Question 1

Other things the same,a country that increases its savings rate will have

Accepted Answer

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

Question 2

In the long run,an increase in the saving rate

Accepted Answer

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

Question 3

Country A and country B both increase their capital stock by one unit.Output in country A increases by 12 while output in country B increases by 15.Other things the same,diminishing returns implies that country A is

Accepted Answer

A)  richer than Country B.If Country A adds another unit of capital,output will increase by more than 12 units.
B)  richer than Country B.If Country A adds another unit of capital,output will increase by less than 12 units.
C)  poorer than Country B.If Country A adds another unit of capital,output will increase by more than 12 units.
D)  poorer than Country B.If Country A adds another unit of capital,output will increase by less than 12 units.E) B) and C)
F) C) and D)

Question 4

Electronics firms may be able to get patents on their ideas.Doing so makes their ideas

Accepted Answer

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

Question 5

Other things the same,if a country raises its saving rate,then in the long run

Accepted Answer

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

Question 6

Suppose that an American opens and operates a candy factory in Finland.This is an example of

Accepted Answer

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

Question 7

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.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?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) None of the above
F) All of the above

Question 8

Consider three imaginary countries.In Aire,saving amounts to $4,000 and consumption amounts to $12,000;in Bovina,saving amounts to $3,000 and consumption amounts to $24,000;and in Cartar,saving amounts to $10,000 and consumption amounts to $50,000.The saving rate is

Accepted Answer

A)  higher in Aire than in Cartar,and it is higher in Cartar than in Bovina.
B)  higher in Cartar than in Aire,and it is higher in Aire than in Bovina.
C)  higher in Cartar than in Bovina,and it is the same in Bovina and Aire.
D)  higher in Aire than in Bovina,and it is the same in Aire and Cartar.E) All of the above
F) A) and B)

Question 9

Foreign saving is used for domestic investment when foreigners engage in

Accepted Answer

A)  foreign direct investment.
B)  foreign portfolio investment.
C)  either foreign direct investment or foreign portfolio investment.
D)  None of the above is correct.E) A) and B)
F) C) and D)

Question 10

Figure 25-1.On the horizontal axis,K/L represents capital (K) per worker (L) .On the vertical axis,Y/L represents output (Y) per worker (L) . 
-Refer to Figure 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Accepted Answer

A)  In the long run,a higher saving rate leads to a higher level of productivity.
B)  In the long run,a higher saving rate leads to a higher level of income.
C)  In the long run,a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income.
D)  All of the above are correct.E) All of the above
F) None of the above D

Question 11

Other things the same,higher population growth

Accepted Answer

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

Question 12

Countries that pursued outward-oriented policies in the 20th century

Accepted Answer

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

Question 13

All else equal,which of the following would tend to cause real GDP per person to rise?

Accepted Answer

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

Question 14

Which of the following is an example of the "brain drain?"

Accepted Answer

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

Question 15

Government corruption

Accepted Answer

A)  impedes the coordinating power of markets and discourages investment.
B)  impedes the coordinating power of markets but does not discourage investment.
C)  does not impede the coordinating power of markets,but does discourage investment.
D)  can neither impede the coordinating power of markets nor discourage investment.E) A) and B)
F) C) and D)

Question 16

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,

Accepted Answer

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

Question 17

Assuming diminishing returns,

Accepted Answer

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

Question 18

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

Accepted Answer

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.E) None of the above
F) All 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) C) and D)
F) All of the above

Question 20

Suppose that a new government is elected in Eurnesia.The new government takes steps toward improving the court system and reducing government corruption.The citizens of Eurnesia find these efforts credible and outsiders believe these changes will be effective and long lasting.These changes will probably

Accepted Answer

A)  raise real GDP per person and productivity in Eurnesia.
B)  raise real GDP per person but not productivity in Eurnesia.
C)  raise productivity but not real GDP per person in Eurnesia.
D)  raise neither productivity nor real GDP per person in Eurnesia.E) A) and C)
F) None of the above

Exam 12: Production and Growth: Economic Growth and Public Policy

Other things the same,a country that increases its savings rate will have

Correct Answer
verified

In the long run,an increase in the saving rate

Correct Answer
verified

Country A and country B both increase their capital stock by one unit.Output in country A increases by 12 while output in country B increases by 15.Other things the same,diminishing returns implies that country A is

Correct Answer
verified

Electronics firms may be able to get patents on their ideas.Doing so makes their ideas

Correct Answer
verified

Other things the same,if a country raises its saving rate,then in the long run

Correct Answer
verified

Suppose that an American opens and operates a candy factory in Finland.This is an example of

Correct Answer
verified

Correct Answer
verified

Consider three imaginary countries.In Aire,saving amounts to $4,000 and consumption amounts to $12,000;in Bovina,saving amounts to $3,000 and consumption amounts to $24,000;and in Cartar,saving amounts to $10,000 and consumption amounts to $50,000.The saving rate is

Correct Answer
verified

Foreign saving is used for domestic investment when foreigners engage in

Correct Answer
verified

Figure 25-1.On the horizontal axis,K/L represents capital (K) per worker (L) .On the vertical axis,Y/L represents output (Y) per worker (L) . -Refer to Figure 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Correct Answer
verified
D

Other things the same,higher population growth

Correct Answer
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C

Countries that pursued outward-oriented policies in the 20th century

Correct Answer
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All else equal,which of the following would tend to cause real GDP per person to rise?

Correct Answer
verified

Which of the following is an example of the "brain drain?"

Correct Answer
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Government corruption

Correct Answer
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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,

Correct Answer
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Assuming diminishing returns,

Correct Answer
verified
D

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

Correct Answer
verified

Other things equal,relatively poor countries tend to grow

Correct Answer
verified

Correct Answer
verified

Exam 12: Production and Growth: Economic Growth and Public Policy

Other things the same,a country that increases its savings rate will have

Correct AnswerverifiedShow Answer

In the long run,an increase in the saving rate

Correct AnswerverifiedShow Answer

Country A and country B both increase their capital stock by one unit.Output in country A increases by 12 while output in country B increases by 15.Other things the same,diminishing returns implies that country A is

Correct AnswerverifiedShow Answer

Electronics firms may be able to get patents on their ideas.Doing so makes their ideas

Correct AnswerverifiedShow Answer

Other things the same,if a country raises its saving rate,then in the long run

Correct AnswerverifiedShow Answer

Suppose that an American opens and operates a candy factory in Finland.This is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider three imaginary countries.In Aire,saving amounts to $4,000 and consumption amounts to $12,000;in Bovina,saving amounts to $3,000 and consumption amounts to $24,000;and in Cartar,saving amounts to $10,000 and consumption amounts to $50,000.The saving rate is

Correct AnswerverifiedShow Answer

Foreign saving is used for domestic investment when foreigners engage in

Correct AnswerverifiedShow Answer

Figure 25-1.On the horizontal axis,K/L represents capital (K) per worker (L) .On the vertical axis,Y/L represents output (Y) per worker (L) . -Refer to Figure 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Correct AnswerverifiedD

Other things the same,higher population growth

Correct AnswerverifiedC

Countries that pursued outward-oriented policies in the 20th century

Correct AnswerverifiedShow Answer

All else equal,which of the following would tend to cause real GDP per person to rise?

Correct AnswerverifiedShow Answer

Which of the following is an example of the "brain drain?"

Correct AnswerverifiedShow Answer

Government corruption

Correct AnswerverifiedShow Answer

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,

Correct AnswerverifiedShow Answer

Assuming diminishing returns,

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Other things equal,relatively poor countries tend to grow

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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D

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C

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D

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