nonrenewable. d. All of the above are correct.

d. All of the above are correct.

75. Which of the following statements is true? a. The quantity of natural resources per worker can influence productivity. b. Technological knowledge and human capital are closely related. c. Over long periods of time, the prices of most natural resources are stable or falling, relative to other prices. d. All of the above are correct.

d. All of the above are correct.

95. Which of the following would increase productivity? a. an increase in the physical capital stock per worker b. an increase in human capital per worker c. an increase in natural resources per worker d. All of the above are correct.

d. All of the above are correct.

Industrial machinery is an example of a. a factor of production that in the past was an output from the production process. b. physical capital. c. something that influences productivity. d. All of the above are correct.

d. All of the above are correct.

Which of the following is considered human capital? a. knowledge acquired from early childhood education programs b. knowledge acquired from grade school c. knowledge acquired from on-the-job training d. All of the above are correct.

d. All of the above are correct.

Which of the following is correct? a. Once adjustment is made for inflation, the prices of most natural resources have been about steady or falling. b. Technological progress has allowed us to substitute renewable resources for some nonrenewable resources. c. Technological progress has made once-crucial natural resources less necessary. d. All of the above are correct.

d. All of the above are correct.

Which of the following nations experienced average rates of economic growth of less than 2 percent over the last 100 years? a. Bangladesh b. Pakistan c. United Kingdom d. All of the above are correct.

d. All of the above are correct.

Which of the following statements is correct? In 2006, a. real income per person in the U.S. was about 6 times that in China. b. real income per person in China was about 2 times that in India. c. the typical resident of India had less real income than the typical resident of England in 1870. d. All of the above are correct.

d. All of the above are correct.

102. Given that a country's real output has increased, in which of the following cases can we be sure that its productivity also has increased? a. The total number of hours worked rose. b. The total number of hours worked stayed the same. c. The total number of hours worked fell. d. Both b and c are correct.

d. Both b and c are correct.

Over the period 1900-2006, which of the following countries experienced the highest average annual growth rate of real GDP per person? a. Indonesia b. India c. Pakistan d. Brazil

d. Brazil

Which of the following statements is correct? a. By definition, all natural resources are nonrenewable. b. Market prices give us reason to believe that natural resources are a limit to economic growth. c. An economy must be blessed with ample quantities of natural resources if it is to be a highly productive economy. d. Differences in natural resources can explain some of the differences in standards of living around the world.

d. Differences in natural resources can explain some of the differences in standards of living around the world.

Which of the following is correct? a. Over the last 100 years Japan had a higher average growth rate than the United States. It follows that, today, the standard of living in Japan is higher than in the United States. b. The typical person in Bangladesh today has about twice the real income of a typical American 100 years ago. c. The typical citizen of China today has about one-half as much real income as the typical citizen of America today. d. None of the above is correct

d. None of the above is correct

94. Suppose that real GDP grew more in Country A than in Country B last year. a. Country A must have a higher standard of living than country B. b. Country A's productivity must have grown faster than country B's. c. Both of the above are correct. d. None of the above is correct.

d. None of the above is correct.

In which of the following countries has economic growth been sufficiently strong in recent history to propel that country from being among the poorest in the world to being among the richest in the world? a. India b. Mexico c. Nigeria d. Singapore

d. Singapore

In the length of one generation, which of the following countries has gone from being among the poorest countries in the world to being among the richest? a. Chad b. Ethiopia c. India d. South Korea

d. South Korea

Of the following countries, which grew most slowly, in terms of real GDP per person, over the last 100 years? a. Brazil b. Mexico c. China d. United States

d. United States

The level of real GDP person a. differs widely across countries, but the growth rate of real GDP per person is similar across countries. b. is very similar across countries, but the growth rate of real GDP per person differs widely across countries. c. and the growth rate of real GDP per person are similar across countries. d. and the growth rate of real GDP per person vary widely across countries.

d. and the growth rate of real GDP per person vary widely across countries.

87. A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are a. proprietary and common knowledge. b. neither proprietary nor common knowledge. c. proprietary, but not common, knowledge. d. common, but not proprietary, knowledge.

d. common, but not proprietary, knowledge

You are told that Country A experienced growth of real GDP per person of 0.5 percent per year throughout the 1900s. In view of other countries' experience, you would have to characterize Country A's growth as a. exceptionally high. b. moderately high. c. moderately low. d. exceptionally low.

d. exceptionally low.

Productivity a. is nearly the same across countries, and so provides no help explaining differences in the standard of living across countries. b. explains very little of the differences in the standard of living across countries. c. explains some, but not most of the differences in the standard of living across countries. d. explains most of the differences in the standard of living across countries.

d. explains most of the differences in the standard of living across countries.

43. The inputs used to produce goods and services are also called a. productivity indicators. b. capitalization producers. c. production functions. d. factors of production.

d. factors of production.

If one wants to know how the material well-being of the average person has changed over time in a given country, one should look at the a. level of real GDP. b. growth rate of nominal GDP. c. growth rate of real GDP. d. growth rate of real GDP per person.

d. growth rate of real GDP per person.

55. Which of the following best illustrates the human capital of a survivor stranded on an island? a. the fishing poles she has produced b. the invention of a better fishing lure c. the fresh fruit and fish on and around the island d. her previous training in a survival course

d. her previous training in a survival course

Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists include these skills as part of Perry's a. standard of learning. b. technological knowledge. c. physical capital. d. human capital.

d. human capital.

20. Countries that have lower levels of real GDP per person than the United States a. tend to have growth rates that are higher than that of the United States. b. tend to have growth rates that are about the same as that of the United States. c. tend to have growth rates that are lower than that of the United States. d. in some cases have growth rates that are higher than that of the United States and in other cases lower than that of the United States.

d. in some cases have growth rates that are higher than that of the United States and in other cases lower than that of the United States.

An economy's production function has the constant-returns-to-scale property. If the economy's labor force doubled and all other inputs stayed the same, then real GDP would a. stay the same. b. increase by exactly 50 percent. c. increase by exactly 100 percent. d. increase, but not necessarily by either 50 percent or 100 percent.

d. increase, but not necessarily by either 50 percent or 100 percent.

96. Which of the following would, by itself, reveal the most about a country's standard of living? a. its level of capital b. the number of hours worked c. its availability of natural resources d. its productivity

d. its productivity

97. 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.

85. Proprietary technology is knowledge that is a. known but no longer used much. b. known, but only recently discovered. c. known mostly by only those in a certain profession. d. known only by the company that discovered it.

d. known only by the company that discovered it.

In 2006, real GDP per person in Bangladesh was a. about 3 times as high as it was in the U.S. in 1870. b. about twice as high as it was in the U.S. in 1870. c. about the same as it was in the U.S. in 1870. d. less than it was in the U.S. in 1870.

d. less than it was in the U.S. in 1870.

86. Proprietary technology is technology that is a. widely used because it is easy to learn. b. widely used because the government subsidizes its use. c. not widely used because people could, but have not, taken the time to learn how to apply it. d. not widely used because it is known or controlled only by the company that discovered it.

d. not widely used because it is known or controlled only by the company that discovered

39. Dilbert's Incorporated produced 5,000,000 units of accounting software in 2004. At the start of 2005 the pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity a. fell by 4%. b. fell by 20%. c. rose by 12%. d. rose by 20%.

d. rose by 20%.

In a particular production process, if the quantities of all inputs used are increased by 60 percent, then the quantity of output increases by 60 percent as well. This means that a. the production process cannot be enhanced by technological advances. b. no mathematical representation of the relevant production function can be formulated. c. the relevant production function has the limits-to-growth property. d. the relevant production function has the constant-returns-to-scale property.

d. the relevant production function has the constant-returns-to-scale property.