Question 1

In the past there have been violent protests against the World Bank and the World Trade Organization. The protesters argued that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contended that these practices make rich countries richer and poor countries poorer. An economist would

Accepted Answer

A)   disagree with the protesters because these practices will help make both rich and poor countries richer.
B)   disagree with the protesters about free trade, but would agree with the protesters about corporate investment.
C)   disagree with the protesters about corporate investment, but would agree with the protesters about free trade.
D)   agree with the protesters.

Question 2

International data on the history of real GDP growth rates shows that over the last 120 years or so, rich countries got richer and poor countries got poorer.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not correct?

Accepted Answer

A)   Across countries there are large differences in the average income per person. These differences are reflected in large differences in the quality of life.
B)   With a growth rate of about 2 percent per year, average income per person doubles about every 60 years.
C)   The ranking of countries by average income changes substantially over time.
D)   In some countries real income per person has changed very little over many years.

Question 4

If a production function has constant returns to scale, then if all inputs double so does production.

Accepted Answer

A) True 
 B)False

Question 5

Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Accepted Answer

A)   Brazil
B)   China
C)   India
D)   Pakistan

Question 6

According to research by Robert Fogel, people in Britain grew taller because of

Accepted Answer

A)   genetics. However this increase in height had no effect on productivity.
B)   genetics. This increase in height is associated with higher productivity.
C)   higher caloric intake. However, this increase in height had no effect on productivity.
D)   higher caloric intake. This increase in height is associated with higher productivity.

Question 7

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N) .
-Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it can be rewritten as

Accepted Answer

A)   Y/L = AF1, K/L, H/L, N/L) 
B)   Y/L = AFL, 1, H/L, N/L) 
C)   Y/L = AFL, K/L, 1, N/L) 
D)   Y/L = AFL, K/L, H/L, 1)

Question 8

One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society

Accepted Answer

A)   conserve resources for future generations.
B)   sacrifice consumption goods and services now in order to enjoy more consumption in the future.
C)   recycle resources so that future generations can produce goods and services with the accumulated capital.
D)   None of the above is correct.

Question 9

Outward-oriented policies

Accepted Answer

A)   allow countries to take advantage of gains from trade.
B)   have generally led to high growth for the countries that pursued them.
C)   receive widespread support from economists.
D)   All of the above are correct.

Question 10

Suppose a country increases trade restrictions. This country would be pursing an

Accepted Answer

A)   inward policy, which most economists believe has beneficial effects on the economy.
B)   inward policy, which most economists believe has adverse effects on the economy.
C)   outward policy, which most economists believe has beneficial effects on the economy.
D)   outward policy, which most economists believe has adverse effects on the economy.

Question 11

If a Japanese company opens a new factory in South Korea, it makes

Accepted Answer

A)   foreign direct investment. The factory will make a bigger impact on South Korea's GDP than on its GNP.
B)   foreign direct investment. The factory will make a bigger impact on South Korea's GNP than on its GDP.
C)   foreign portfolio investment. The factory will make a bigger impact on South Korea's GDP than on its GNP.
D)   foreign portfolio investment. The factory will make a bigger impact on South Korea's GNP than on its GDP.

Question 12

Which of the following is an example of a nonrenewable resource?

Accepted Answer

A)   corn
B)   oil
C)   livestock
D)   All of the above are correct.

Question 13

If a country were to increase its saving rate, then in the long run it would also increase its

Accepted Answer

A)   level of income.
B)   growth rate of income.
C)   growth rate of productivity.
D)   All of the above are correct.

Question 14

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.

Question 15

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

Accepted Answer

A)   output in country A increases by more than in country B.
B)   output in country A increases by the same amount as in country B.
C)   output in country A increases by less than in country B.
D)   None of the above is necessarily correct.

Question 16

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.

Question 17

An increase in the saving rate would, other things the same,

Accepted Answer

A)   increase growth more for a poor country than for a rich country, and raise growth permanently.
B)   increase growth more for a poor country than for a rich country, but raise growth temporarily.
C)   increase growth more for a rich country than for a poor country, and raise growth permanently.
D)   increase growth more for a rich country than for a poor country, but raise growth temporarily.

Question 18

Which of the following would, by itself, reveal the most about a country's standard of living?

Accepted Answer

A)   its level of capital
B)   the number of hours worked
C)   its availability of natural resources
D)   its productivity

Question 19

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Accepted Answer

A)   8
B)   12
C)   16
D)   None of the above is correct.

Question 20

Real GDP per person in rich countries, such as Germany, is sometimes more than 10 times that of poor countries like India.

Accepted Answer

A) True 
 B)False

Exam 7: Production and Growth

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N) . -Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it can be rewritten as

Correct Answer
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An increase in the saving rate would, other things the same,

Correct Answer
verified

Which of the following is not correct?

Correct Answer
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Outward-oriented policies

Correct Answer
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Correct Answer
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Suppose a country increases trade restrictions. This country would be pursing an

Correct Answer
verified

Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Correct Answer
verified

Greater scarcity of a natural resource is indicated

Correct Answer
verified

International data on the history of real GDP growth rates shows that over the last 120 years or so, rich countries got richer and poor countries got poorer.

Correct Answer
verified

If a Japanese company opens a new factory in South Korea, it makes

Correct Answer
verified

Which of the following would, by itself, reveal the most about a country's standard of living?

Correct Answer
verified

Real GDP per person in rich countries, such as Germany, is sometimes more than 10 times that of poor countries like India.

Correct Answer
verified

If a country were to increase its saving rate, then in the long run it would also increase its

Correct Answer
verified

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

Correct Answer
verified

If a production function has constant returns to scale, then if all inputs double so does production.

Correct Answer
verified

One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society

Correct Answer
verified

Other things equal, relatively poor countries tend to grow

Correct Answer
verified

According to research by Robert Fogel, people in Britain grew taller because of

Correct Answer
verified

Which of the following is an example of a nonrenewable resource?

Correct Answer
verified

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Correct Answer
verified

Exam 7: Production and Growth

Scenario 25-1. An economy's production form takes the form Y = AFL, K, H, N) . -Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then it can be rewritten as

Correct AnswerverifiedShow Answer

An increase in the saving rate would, other things the same,

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Outward-oriented policies

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a country increases trade restrictions. This country would be pursing an

Correct AnswerverifiedShow Answer

Over the period 1900-2010, which of the following countries experienced the highest average annual growth rate of real GDP per person?

Correct AnswerverifiedShow Answer

Greater scarcity of a natural resource is indicated

Correct AnswerverifiedShow Answer

International data on the history of real GDP growth rates shows that over the last 120 years or so, rich countries got richer and poor countries got poorer.

Correct AnswerverifiedShow Answer

If a Japanese company opens a new factory in South Korea, it makes

Correct AnswerverifiedShow Answer

Which of the following would, by itself, reveal the most about a country's standard of living?

Correct AnswerverifiedShow Answer

Real GDP per person in rich countries, such as Germany, is sometimes more than 10 times that of poor countries like India.

Correct AnswerverifiedShow Answer

If a country were to increase its saving rate, then in the long run it would also increase its

Correct AnswerverifiedShow Answer

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

Correct AnswerverifiedShow Answer

If a production function has constant returns to scale, then if all inputs double so does production.

Correct AnswerverifiedShow Answer

One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society

Correct AnswerverifiedShow Answer

Other things equal, relatively poor countries tend to grow

Correct AnswerverifiedShow Answer

According to research by Robert Fogel, people in Britain grew taller because of

Correct AnswerverifiedShow Answer

Which of the following is an example of a nonrenewable resource?

Correct AnswerverifiedShow Answer

A barber shop produces 192 haircuts a day. Each barber in the shop works 8 hours per day and produces the same number of haircuts per hour. If the shop's productivity is 2 haircuts per hour of labor, then how many barbers does the shop employ?

Correct AnswerverifiedShow Answer

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