Question 1

Increases in both human capital per worker and physical capital per worker increase productivity.

Accepted Answer

A) True 
 B)False

Question 2

How does the phenomenon of diminishing returns to capital explain the catch-up effect?

Accepted Answer

When an economy initially has a small am...

Question 3

All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more?

Accepted Answer

A)  Productivity will definitely fall.
B)  Productivity will definitely be unchanged.
C)  Productivity will definitely rise.
D)  None of the above are necessarily correct.E) All of the above
F) A) and B)

Question 4

In 2012, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP per person grew by about 1.94%. Which of the following sets of growth rates is consistent with this growth in real GDP per person?

Accepted Answer

A)  3% population growth and 4% real GDP growth
B)  3% population growth and 5% real GDP growth
C)  6% population growth and 4% real GDP growth
D)  6% population growth and 5% real GDP growthE) A) and D)
F) A) and C)

Question 5

An important prerequisite for the price system to work is an economy-wide respect for _______ rights.

Accepted Answer

The answer of An important prerequisite for the price system...

Question 6

Which of the following items plays a role in determining productivity?

Accepted Answer

A)  physical capital
B)  natural resources
C)  technological knowledge
D)  All of the above are correct.E) A) and B)
F) A) and D)

Question 7

In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of output increases by 60% as well. This means that

Accepted Answer

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 constant-returns-to-scale.E) A) and D)
F) A) and C)

Question 8

Greg's Ice Cream produces 1120 gallons of ice cream per day. Each employed works seven hours and has productivity of 20 gallons an hour. How many employees does Greg's employ?

Accepted Answer

A)  160
B)  56
C)  8
D)  None of the above is correct.E) C) and D)
F) A) and B)

Question 9

In 2014 income per person in the United States was about 10 times that in India.

Accepted Answer

A) True 
 B)False

Question 10

During the past century the average growth rate of U.S. real GDP per person implies that it doubled, on average, about every

Accepted Answer

A)  100 years.
B)  70 years.
C)  35 years.
D)  25 years.E) C) and D)
F) B) and C)

Question 11

Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that

Accepted Answer

A)  real GDP per person grew faster in Mapoli than in Romeria.
B)  real GDP per person must be higher in Mapoli than in Romeria.
C)  the standard of living must be higher in Mapoli than in Romeria.
D)  All of the above are correct.E) A) and B)
F) C) and D)

Question 12

In a market economy, the real, or inflation-adjusted, price of a resource measures its

Accepted Answer

A)  contribution to revenue.
B)  relative scarcity.
C)  productivity.
D)  contribution to efficiency.E) B) and C)
F) A) and B)

Question 13

Consider the nations of Canada, the United Kingdom, and the United States. Since 1870, which of these nations has progressed, in an economic sense, more slowly than the other two nations?

Accepted Answer

The United Kingdom's growth ra...

Question 14

Investment in

Accepted Answer

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.E) All of the above
F) B) and C)

Question 15

The slope of the production function with capital per worker on the horizontal axis and output per worker on the vertical axis

Accepted Answer

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.E) A) and B)
F) A) and C)

Question 16

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by

Accepted Answer

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.E) B) and C)
F) B) and D)

Question 17

Greater scarcity of a natural resource is indicated

Accepted Answer

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.E) A) and B)
F) B) and C)

Question 18

Inward-oriented policies

Accepted Answer

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.E) None of the above
F) All of the above

Question 19

Consider the production function  
. Suppose  
and  
. Does the production function have the property of constant returns to scale? Why or why not?

Accepted Answer

No, the production function does not hav...

Question 20

Investment from abroad

Accepted Answer

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.E) A) and D)
F) None of the above

Exam 25: Production and Growth

Investment from abroad

Correct AnswerverifiedShow Answer

How does the phenomenon of diminishing returns to capital explain the catch-up effect?

Correct AnswerverifiedWhen an economy initially has a small am...View AnswerShow Answer

In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of output increases by 60% as well. This means that

Correct AnswerverifiedShow Answer

In a market economy, the real, or inflation-adjusted, price of a resource measures its

Correct AnswerverifiedShow Answer

During the past century the average growth rate of U.S. real GDP per person implies that it doubled, on average, about every

Correct AnswerverifiedShow Answer

In 2012, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP per person grew by about 1.94%. Which of the following sets of growth rates is consistent with this growth in real GDP per person?

Correct AnswerverifiedShow Answer

Inward-oriented policies

Correct AnswerverifiedShow Answer

Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that

Correct AnswerverifiedShow Answer

Greater scarcity of a natural resource is indicated

Correct AnswerverifiedShow Answer

The slope of the production function with capital per worker on the horizontal axis and output per worker on the vertical axis

Correct AnswerverifiedShow Answer

An important prerequisite for the price system to work is an economy-wide respect for _______ rights.

Correct AnswerverifiedShow Answer

Increases in both human capital per worker and physical capital per worker increase productivity.

Correct AnswerverifiedShow Answer

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by

Correct AnswerverifiedShow Answer

Investment in

Correct AnswerverifiedShow Answer

In 2014 income per person in the United States was about 10 times that in India.

Correct AnswerverifiedShow Answer

Greg's Ice Cream produces 1120 gallons of ice cream per day. Each employed works seven hours and has productivity of 20 gallons an hour. How many employees does Greg's employ?

Correct AnswerverifiedShow Answer

All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more?

Correct AnswerverifiedShow Answer

Which of the following items plays a role in determining productivity?

Correct AnswerverifiedShow Answer

Consider the nations of Canada, the United Kingdom, and the United States. Since 1870, which of these nations has progressed, in an economic sense, more slowly than the other two nations?

Correct AnswerverifiedThe United Kingdom's growth ra...View AnswerShow Answer

Consider the production function . Suppose and . Does the production function have the property of constant returns to scale? Why or why not?

Correct AnswerverifiedNo, the production function does not hav...View AnswerShow Answer

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When an economy initially has a small am...
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The United Kingdom's growth ra...
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No, the production function does not hav...
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