Question 1

Greater scarcity of a natural resource is indicated

Accepted Answer

A)  by an increase in the price of the resource, whether the price increase is less than or greater than the rate of inflation.
B)  only by an increase in the price of the resource that is less than the rate of inflation.
C)  only by an increase in the price of the resource that is greater than the rate of inflation.
D)  only by an increase in the price of the resource that is caused by a decrease in supply and is greater than the rate of inflation.E) B) and D)
F) A) and D)

Question 2

Petroleum is an example of a nonrenewable resource.

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

The return to schooling for society is higher than the return to schooling for the individual if

Accepted Answer

A)  the concept of diminishing returns applies to education.
B)  the concept of constant returns to scale applies to education.
C)  human capital conveys positive externalities.
D)  investment in human capital involves no opportunity costs.E) A) and C)
F) B) and C)

Question 5

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was Alpha Cabinet Company's productivity?

Accepted Answer

A)  1/8 cabinet per hour
B)  8 hours per cabinet
C)  40 cabinets
D)  None of the above is correct.E) All of the above
F) B) and D)

Question 6

Consider three imaginary countries. In Mainland, saving amounts to $4,000 and consumption amounts to $8,000; in Upland, saving amounts to $2,000 and consumption amounts to $15,000; and in Lowland, saving amounts to $6,000 and consumption amounts to $11,000. The saving rate is

Accepted Answer

A)  higher in Mainland than in Lowland, and it is higher in Lowland than in Upland.
B)  higher in Lowland than in Mainland, and it is higher in Mainland than in Upland.
C)  higher in Lowland than in Upland, and it is the same in Upland and Mainland.
D)  higher in Mainland than in Upland, and it is the same in Mainland and Lowland.E) B) and D)
F) All of the above

Question 7

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) None of the above

Question 8

In 2009, Angel Foods produced 300,000 bags of tortilla chips, employing 12,000 hours of labor. In 2010, Angel Foods produced 325,000 bags of tortilla chips, employing 13,000 hours of labor. Angel Food's productivity

Accepted Answer

A)  decreased by 2.1 percent.
B)  was unchanged.
C)  increased by 1.3 percent.
D)  increased by 2.3 percent.E) A) and B)
F) A) and C)

Question 9

Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5 billion. Which of the following changes in population is consistent with a 5 percent growth rate of real GDP per person over the last year?

Accepted Answer

A)  The population decreased from 88 million to 84 million.
B)  The population decreased from 75 million to 73 million.
C)  The population increased from 45 million to 50 million.
D)  The population increased from 60 million to 62 million.E) All of the above
F) A) and B)

Question 10

Countries that have lower levels of real GDP per person than the United States

Accepted Answer

A)  tend to have growth rates that are higher than that of the United States.
B)  tend to have growth rates that are about the same as that of the United States.
C)  tend to have growth rates that are lower than that of the United States.
D)  in some cases have growth rates that are higher than that of the United States and in other cases lower than that of the United States.E) C) and D)
F) All of the above

Question 11

In recent decades, average income in some East Asian countries, such as South Korea, Singapore, and Taiwan, has risen about

Accepted Answer

A)  2 percent per year.
B)  4 percent per year.
C)  7 percent per year.
D)  10 percent per year.E) A) and B)
F) A) and C)

Question 12

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) A) and B)

Question 13

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepare 60 reports for its 10 largest clients. What was Allied Business Consultants' productivity?

Accepted Answer

A)  1.5 reports per hour
B)  6 reports per client
C)  7.5 reports per hour
D)  60 reportsE) C) and D)
F) None of the above

Question 14

Which of the following statements is correct?

Accepted Answer

A)  In 1870, real income per person was higher in the United Kingdom than in any other country at that time.
B)  Between 1870 and 2008, India experienced significantly higher growth of real income per person than did the United States.
C)  Between 1870 and 2008, the United States experienced significantly higher growth of real income per person than did Canada.
D)  All of the above are correct.E) All of the above
F) A) and B)

Question 15

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

Accepted Answer

A)  xY = 2xAF(L, K, H, N) .
B)  Y/L = A F(xL, xK, xH, xN) .
C)  Y/L = A F( 1, K/L, H/L, N/L) .
D)  L = AF(Y, K, H, N) .E) A) and B)
F) A) and C)

Question 16

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely

Accepted Answer

A)  have no affect on either real GDP nor productivity
B)  raise real GDP and productivity.
C)  raise real GDP but not productivity.
D)  raise productivity but not real GDP.E) B) and C)
F) A) and D)

Question 17

Dilbert's Incorporated produced 5,000,000 units of accounting software in 2008. At the start of 2009 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) B) and D)

Question 18

Other things the same, if a country raises its saving rate, when is growth of real GDP per person higher?

Accepted Answer

A)  as the economy moves toward the long run and in the long run.
B)  as the economy moves toward the long run, but not in the long run.
C)  in the long run, but not as the economy moves toward the long run.
D)  neither as the economy moves toward the long run, nor in the long run.E) A) and B)
F) C) and D)

Question 19

Which of the following are human capital and physical capital, respectively?

Accepted Answer

A)  for a brick layer: her bricks and her tools
B)  for a gas station: the pumps and the cash register
C)  for a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen
D)  for a medical office: the building and the doctors' knowledge of medicineE) A) and D)
F) A) and B)

Question 20

Adam and Doug both build birdhouses. Adam works 20 hours a week and produces 12 bird houses. Doug works 30 hours a week and produces 15 bird houses. Which of the following is correct?

Accepted Answer

A)  Adam's production and productivity are higher than Doug's.
B)  Adam's production is higher than Doug's, but Doug's productivity is higher than Adam's.
C)  Doug's production is higher than Adam's, but Adam's productivity is higher than Doug's.
D)  Doug's production and productivity are higher than Adam's.E) All of the above
F) A) and D)

Exam 12: Production and Growth

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

In recent decades, average income in some East Asian countries, such as South Korea, Singapore, and Taiwan, has risen about

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Adam and Doug both build birdhouses. Adam works 20 hours a week and produces 12 bird houses. Doug works 30 hours a week and produces 15 bird houses. Which of the following is correct?

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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

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

Correct AnswerverifiedShow Answer

In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely

Correct AnswerverifiedShow Answer

Other things the same, if a country raises its saving rate, when is growth of real GDP per person higher?

Correct AnswerverifiedShow Answer

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was Alpha Cabinet Company's productivity?

Correct AnswerverifiedShow Answer

Greater scarcity of a natural resource is indicated

Correct AnswerverifiedShow Answer

Countries that have lower levels of real GDP per person than the United States

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following are human capital and physical capital, respectively?

Correct AnswerverifiedShow Answer

The return to schooling for society is higher than the return to schooling for the individual if

Correct AnswerverifiedShow Answer

Dilbert's Incorporated produced 5,000,000 units of accounting software in 2008. At the start of 2009 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

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepare 60 reports for its 10 largest clients. What was Allied Business Consultants' productivity?

Correct AnswerverifiedShow Answer

Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5 billion. Which of the following changes in population is consistent with a 5 percent growth rate of real GDP per person over the last year?

Correct AnswerverifiedShow Answer

Petroleum is an example of a nonrenewable resource.

Correct AnswerverifiedShow Answer

In 2009, Angel Foods produced 300,000 bags of tortilla chips, employing 12,000 hours of labor. In 2010, Angel Foods produced 325,000 bags of tortilla chips, employing 13,000 hours of labor. Angel Food's productivity

Correct AnswerverifiedShow Answer

Consider three imaginary countries. In Mainland, saving amounts to $4,000 and consumption amounts to $8,000; in Upland, saving amounts to $2,000 and consumption amounts to $15,000; and in Lowland, saving amounts to $6,000 and consumption amounts to $11,000. The saving rate is

Correct AnswerverifiedShow Answer

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