Question 1

Figure 25-1 
-Refer to Figure 21-1. Does the figure represent the idea that the amount of capital per worker influences the amount of output per worker, or does the figure represent the idea that the amount of output per worker influences the amount of capital per worker?

Accepted Answer

The figure represents the idea...

Question 2

In an economy where net exports are zero, if saving rises in some period, then in that period

Accepted Answer

A)   consumption and investment fall.
B)   consumption falls and investment rises.
C)   consumption rises and investment falls.
D)   consumption rises and investment fallsE) C) and D)
F) B) and C)

Question 3

In one day Madison Laundry washed 4,000 pounds of laundry with 5 workers who each worked 8 hours. What was its productivity?

Accepted Answer

A)   4000 pounds of laundry
B)   500 pounds of laundry per hour
C)   100 pounds of laundry per hour
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 4

In 2012, the imaginary nation of Dorados had a population of 8,000 and real GDP of 3,000,000. During the year its real GDP grew by about 2.9%. Which of the following sets of growth rates is consistent with this growth in real GDP?

Accepted Answer

A)   2% population growth and 6% real GDP growth
B)   6% population growth and 2% real GDP growth
C)   4% population growth and 7% real GDP growth
D)   7% population growth and 4% real GDP growthE) C) and D)
F) A) and B)

Question 5

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

Question 6

Other things the same, a country that increases its saving rate increases

Accepted Answer

A)   its future productivity and future real GDP.
B)   neither its future productivity nor future real GDP.
C)   its future productivity, but not its future real GDP.
D)   its future real GDP, but not its future productivity.E) All of the above
F) A) and B)

Question 7

Is coal a produced factor of production?

Accepted Answer

No. Coal is a natural resource...

Question 8

Dilbert's Incorporated produced 5,000,000 units of accounting software in 2010. At the start of 2011 the pointy­ haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity

Accepted Answer

A)   fell by 4%.
B)   fell by 20%.
C)   rose by 12%.
D)   rose by 20%.E) None of the above
F) C) and D)

Question 9

A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are

Accepted Answer

A)   proprietary and common knowledge.
B)   common, but not proprietary, knowledge.
C)   proprietary, but not common, knowledge.
D)   neither proprietary nor common knowledge.E) All of the above
F) C) and D)

Question 10

When a country removes trade barriers and imports appliances and exports engineering services,

Accepted Answer

A)   its growth slows.
B)   its productivity decreases.
C)   it is essentially transforming engineering services into appliances.
D)   its economic well-being decreases while that of the country that sells appliances increases.E) A) and B)
F) A) and C)

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) All of the above
F) None of the above

Question 12

In a market economy, scarcity of resources is most clearly reflected in

Accepted Answer

A)   supply.
B)   demand.
C)   market prices.
D)   the stock of the resource.E) B) and D)
F) None of the above

Question 13

According to studies using international data, an increase in the saving rate

Accepted Answer

A)   does not increase the growth rate of output.
B)   increases the growth rate of output for a few years.
C)   increases the growth rate of output for about a decade.
D)   increases the growth rate of output for several decades.E) None of the above
F) A) and B)

Question 14

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at smaller levels of existing capital per worker.

Accepted Answer

A) True 
 B)False

Question 15

The average income in a rich country

Accepted Answer

A)   is about 5 times that in a poor country. Further, people in rich countries have longer life expectancy.
B)   is about 5 times that in a poor country. However, people in rich countries have about the same life expectancy as those in poor countries.
C)   is more than ten times that in a poor country. Further, people in rich countries have longer life expectancy.
D)   is more than ten times that in poor country. However, people in rich countries have about the same life expectancy as those in poor countries.E) B) and C)
F) B) and D)

Question 16

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 C)
F) B) and D)

Question 17

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

Question 18

If there are constant returns to scale, the production function can be written as

Accepted Answer

A)   xY = 2xAFL, K, H, N) .
B)   Y/L = A FxL, xK, xH, xN) .
C)   Y/L = A F 1, K/L, H/L, N/L) .
D)   L = AFY, K, H, N) .E) None of the above
F) B) and C)

Question 19

In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500. Maconia had 5% growth in real GDP per person. In 2012 it had a population of 8,400. To the nearest dollar what was real GDP in Maconia in 2012?

Accepted Answer

A)   216,815
B)   221,025
C)   226,416
D)   None of the above is correct.E) A) and C)
F) B) and C)

Question 20

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

Accepted Answer

A)   both the first and the second
B)   the first but not the second
C)   the second but not the first
D)   neither the first nor the secondE) B) and D)
F) A) and C)

Exam 12: Production and Growth

"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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The average income in a rich country

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Other things the same, higher population growth

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In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500. Maconia had 5% growth in real GDP per person. In 2012 it had a population of 8,400. To the nearest dollar what was real GDP in Maconia in 2012?

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

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Dilbert's Incorporated produced 5,000,000 units of accounting software in 2010. At the start of 2011 the pointy­ haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity

Correct AnswerverifiedShow Answer

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at smaller levels of existing capital per worker.

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In an economy where net exports are zero, if saving rises in some period, then in that period

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A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

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

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Figure 25-1 -Refer to Figure 21-1. Does the figure represent the idea that the amount of capital per worker influences the amount of output per worker, or does the figure represent the idea that the amount of output per worker influences the amount of capital per worker?

Correct AnswerverifiedThe figure represents the idea...View AnswerShow Answer

A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are

Correct AnswerverifiedShow Answer

In one day Madison Laundry washed 4,000 pounds of laundry with 5 workers who each worked 8 hours. What was its productivity?

Correct AnswerverifiedShow Answer

Other things the same, a country that increases its saving rate increases

Correct AnswerverifiedShow Answer

In 2012, the imaginary nation of Dorados had a population of 8,000 and real GDP of 3,000,000. During the year its real GDP grew by about 2.9%. Which of the following sets of growth rates is consistent with this growth in real GDP?

Correct AnswerverifiedShow Answer

According to studies using international data, an increase in the saving rate

Correct AnswerverifiedShow Answer

When a country removes trade barriers and imports appliances and exports engineering services,

Correct AnswerverifiedShow Answer

In a market economy, scarcity of resources is most clearly reflected in

Correct AnswerverifiedShow Answer

If there are constant returns to scale, the production function can be written as

Correct AnswerverifiedShow Answer

Is coal a produced factor of production?

Correct AnswerverifiedNo. Coal is a natural resource...View AnswerShow Answer

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Dilbert's Incorporated produced 5,000,000 units of accounting software in 2010. At the start of 2011 the pointy haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity

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The figure represents the idea...
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No. Coal is a natural resource...
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