Question 1

Figure 25-1 
-Refer to Figure 21-1. "When the amount of capital per worker increases by one unit, a poor country experiences a greater benefit than does a rich country." Does the figure illustrate this notion? Briefly explain.

Accepted Answer

Yes, the bowed-out (concave) n...

Question 2

Which of the following is correct?

Accepted Answer

A)  Once adjustment is made for inflation, the prices of most natural resources have been about steady or falling.
B)  Technological progress has allowed us to substitute renewable resources for some nonrenewable resources.
C)  Technological progress has made once-crucial natural resources less necessary.
D)  All of the above are correct.E) B) and C)
F) A) and B)

Question 3

Economist Michael Kremer found that world growth rates fell as population increased.

Accepted Answer

A) True 
 B)False

Question 4

Productivity is the amount of goods and services

Accepted Answer

A)  an economy produces. It is not linked to a nation's economic policies.
B)  an economy produces. It is linked to a nation's economic policies.
C)  produced for each hour of a worker's time. It is not linked to a nation's economic policies.
D)  produced for each hour of a worker's time. It is linked to a nation's economic policies.E) All of the above
F) B) and D)

Question 5

The majority of economists believe that future innovations will not be transformational enough to sustain high economic growth rates in the U.S. and western Europe.

Accepted Answer

A) True 
 B)False

Question 6

In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

Accepted Answer

A)  public good.
B)  societal good.
C)  private good.
D)  normal good.E) B) and C)
F) A) and D)

Question 7

According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that they could not perform manual labor?

Accepted Answer

A)  5 percent
B)  10 percent
C)  20 percent
D)  25 percentE) None of the above
F) A) and C)

Question 8

An organization that tries to encourage the flow of investment to poor countries is the

Accepted Answer

A)  World Bank.
B)  Organization of Less Developed Countries.
C)  Alliance of Developing Countries.
D)  International Development Alliance.E) A) and C)
F) A) and D)

Question 9

Which of these countries' growth rates of real GDP per person have exceeded the United States' growth rate of real GDP per person over the last century?

Accepted Answer

A)  Canada and China
B)  China and India
C)  Germany and India
D)  Germany and PakistanE) A) and B)
F) All of the above

Question 10

The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Accepted Answer

In the long run, a higher saving rate le...

Question 11

Table 25-1.
Athens and Troy both produce only ribs and baked potatoes. 
-Refer to Table 25-1. Which of the following is correct?

Accepted Answer

A)  Both real GDP and real GDP per person are higher in Athens than Troy.
B)  Real GDP is higher in Athens while real GDP per person is higher in Troy
C)  Real GDP is higher in Troy while real GDP per person is higher in Athens.
D)  Both real GDP and real GDP per person are higher in Troy than Athens.E) All of the above
F) C) and D)

Question 12

Figure 25-1 
-Refer to Figure 21-1. In order for the figure to make sense, do we have to assume that capital is the only determinant of output? Briefly explain.

Accepted Answer

No, we do not have to assume that capita...

Question 13

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) None of the above

Question 14

If the best educated and most skilled persons leave a country, then in the short term this country's human capital per worker

Accepted Answer

A)  and physical capital per worker will increase.
B)  and physical capital per worker will decrease.
C)  will increase but physical capital per worker will decrease.
D)  will decrease but physical capital per worker will increase.E) B) and C)
F) None of the above

Question 15

A nation's standard of living is determined by

Accepted Answer

A)  the percentage of its GDP that is accounted for by government purchases.
B)  the quantity of natural resources with which it is endowed.
C)  the productivity of its workers.
D)  factors and events that are beyond the nation's control.E) B) and C)
F) All of the above

Question 16

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

Accepted Answer

A)  both output and productivity
B)  output, but not productivity
C)  productivity, but not output
D)  neither productivity nor outputE) A) and D)
F) A) and C)

Question 17

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

Accepted Answer

A)  have no impact on the growth rate of real GDP per person.
B)  decrease the growth of real GDP per person for a few years.
C)  increase the growth of real GDP per person for several decades.
D)  permanently increase the growth rate of real GDP per person.E) C) and D)
F) B) and C)

Question 18

Rapid population growth

Accepted Answer

A)  was hailed by Thomas Robert Malthus as the key to future economic growth.
B)  tends to lead to higher levels of educational attainment.
C)  is the main reason that less developed nations are poor.
D)  may depress economic prosperity by reducing the amount of capital which each worker has to work with.E) B) and C)
F) All of the above

Question 19

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

Accepted Answer

A)  represents an unconventional view of the production process.
B)  is an assertion that capital is subject to increasing returns.
C)  is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 20

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Accepted Answer

A) True 
 B)False

Exam 25: Production and Growth

A nation's standard of living is determined by

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According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that they could not perform manual labor?

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Which of these countries' growth rates of real GDP per person have exceeded the United States' growth rate of real GDP per person over the last century?

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Other things equal, relatively poor countries tend to grow

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"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

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Economist Michael Kremer found that world growth rates fell as population increased.

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Productivity is the amount of goods and services

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Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

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Figure 25-1 -Refer to Figure 21-1. "When the amount of capital per worker increases by one unit, a poor country experiences a greater benefit than does a rich country." Does the figure illustrate this notion? Briefly explain.

Correct AnswerverifiedYes, the bowed-out (concave) n...View AnswerShow Answer

Which of the following is correct?

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An organization that tries to encourage the flow of investment to poor countries is the

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In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a

Correct AnswerverifiedShow Answer

The majority of economists believe that future innovations will not be transformational enough to sustain high economic growth rates in the U.S. and western Europe.

Correct AnswerverifiedShow Answer

If the best educated and most skilled persons leave a country, then in the short term this country's human capital per worker

Correct AnswerverifiedShow Answer

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Correct AnswerverifiedShow Answer

Figure 25-1 -Refer to Figure 21-1. In order for the figure to make sense, do we have to assume that capital is the only determinant of output? Briefly explain.

Correct AnswerverifiedNo, we do not have to assume that capita...View AnswerShow Answer

Table 25-1. Athens and Troy both produce only ribs and baked potatoes. -Refer to Table 25-1. Which of the following is correct?

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Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

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The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain.

Correct AnswerverifiedIn the long run, a higher saving rate le...View AnswerShow Answer

Rapid population growth

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Yes, the bowed-out (concave) n...
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No, we do not have to assume that capita...
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In the long run, a higher saving rate le...
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