Chapter 12
Renewable resources
Natural resource that can be reproduced
Nonrenewable resource
Natural resource that is limited in supply
Outward-oriented policies
Policies that decrease international trade restrictions
Inward-oriented policies
Policies that increase international trade restrictions
A reasonable measure of the standard of living in a country is
Real GDP per person
Infant-Industry argument
Restricting international trade to project fledging domestic industry from foreign competition
Which of the following expenditures to enhance productivity is most likely to emit a positive externality?
Susan pays her college tuition
Property rights
The ability of people to exercise control over their resources
Growth rate
The annual percentage change in output
Human Capital
The knowledge and skills that workers acquire through education, training, and experience
Catch-up effect
The property that poorer countries tend to grow more rapidly than richer countries
Real GDP per person
The quantity of goods and services available for the average individual in the economy
Productivity
The quantity of goods and services produced from each unit of labor input
Production function
The relationship between inputs and outputs from production
Physical capital
The stock of equipment and structures used to produce output
An increase in the rate of saving and investment permanently increases a country's rate of growth
False
If Mazda builds a new plant in Illinois
in the future, US GDP will rise more than US GNP
If real GDP per person in 2009 is $18,073 and real GDP per person in 2010 is $18,635, what is the growth rate of real output over this period?
3.1 percent
Which of the following describes an increase in technological knowledge?
A farmer discovers that it is better to plant in the spring rather than in the fall
Public good
A good that we may all use at the same time without diminishing another's benefits
Constant returns to scale
A production process where doubling all of the inputs doubles the output
Technological knowledge
A society's understanding about the best ways to produce goods and services
Foreign portfolio investment
Capital investment financed with foreign money but operated by domestic residents
Foreign direct investment
Capital investment owned and operated by foreigners
A country can only increase its level of investment by increasing its saving
False
Economic evidence supports that predictions of Thomas Malthus regarding the effects of population growth and the food supply on the standard of living
False
Evidence of rising prices for natural resources demonstrates that nonrenewable resources will become so scarce that economic growth will be limited
False
Human capital refers to human-made capital such as tools and machinery, as opposed to natural capital such as rivers and timber
False
Most economists believe that inward-oriented policies that protect infant industries improve growth rates of developing nations
False
The United States should grow faster than Japan because the United States has a larger economy
False
Madelyn goes to college and reads many books while at school. Her education increases which of the following factors of production?
Human capital
Which of the following government policies is least likely to increase growth in Africa?
Increase restrictions on the importing of Japanese automobiles and electronics
Natural Resources
Inputs into production provided by nature
Factors of production
Inputs used in production, such as labor, capital, and natural resources
Many East Asian countries are growing very quickly because
They save and invest an unusually high percentage of their GDP
Which of the following is an example of foreign portfolio investment?
Toyota buys stock in ford, and ford uses the proceeds to build a new plant in Michigan
An increase in capital should cause the growth rate of a relatively poor country to increase more than that of a rich country
True
Countries have great variance in both the level and growth rate of GDP per person, thus poor countries can become relatively rich over time
True
If Germans invest in the US economy by building a new mercedes factory, in the future US GDP will rise by more than US GNP
True
If a production function exhibits constant returns to scale, then doubling all of the inputs double output
True
In very poor countries, paying parents to send their children to school may increase the education of poor children and decrease the use of child labor
True
Investment in human capital and technology may be particularly productive because of positive spillover effects
True
The only factor of production that is not "produced" is natural resources
True
The opportunity cost of additional growth is that someone must forgo current consumption
True
The rate of economic growth is probably underestimated
True
Externality
When the actions of one person affect the well-being of a bystander
Diminishing returns
When the incremental increase in output declines as equal increments of an input are added to production
Copper is an example of
a nonrenewable natural resource
Thomas Malthus argued that
an ever-increasing population in constrained only by the food supply, resulting in chronic famines
The opportunity cost of growth is a reduction in
current consumption
When a nation has very little GDP per person..
it has the potential to grow relatively quickly due to the "catch-up-effect"
Once a country is wealthy
it may be harder for it to grow quickly because of the diminishing returns to capital
For a given level of technology, we should expect an increase in labor productivity within a nation when there is an increase in each of the following except
labor
To increase growth, governments should do all of the following except
nationalize major industries
Our standard of living is most closely related to
our productivity because our income is equal to what we produce