Chapter24 ProductionandGrowth

TestB
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Inthelast100yearsU.S.percapitarealGDPgrewabout a. 2%peryear,sothatitisabouttwotimesashigh. b. 2%peryear,sothatitisabouteighttimesashigh. c. 4%peryear,sothatitisabouttwotimesashigh. d. 4%peryear,sothatitisabouteighttimesashigh. ANSWER:b. 2%peryear,sothatitisabouteighttimesashigh. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

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PercapitarealGDPinChinaisaboutequaltopercapitarealGDPintheUnitedStatesin a. 1870,and1/2thatintheUnitedStatestoday. b. 1870,and1/8thatintheUnitedStatestoday. c. 1920,and1/2thatintheUnitedStatestoday. d. 1920,and1/8thatintheUnitedStatestoday. ANSWER:b. 1870,and1/8thatintheUnitedStatestoday. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

3

Ofcountrieslistedinthetext,thepercapitarealGDPgrowthratesoverthelast100yearsranged fromabout a. 0%5%. b. 1%3%. c. 2%5%. d. 3%6%. ANSWER:b. 1%3%. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

4

SupposeaneconomythatwasroughlythesizeofAustraliahadapopulationof19millionandreal GDPofabout380,000millionU.S.dollarsin1998.Supposefurtherthatin1999populationwasabout 19.5millionandrealGDPwasabout401,500milliondollars.Whataretheapproximategrowthrates ofrealGDPandofrealGDPpercapita? a. 5.7%,5.3% b. 5.7%,3% c. 3%,5.7% d. 5.3%,3% ANSWER:b. 5.7%,3% TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

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Whichofthefollowingiscorrect? a. IfacountryhasapercapitarealGDPgrowthrateof7%,itspercapitarealGDPwilldouble aboutevery14years. b. ThecurrentlevelofpercapitarealGDPintheUnitedStatesisabout$19,450. c. Although100yearsagotheUnitedKingdomhadgreaterpercapitarealGDPthantheUnited StatesandCanada,itnowhaslowerpercapitarealGDPthanbothofthem. d. Alloftheabovearecorrect. ANSWER:c. Although100yearsagotheUnitedKingdomhadgreaterpercapitarealGDPthanthe UnitedStatesandCanada,itnowhaslowerpercapitarealGDPthanbothofthem. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y
6

Productivityisthe a. growthrateofrealGDP. b. averageamountaworkerproducesperhour. c. levelofrealGDP. d. Noneoftheaboveiscorrect. ANSWER:b. averageamountaworkerproducesperhour. TYPE:MKEY1:DSECTION:2OBJECTIVE:2RANDOM:Y NOTE:THEFOLLOWINGQUESTIONISREPEATEDFROMTHEONLINEQUIZZES.YOUR STUDENTSMAYHAVEALREADYSEENTHISQUESTIONANDITSANSWER.
7

Supposethatfactoryoutputrosefrom50,000unitsto55,000unitswhilelaborhoursrosefrom1100 to1200.Whichofthefollowingistrue? a. Laborproductivityremainedunchanged. b. Laborproductivityincreasedslightly. c. Laborproductivitydecreasedslightly. d. Laborproductivityincreasedsharply. ANSWER:b. Laborproductivityincreasedslightly. TYPE:MKEY1:DSECTION:2OBJECTIVE:2RANDOM:Y

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TheproductivityofU.S.workersishigherthanthatofworkersinmanycountriesthathaveless capital.Whichofthefollowingargumentsconcerningthesefactsislogicallyconsistent? a. Thiscontradictstheideaofdiminishingmarginalproduct.IfU.S.workershavemorecapital, theyshouldhavelowerproductivity. b. ProductivityintheUnitedStatesishigherbecausetheUnitedStateshasmoreworkersthan thosecountrieshavinglowproductivity. c. TheUnitedStatescouldhavegreaterproductivitybecauseitsworkershavebothmorehuman capitalandphysicalcapitalperworker. d. Noneoftheaboveislogicallyconsistent. ANSWER:c. TheUnitedStatescouldhavegreaterproductivitybecauseitsworkershavebothmore humancapitalandphysicalcapitalperworker. TYPE:MKEY1:CSECTION:2OBJECTIVE:2RANDOM:Y

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Engineeringstudentslearnlongestablishedmethodsforconstructingbridges,inandofitselfthis learningincreases a. humancapital. b. physicalcapital. c. technologicalknowledge. d. Noneoftheaboveiscorrect. ANSWER:a. humancapital. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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Ifthereareconstantreturnstoscalethen a. adoublingofallinputsdoublesrealGDP. b. technologicalprogressdoesnotaffectpercapitarealGDP. c. doublinglaborwouldleavepercapitarealGDPunchanged. d. anincreaseincapitalperworkerwouldleavepercapitarealGDPunchanged. ANSWER:a. adoublingofallinputsdoublesrealGDP. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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Whichofthefollowingisincorrect? a. Bulldozersareanexampleofphysicalcapital. b. Studentscanbeviewedasworkerswhohavetheimportantjobofproducinghumancapital thatwillbeusedinfutureproduction. c. Aforestisanonrenewableresource. d. Technologicalprogressmayreduceourdependenceonnonrenewableresources. ANSWER:c. Aforestisanonrenewableresource. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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Humancapitalis a. thenumberofworkersintheeconomy. b. thenumberofworkersdividedbythepopulation. c. theamountofphysicalcapitalperworker. d. societysunderstandingofthebestwaytoproduceoutput. ANSWER:d. societysunderstandingofthebestwaytoproduceoutput. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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Considerthefollowingtwosentences.Thewealthofsomecountriesderivesprimarilyfromthe naturalresourcestheyown.However,countrieswithfewnaturalresourcescanbehighly productive. a. Bothsentencesaretrue. b. Onlythefirstsentenceistrue. c. Onlythesecondsentenceistrue. d. Neithersentenceistrue. ANSWER:a. Bothsentencesaretrue. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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22yChapter24/ProductionandGrowth
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Onceadjustedforinflationthepriceofmostnaturalresources a. rosebecauseofincreasingdemandfromagrowingpopulation. b. rosebecausetheirsupplyisdeclining. c. werestableorfallingbecauseofgovernmentpricecontrols. d. Noneoftheaboveiscorrect. ANSWER:d. Noneoftheaboveiscorrect. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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Inthelongrunahighersavingsrateleadsto a. ahigherlevelofpercapitaincome. b. ahigherlevelofproductivity. c. anincreaseinthegrowthrateofincome. d. AandB,butnotC. ANSWER:d. AandB,butnotC. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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Considerthefollowingtwosentences.Accordingtothedata,countrieswithhigherinvestment relativetoGDP,tendtohavehighergrowthratesofrealGDPperperson.Thisrelationisnotperfect though,becauseanincreaseinthephysicalcapitalstockincreasesoutputperpersonmoreina countrywithmuchcapitalthaninasimilarcountrywithlesscapital. a. Bothsentencesaretrue. b. Bothsentencesarefalse. c. Onlythefirstsentenceistrue. d. Onlythesecondsentenceistrue. ANSWER:c. Onlythefirstsentenceistrue. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y
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Thecatchupeffectisthe a. tendencyforcountriesthatstartoffpoortogrowmorerapidlythancountriesthatstartoffrich. b. propertywherebythebenefitsofanextraunitofaninputdeclinesasthequantityoftheinput increases. c. tendencyforthegrowthrateofthecapitalstockofacountrytomatchitspopulationgrowth rate. d. propertywherebythebenefitsofdifferentinputsmovetowardeachotherovertime. ANSWER:a. tendencyforcountriesthatstartoffpoortogrowmorerapidlythancountriesthatstartoff rich. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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Chapter24/ProductionandGrowthy23
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Whichofthefollowingisincorrect? a. ControllingforothervariablessuchasthepercentageofGDPdevotedtoinvestment,poor countriestendtogrowfasterthanrichcountries. b. Thegrowththatarisesfromcapitalaccumulationisnotafreelunch. c. CountriessuchasSingaporeandJapan,thatdevotedalargeshareofGDPtoinvestmentfrom 19601991tendedtohavehighergrowthratesoverthisperiod. d. TheUnitedStatesandKoreadevotedsimilarsharesofrealGDPtoinvestmentfrom19601991, buttheUnitedStateshadahighergrowthrate. ANSWER:d. TheUnitedStatesandKoreadevotedsimilarsharesofrealGDPtoinvestmentfrom1960 1991,buttheUnitedStateshadahighergrowthrate. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y
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WhichwouldincreasethecapitalstockofElSalvadorandprovidereturnstoU.S.investors? a. U.S.foreigndirectinvestmentinElSalvador. b. U.S.foreignportfolioinvestmentinElSalvador. c. Bothoftheabovearecorrect. d. Neitheroftheaboveiscorrect. ANSWER:c. Bothoftheabovearecorrect. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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U.S.foreigndirectinvestment a. raisesbothU.S.GDPandU.S.GNP. b. raisesneitherU.S.GDPnorU.S.GNP. c. raisesU.S.GDP,butnotU.S.GNP. d. raisesU.S.GNP,butnotU.S.GDP. ANSWER:d. raisesU.S.GNP,butnotU.S.GDP. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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WhichofthefollowingisNOTcorrect? a. Manyeconomistswouldadvisegovernmentsinlessdevelopedeconomiestoimplement policiesthatencourageinvestmentfromabroad. b. LoweringpopulationgrowthratescanincreasepercapitarealGDP. c. Someeconomistsarguethateducationisparticularlyimportantbecausehumancapitalhas positiveexternalities. d. Inthelongrun,increasesinthesavingsrateleadtoincreasesinrealGDPgrowth. ANSWER:d. Inthelongrun,increasesinthesavingsrateleadtoincreasesinrealGDPgrowth. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y NOTE:THEFOLLOWINGQUESTIONISREPEATEDFROMTHEONLINEQUIZZES.YOUR STUDENTSMAYHAVEALREADYSEENTHISQUESTIONANDITSANSWER.

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24yChapter24/ProductionandGrowth
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Whichofthefollowingstatementsiscorrect? a. Ingeneral,agivenlevelofinvestmentinapoorcountrywillleadtogreatereconomicgrowth thanthesamelevelofinvestmentinarichcountry. b. Ifanationinvestsmore,itseconomicgrowthratewillbepermanentlyhigher. c. Anationmusthaveabundantnaturalresourcesifitistoexperiencerapideconomicgrowth. d. Increasedeconomicgrowththroughincreasedinvestmentdoesnothaveanopportunitycost. ANSWER:a. Ingeneral,agivenlevelofinvestmentinapoorcountrywillleadtogreatereconomic growththanthesamelevelofinvestmentinarichcountry. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y NOTE:THEFOLLOWINGQUESTIONISREPEATEDFROMTHEONLINEQUIZZES.YOUR STUDENTSMAYHAVEALREADYSEENTHISQUESTIONANDITSANSWER.
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Generallyspeakingfromsocietysviewpoint,thereturnstoresearchanddevelopmentundertaken byfirms a. isapublicgood. b. isaprivategood. c. shouldneverbesupportedbygovernment. d. willneveroccurifasystemofpatentsisnotputintoplace. ANSWER:a. isapublicgood. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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SupposeaGermanownedautomobilecompanyopensanewcarplantinWayne,Nebraska. a. ThisforeigndirectinvestmentincreasesU.S.realGDPmorethanitincreasesU.S.realGNP. b. ThisforeigndirectinvestmentincreasesU.S.realGNPmorethanitincreasesU.S.realGDP. c. ThisforeignportfolioinvestmentincreasesU.S.realGDPmorethanitincreasesU.S.realGNP. d. TheforeignportfolioinvestmentincreasesU.S.realGNPmorethanitincreasesU.S.realGDP. ANSWER:a. ThisforeigndirectinvestmentincreasesU.S.realGDPmorethanitincreasesU.S.real GNP. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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WhichofthefollowingcanincreaserealGDPperperson? a. adecreaseinpopulationgrowth b. foreigninvestmentfromabroad c. policiestoencourageinternationaltrade d. Alloftheabovearecorrect. ANSWER:d. Alloftheabovearecorrect. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:b.2%peryear,sothatitisabouteighttimesashigh. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

ANSWER:b.1870,and1/8thatintheUnitedStatestoday. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

ANSWER:b.1%3%. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

ANSWER:b.5.7%,3% TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

ANSWER:c. Although100yearsagotheUnitedKingdomhadgreaterpercapitarealGDP thantheUnitedStatesandCanada,itnowhaslowerpercapitarealGDPthanbothofthem. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y

ANSWER:b.averageamountaworkerproducesperhour. TYPE:MKEY1:DSECTION:2OBJECTIVE:2RANDOM:Y

ANSWER:b.Laborproductivityincreasedslightly. TYPE:MKEY1:DSECTION:2OBJECTIVE:2RANDOM:Y

ANSWER:c. TheUnitedStatescouldhavegreaterproductivitybecauseitsworkershave bothmorehumancapitalandphysicalcapitalperworker. TYPE:MKEY1:CSECTION:2OBJECTIVE:2RANDOM:Y

ANSWER:a.humancapital. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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ANSWER:a.adoublingofallinputsdoublesrealGDP. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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ANSWER:c. Aforestisanonrenewableresource. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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ANSWER:d.

society'sunderstandingofthebestwaytoproduceoutput.

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ANSWER:a.Bothsentencesaretrue. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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ANSWER:d. Noneoftheaboveiscorrect. TYPE:MKEY1:DSECTION:2OBJECTIVE:3RANDOM:Y

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ANSWER:d. AandB,butnotC. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:c. Onlythefirstsentenceistrue. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:a.tendencyforcountriesthatstartoffpoortogrowmorerapidlythancountries thatstartoffrich. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:d. TheUnitedStatesandKoreadevotedsimilarsharesofrealGDPto investmentfrom19601991,buttheUnitedStateshadahighergrowthrate. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:c. Bothoftheabovearecorrect. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:d. raisesU.S.GNP,butnotU.S.GDP. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:d. Inthelongrun,increasesinthesavingsrateleadtoincreasesinreal GDPgrowth. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:a.Ingeneral,agivenlevelofinvestmentinapoorcountrywillleadtogreater economicgrowththanthesamelevelofinvestmentinarichcountry. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:a.isapublicgood.

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ANSWER:a.ThisforeigndirectinvestmentincreasesU.S.realGDPmorethanitincreases U.S.realGNP. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y

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ANSWER:d. Alloftheabovearecorrect. TYPE:MKEY1:DSECTION:3OBJECTIVE:4RANDOM:Y