chapter 25 mankiw/taylor

t/f: A country can only increase its level of investment by increasing its saving.

F

t/f: An increase in the rate of saving and investment permanently increases a country's rate of growth.

F

t/f: Economic evidence supports the predictions of Thomas Malthus regarding the effects of population growth and the food supply on the standard of living.

F

t/f: Evidence of rising prices for natural resources demonstrates that non-renewable resources will become so scarce that economic growth will be limited.

F

t/f: Human capital refers to human-made capital such as tools and machinery, as opposed to natural capital such as rivers and timber.

F

t/f: Most economists believe that inward-oriented policies that protect infant industries improve the growth rates of developing nations.

F

t/f: The United States should grow faster than Japan because the United States has a larger economy.

F

t/f: An increase in capital should cause the growth rate of a relatively poor country to increase more than that of a rich country.

T

t/f: If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

T

t/f: If a production function exhibits constant returns to scale, then doubling all of the inputs doubles output.

T

t/f: 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 labour.

T

t/f: Investment in human capital and technology may be particularly productive because of positive spillover effects.

T

t/f: The only factor of production that is not "produced" is natural resources.

T

t/f: The opportunity cost of additional growth is that someone must forgo current consumption.

T

t/f: The rate of economic growth is probably underestimated.

T

For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except a.labour. b.physical capital/worker. c.human capital/worker. d.natural resources/worker.

a.labour.

A reasonable measure of the standard of living in a country is a.real GDP per person. b.nominal GDP per person. c.real GDP. d.the growth rate of nominal GDP per person. e.nominal GDP.

a.real GDP per person.

Many East Asian countries are growing very quickly because a.they save and invest an unusually high percentage of their GDP. b.they have always been wealthy and will continue to be wealthy, which is known as the "snowball effect." c.they are imperialists and have collected wealth from previous victories in war. d.they have enormous natural resources.

a.they save and invest an unusually high percentage of their GDP.

Which of the following statements is true? a.Countries all have the same growth rate and level of output because any country can obtain the same factors of production. b.Countries have great variance in both the level and growth rate of GDP/person; thus, poor countries can become relatively rich over time. c.Countries may have a different level of GDP/person but they all grow at the same rate. d.Countries may have a different growth rate but they all have the same level of GDP/person.

b.Countries have great variance in both the level and growth rate of GDP/person; thus, poor countries can become relatively rich over time.

Which of the following is an example of foreign portfolio investment? a.Toyota builds a new plant in the north of England. b.EDF of France buys shares in Scottish & Southern Energy of the UK, and Scottish & Southern Energy uses the proceeds to build a new hydro-electric power station in Scotland. c.Deutsche Bank of Germany buys some new software from a UK supplier. d.JCB builds a new plant near Manchester. e.None of these answers.

b.EDF of France buys shares in Scottish & Southern Energy of the UK, and Scottish & Southern Energy uses the proceeds to build a new hydro-electric power station in Scotland.

Which of the following expenditures to enhance productivity is most likely to emit a positive externality? a.Megabank buys a new computer. b.Nathalie pays her university tuition fees. c.Exxon leases a new oil field. d.General Motors buys a new drill press.

b.Nathalie pays her university tuition fees.

The opportunity cost of growth is a.a reduction in current investment. b.a reduction in current consumption. c.a reduction in taxes. d.a reduction in current saving.

b.a reduction in current consumption.

Which of the following statements regarding the impact of population growth on productivity is true? a.There is no evidence, yet, that rapid population growth stretches natural resources to the point that it limits growth in productivity. b.all of these answers c.Rapid population growth may dilute the capital stock, lowering productivity. d.Rapid population growth may promote technological progress, increasing productivity.

b.all of these answers

Thomas Malthus argued that a.none of these answers b.an ever increasing population is constrained only by the food supply, resulting in chronic famines. c.technological progress will continuously generate improvements in productivity and living standards. d.labour is the only true factor of production. e.private charities and government aid will improve the welfare of the poor.

b.an ever increasing population is constrained only by the food supply, resulting in chronic famines.

Which of the following best describes the rate of growth in productivity in the United States over the last fifty years? a.Productivity growth has been steady over the last 50 years. b.Productivity has been growing more slowly every decade since World War II. c.Productivity grew quickly in the 1950s and 1960s, more slowly from the early 1970s through 1995, and then quickly again. d.Productivity grew slowly from the 1950s through the 1970s, and then began to accelerate, probably due to advances in computer technology. e.Productivity has been growing more quickly every decade since World War II.

c.Productivity grew quickly in the 1950s and 1960s, more slowly from the early 1970s through 1995, and then quickly again.

To increase growth, governments should do all of the following except a.encourage foreigners to investment in your country. b.encourage saving and investment. c.nationalize major industries. d.encourage research and development. e.promote free trade.

c.nationalize major industries.

Our standard of living is most closely related to a.how hard we work. b.our supply of capital, because everything of value is produced by machinery. c.our productivity, because our income is equal to what we produce. d.our supply of natural resources, because they limit production.

c.our productivity, because our income is equal to what we produce.

Which of the following describes an increase in technological knowledge? a.A farmer sends his child to agricultural college and the child returns to work on the farm. b.A farmer hires another day labourer. c.A farmer buys another tractor. d.A farmer discovers that it is better to plant in the spring rather than in the fall.

d.A farmer discovers that it is better to plant in the spring rather than in the fall.

If a production function exhibits constant returns to scale, a.doubling all of the inputs more than doubles output due to the catch-up effect. b.doubling all of the inputs has absolutely no impact on output because output is constant. c.doubling all of the inputs less than doubles output due to diminishing returns. d.doubling all of the inputs doubles output.

d.doubling all of the inputs doubles output.

When a nation has very little GDP per person, a.it is doomed to being relatively poor forever. b.none of these answers c.an increase in capital will likely have little impact on output. d.it has the potential to grow relatively quickly due to the "catch-up-effect." e.it must be a small nation.

d.it has the potential to grow relatively quickly due to the "catch-up-effect."

Once a country is wealthy, a.it no longer needs any human capital. b.capital becomes more productive due to the "catch-up effect." c.none of these answers d.it may be harder for it to grow quickly because of the diminishing returns to capital. e.it is nearly impossible for it to become relatively poorer.

d.it may be harder for it to grow quickly because of the diminishing returns to capital.

Copper is an example of a.a renewable natural resource. b.human capital. c.physical capital. d.technology. e.a non-renewable natural resource.

e.a non-renewable natural resource.

Which of the following government policies is least likely to increase growth in Africa? a.increase expenditures on public education b.eliminate civil war c.All of these answers would increase growth. d.reduce restrictions on foreign capital investment e.increase restrictions on the importing of American tractors and electronics

e.increase restrictions on the importing of American tractors and electronics

If Toyota builds a new plant in the north of England, a.none of these answers b.there has been an increase in foreign portfolio investment in the UK. c.once the plant starts producing cars UK GDP will rise less than UK GNP. d.once the plant starts producing cars UK GDP and GNP will both fall because some income from this investment will accrue to foreigners. e.once the plant starts producing cars UK GDP will rise more than UK GNP.

e.once the plant starts producing cars UK GDP will rise more than UK GNP.