Question 1

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1. Reduce corruption in the legal system; 2. Reduce reliance on market forces because they allocate goods and services in an unfair manner; 3. Restrict investment in domestic industries by foreigners because they take some of the profits out of the country; 4. Encourage trade with neighboring countries; and 5. Increase the fraction of GDP devoted to consumption. How many of these measures will have a positive effect on growth?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) A) and C)

Question 2

An increase in a country's population may contribute to the rate of technological progress because a larger population

Accepted Answer

A)   forces the capital stock to be spread more thinly.
B)   forces natural resources to be spread more thinly.
C)   brings with it more scientists, inventors, and engineers.
D)   brings with it more favorable recognition from other countries.E) None of the above
F) A) and B)

Question 3

A country experiencing a growth rate of 12% per year can go from being one of the poorest to one of the richest in

Accepted Answer

A)   one generation. In the last couple of decades China's growth rate has been higher than 12%.
B)   one generation. However, in the last couple of decades not even China's growth rate has been this high.
C)   three generations. In the last couple of decades China's growth rate has been higher than 12%.
D)   three generations. However, in the last couple of decades not even China's growth rate has been this high.E) C) and D)
F) A) and C)

Question 4

Consider the production function Y = 4FL,K,H,N). Suppose F10,8,6,5)= 100 and F30,24,18,15)=300. Does the production function have the property of constant returns to scale? Why or why not?

Accepted Answer

Yes, the production function has the pro...

Question 5

Which of the following is consistent with the catch-up effect?

Accepted Answer

A)   The United States had a higher growth rate before 1900 than after.
B)   After World War II the United States had lower growth rates than war-ravaged European countries.
C)   Although the United States has a relatively high level of output per person, its growth rate is rather modest compared to some countries.
D)   All of the above are correct.E) A) and C)
F) B) and C)

Question 6

Which of the following is not correct?

Accepted Answer

A)   Countries that have had higher output growth per person have typically done so without higher productivity growth.
B)   A country's standard of living and its productivity are closely related.
C)   Productivity refers to output produced per hour of work.
D)   Increases in productivity can be used to increase output or leisure.E) All of the above
F) C) and D)

Question 7

Which one of the factors of production originates as an output from the production process, and is subsequently used as an input into the production process?

Accepted Answer

The input ...

Question 8

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 4 percent to 7 percent. Over the next ten years we would expect that

Accepted Answer

A)   the growth rate will not change in either country.
B)   the country that started with less capital per worker will grow faster.
C)   the country that started with more capital per worker will grow faster.
D)   both countries will grow and at the same higher rate.E) B) and C)
F) A) and D)

Question 9

Which of the following is a part of your economics professor's human capital?

Accepted Answer

A)   the things she learned at some prestigious university
B)   her copy of Mankiw's text
C)   her chalk holder
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 10

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in are responsible for some of the differences in standards of living around the world.

Accepted Answer

The answer of Because of its vast oil reserves, Saudi...

Question 11

"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) All of the above
F) B) and D)

Question 12

Which of the following is an example of physical capital?

Accepted Answer

A)   the strength of workers
B)   on the job training
C)   financial assets like cash and bonds
D)   the equipment in a factoryE) A) and D)
F) B) and C)

Question 13

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are

Accepted Answer

A)   diminishing returns to capital so the poor country grows slower.
B)   increasing returns to capital so the poor country grows slower.
C)   diminishing returns to capital so the poor country grows faster.
D)   increasing returns to capital so the poor country grows faster.E) A) and D)
F) C) and D)

Question 14

Fretonia and Libstien are the same except Fretonia has a larger capital stock. Both countries undertake policies that raise their saving rates to the same higher level. We would expect that

Accepted Answer

A)   both countries would have permanent increases in their growth rates, but the increase would initially be larger in Fretonia.
B)   both countries would have permanent increases in their growth rates, but the increase would initially be smaller in Fretonia.
C)   both countries would have temporary increases in their growth rates, but the increase would be larger in Fretonia.
D)   both countries would have temporary increases in their growth rates, but the increase would be smaller in Fretonia.E) A) and B)
F) A) and C)

Question 15

An increase in the saving rate permanently increases the growth rate of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following provide benefits to society at large and not just to the persons)  who pursues it?

Accepted Answer

A)   both technological knowledge that is a public good and education
B)   technological knowledge that is a public good, but not education
C)   education, but not technological knowledge that is a public good
D)   neither education, nor technological knowledge that is a public goodE) B) and D)
F) All of the above

Question 17

Proprietary technology is technology

Accepted Answer

A)   that the government prohibits firms from using.
B)   conserves natural resources.
C)   that is useful while other types of technology are outdated.
D)   that is known or controlled only by the company that discovered it.E) C) and D)
F) A) and C)

Question 18

The catch-up effect says that countries with low income can grow faster than countries with higher income.
However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

Accepted Answer

The argument that poor countries will te...

Question 19

Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

Accepted Answer

A)   Popeye's production and productivity are greater than Wimpy's.
B)   Popeye's production is greater than Wimpy's, but his productivity is less.
C)   Wimpy's production and productivity are greater than Popeye's.
D)   Wimpy's production is greater than Popeye's, but his productivity is less.E) B) and D)
F) C) and D)

Question 20

Which of the following statements is correct? In 2010,

Accepted Answer

A)   real income per person in the U.S. was about 6 times that in China.
B)   real income per person in China was more than 2 times that in India.
C)   the typical resident of India had less real income than the typical resident of England in 1870.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Exam 12: Production and Growth

An increase in a country's population may contribute to the rate of technological progress because a larger population

Correct Answer
verified

"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 Answer
verified

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are

Correct Answer
verified

A country experiencing a growth rate of 12% per year can go from being one of the poorest to one of the richest in

Correct Answer
verified

Correct Answer
verified

Which of the following provide benefits to society at large and not just to the persons) who pursues it?

Correct Answer
verified

Consider the production function Y = 4FL,K,H,N). Suppose F10,8,6,5)= 100 and F30,24,18,15)=300. Does the production function have the property of constant returns to scale? Why or why not?

Correct Answer
verified
Yes, the production function has the pro...
View Answer

Fretonia and Libstien are the same except Fretonia has a larger capital stock. Both countries undertake policies that raise their saving rates to the same higher level. We would expect that

Correct Answer
verified

An increase in the saving rate permanently increases the growth rate of real GDP per person.

Correct Answer
verified

Which of the following is consistent with the catch-up effect?

Correct Answer
verified

Correct Answer
verified
The argument that poor countries will te...
View Answer

Which one of the factors of production originates as an output from the production process, and is subsequently used as an input into the production process?

Correct Answer
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The input ...
View Answer

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in are responsible for some of the differences in standards of living around the world.

Correct Answer
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Correct Answer
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Which of the following statements is correct? In 2010,

Correct Answer
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Which of the following is an example of physical capital?

Correct Answer
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Which of the following is not correct?

Correct Answer
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Proprietary technology is technology

Correct Answer
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Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

Correct Answer
verified

Which of the following is a part of your economics professor's human capital?

Correct Answer
verified

Exam 12: Production and Growth

An increase in a country's population may contribute to the rate of technological progress because a larger population

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

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are

Correct AnswerverifiedShow Answer

A country experiencing a growth rate of 12% per year can go from being one of the poorest to one of the richest in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following provide benefits to society at large and not just to the persons) who pursues it?

Correct AnswerverifiedShow Answer

Consider the production function Y = 4FL,K,H,N). Suppose F10,8,6,5)= 100 and F30,24,18,15)=300. Does the production function have the property of constant returns to scale? Why or why not?

Correct AnswerverifiedYes, the production function has the pro...View AnswerShow Answer

Fretonia and Libstien are the same except Fretonia has a larger capital stock. Both countries undertake policies that raise their saving rates to the same higher level. We would expect that

Correct AnswerverifiedShow Answer

An increase in the saving rate permanently increases the growth rate of real GDP per person.

Correct AnswerverifiedShow Answer

Which of the following is consistent with the catch-up effect?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe argument that poor countries will te...View AnswerShow Answer

Which one of the factors of production originates as an output from the production process, and is subsequently used as an input into the production process?

Correct AnswerverifiedThe input ...View AnswerShow Answer

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in are responsible for some of the differences in standards of living around the world.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is correct? In 2010,

Correct AnswerverifiedShow Answer

Which of the following is an example of physical capital?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Proprietary technology is technology

Correct AnswerverifiedShow Answer

Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then

Correct AnswerverifiedShow Answer

Which of the following is a part of your economics professor's human capital?

Correct AnswerverifiedShow Answer

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Yes, the production function has the pro...
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The argument that poor countries will te...
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The input ...
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