Question 1

Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.

Accepted Answer

A) True 
 B)False

Question 2

Average income has been stagnant for many years in

Accepted Answer

A)  Chad.
B)  Gabon.
C)  Senegal.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 3

"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

Accepted Answer

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

Question 4

Which of the following is correct?

Accepted Answer

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

Question 5

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?

Accepted Answer

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

Question 6

Over the last ten years productivity grew more slowly in Upland than in Lowland and the population and total hours worked remained the same in both countries. It follows that

Accepted Answer

A)  real GDP per person must be lower in Upland than in Lowland.
B)  real GDP per person grew more slowly in Upland than in Lowland.
C)  the standard of living must be higher in Upland than in Lowland.
D)  All of the above are correct.E) B) and C)
F) C) and D)

Question 7

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?

Accepted Answer

A)  2
B)  4
C)  6
D)  8E) All of the above
F) A) and B)

Question 8

Which of the following is an observation made by economist Michael Kremer?

Accepted Answer

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

Question 9

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N) .
-Refer to Scenario 12-1. In the production function, which of the following represents technology?

Accepted Answer

A)  A
B)  K
C)  H
D)  NE) B) and C)
F) None of the above

Question 10

Like physical capital, human capital is a produced factor of production.

Accepted Answer

A) True 
 B)False

Question 11

Countries that grew the fastest over the last 100 or so years had growth rates of real income per person of about

Accepted Answer

A)  0.5 percent per year.
B)  1.5 percent per year.
C)  2.0 percent per year.
D)  2.5 percent per year.E) A) and D)
F) All of the above

Question 12

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

A)  not change.
B)  increase but not double.
C)  double.
D)  more than double.E) B) and C)
F) None of the above

Question 13

If WarmWear, a U.S.manufacturer of winter clothing, opens a new factory in Austria, then

Accepted Answer

A)  Austrian GNP increases by more than Austrian GDP, because GDP includes income earned by foreigners working in Austria.
B)  Austrian GNP increases by more than Austrian GDP, because GDP excludes income earned by foreigners working in Austria.
C)  Austrian GNP increases by less than Austrian GDP, because GDP includes income earned by foreigners working in Austria.
D)  Austrian GNP increases by less than Austrian GDP, because GDP excludes income earned by foreigners working in Austria.E) C) and D)
F) B) and D)

Question 14

The average citizen of India in 2008 had

Accepted Answer

A)  less real income than the typical resident of Canda in 1870.
B)  less real income than the typical resident of the United Kingdom in 1870.
C)  higher real income than a resident of Japan in 2008.
D)  higher real income than a resident of China in 2008.E) C) and D)
F) All of the above

Question 15

Country A experienced a growth rate of real GDP per person of 4 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Accepted Answer

A)  exceptionally high.
B)  moderately high.
C)  moderately low.
D)  exceptionally low.E) C) and D)
F) A) and D)

Question 16

Which of the following statements is true?

Accepted Answer

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

Question 17

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  10 years.
B)  15 years.
C)  20 years.
D)  25 years.E) A) and D)
F) None of the above

Question 19

Other things equal, relatively poor countries tend to grow

Accepted Answer

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

Question 20

A country's standard of living depends on its ability to produce goods and services.

Accepted Answer

A) True 
 B)False

Exam 12: Production and Growth

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?

Correct AnswerverifiedShow Answer

The average citizen of India in 2008 had

Correct AnswerverifiedShow Answer

If WarmWear, a U.S.manufacturer of winter clothing, opens a new factory in Austria, then

Correct AnswerverifiedShow Answer

Like physical capital, human capital is a produced factor of production.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N) . -Refer to Scenario 12-1. In the production function, which of the following represents technology?

Correct AnswerverifiedShow Answer

Other things equal, relatively poor countries tend to grow

Correct AnswerverifiedShow Answer

Country A experienced a growth rate of real GDP per person of 4 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Correct AnswerverifiedShow Answer

A country's standard of living depends on its ability to produce goods and services.

Correct AnswerverifiedShow Answer

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

Correct AnswerverifiedShow Answer

Average income has been stagnant for many years in

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Over the last ten years productivity grew more slowly in Upland than in Lowland and the population and total hours worked remained the same in both countries. It follows that

Correct AnswerverifiedShow Answer

Which of the following is an observation made by economist Michael Kremer?

Correct AnswerverifiedShow Answer

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

"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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.

Correct AnswerverifiedShow Answer

Countries that grew the fastest over the last 100 or so years had growth rates of real income per person of about

Correct AnswerverifiedShow Answer

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