Question 1

Nathan owns a coffee kiosk. All of his employees work 8 hours per day. In 2009, he employed 5 people who produced a total of 900 cups of coffee each day. In 2010, he hired a sixth employee and production increased to 1188 cups of coffee each day. In Nathan's kiosk, productivity

Accepted Answer

A)  decreased by 2 percent.
B)  increased by 9 percent.
C)  increased by 10 percent.
D)  increased by 1.11 percent.E) All of the above
F) C) and D)

Question 2

Evidence shows that other things the same, poor countries grow

Accepted Answer

A)  faster than rich countries. However, no country that was poor in 1870 is now rich.
B)  faster than rich countries. In fact, some countries that were poor in 1870 are now rich.
C)  slower than rich countries. In fact, no country that was poor in 1870 is now rich.
D)  slower than rich countries. However, some countries that were poor in 1870 are now rich.E) A) and B)
F) None of the above

Question 3

Figure 12-1. On the horizontal axis, K/L represents capital (K)  per worker (L) . On the vertical axis, Y/L represents output (Y)  per worker (L) . 
-Refer to Figure 12-1. The curve becomes flatter as the amount of capital per worker increases because of

Accepted Answer

A)  increasing returns to capital.
B)  increasing returns to labor.
C)  diminishing returns to capital.
D)  diminishing returns to labor.E) C) and D)
F) None of the above

Question 4

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Accepted Answer

A)  raise productivity. Other things the same, this increase will be larger in a poor country.
B)  raise productivity. Other things the same, this increase will be larger in a rich country.
C)  reduce productivity. Other things the same, this decrease will be larger in a poor country.
D)  reduce productivity. Other things the same, this decrease will be larger in a rich country.E) A) and B)
F) A) and C)

Question 5

The behavior of market prices over time indicates that natural resources are

Accepted Answer

A)  a limit to economic growth.
B)  unrelated to economic growth.
C)  not a limit to economic growth.
D)  the major determinant of productivity.E) A) and D)
F) B) and D)

Question 6

Over the period 1900-2008, Brazil's rate of economic growth exceeded that of China.

Accepted Answer

A) True 
 B)False

Question 7

Over the last century, U.S. real GDP per person grew at a rate of about

Accepted Answer

A)  2 percent per year, so that it is now 2 times as high as it was a century ago.
B)  2 percent per year, so that it is now 8 times as high as it was a century ago.
C)  4 percent per year, so that it is now 2 times as high as it was a century ago.
D)  4 percent per year, so that it is now 8 times as high as it was a century ago.E) A) and B)
F) A) and C)

Question 8

Suppose that a country increased its saving rate. In the long run it would have

Accepted Answer

A)  higher productivity, and another unit of capital would increase output by more than before.
B)  higher productivity, but another unit of capital would increase output by less than before.
C)  lower productivity, and another unit of capital would increase output by more than before.
D)  lower productivity, but another unit of capital would increase output by less than before.E) B) and C)
F) A) and B)

Question 9

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 4 percent to 7 percent. Over the next ten years we would expect that

Accepted Answer

A)  the growth rate will not change in either country.
B)  the country that started with less capital per worker will grow faster.
C)  the country that started with more capital per worker will grow faster.
D)  both countries will grow and at the same higher rate.E) C) and D)
F) A) and C)

Question 11

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Accepted Answer

A)  decreasing returns to scale.
B)  zero returns to scale.
C)  constant returns to scale.
D)  increasing returns to scale.E) A) and B)
F) A) and C)

Question 12

Which of the following would be considered physical capital?

Accepted Answer

A)  the available knowledge on how to make semiconductors
B)  a taxi-cab driver's knowledge of the fastest routes to take
C)  bulldozers, backhoes and other construction equipment
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 13

Human capital is the

Accepted Answer

A)  knowledge and skills that workers acquire through education, training, and experience.
B)  stock of equipment and structures that is used to produce goods and services.
C)  total number of hours worked in an economy.
D)  same thing as technological knowledge.E) B) and D)
F) All of the above

Question 14

If a country has a higher level of productivity than another, then it also has a higher level of real GDP.

Accepted Answer

A) True 
 B)False

Question 15

If a good has become more scarce, then we know for sure that

Accepted Answer

A)  the demand for it increased.
B)  the supply of it decreased.
C)  either the demand for it increased or the supply of it decreased.
D)  both the supply of it and the demand for it decreased.E) A) and C)
F) B) and C)

Question 16

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

Accepted Answer

A) True 
 B)False

Question 17

Megan is a landscaper. Which of the following are included in her human capital?

Accepted Answer

A)  her knowledge of landscaping learned in college and her landscaping equipment
B)  her knowledge of landscaping learned in college, but not her landscaping equipment
C)  her landscaping equipment, but not her knowledge of landscaping learned in college
D)  neither her knowledge of landscaping learned in college nor her landscaping equipmentE) All of the above
F) B) and D)

Question 18

Average income has been stagnant for many years in

Accepted Answer

A)  Gabon.
B)  Ireland.
C)  Singapore.
D)  All of the above are correct.E) A) and D)
F) None of the above

Question 19

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Accepted Answer

A)  5 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller.
B)  10 percent. In less developed countries the gap between the wages of educated and uneducated workers is smaller.
C)  5 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger.
D)  10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger.E) All of the above
F) C) and D)

Question 20

Which of the following is correct?

Accepted Answer

A)  Although levels of real GDP per person vary substantially from country to country, the growth rate of real GDP per person is similar across countries.
B)  Productivity is not closely linked to government policies.
C)  The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress.
D)  Productivity may be measured by the growth rate of real GDP per person.E) B) and C)
F) A) and C)

Exam 12: Production and Growth

Correct Answer
verified

Nathan owns a coffee kiosk. All of his employees work 8 hours per day. In 2009, he employed 5 people who produced a total of 900 cups of coffee each day. In 2010, he hired a sixth employee and production increased to 1188 cups of coffee each day. In Nathan's kiosk, productivity

Correct Answer
verified

Evidence shows that other things the same, poor countries grow

Correct Answer
verified

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Correct Answer
verified

If a country has a higher level of productivity than another, then it also has a higher level of real GDP.

Correct Answer
verified

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

Correct Answer
verified

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

Correct Answer
verified

Over the period 1900-2008, Brazil's rate of economic growth exceeded that of China.

Correct Answer
verified

Over the last century, U.S. real GDP per person grew at a rate of about

Correct Answer
verified

Average income has been stagnant for many years in

Correct Answer
verified

Human capital is the

Correct Answer
verified

Which of the following would be considered physical capital?

Correct Answer
verified

Megan is a landscaper. Which of the following are included in her human capital?

Correct Answer
verified

Figure 12-1. On the horizontal axis, K/L represents capital (K) per worker (L) . On the vertical axis, Y/L represents output (Y) per worker (L) . -Refer to Figure 12-1. The curve becomes flatter as the amount of capital per worker increases because of

Correct Answer
verified

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

If a good has become more scarce, then we know for sure that

Correct Answer
verified

The behavior of market prices over time indicates that natural resources are

Correct Answer
verified

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Correct Answer
verified

Suppose that a country increased its saving rate. In the long run it would have

Correct Answer
verified

Exam 12: Production and Growth

Correct AnswerverifiedShow Answer

Nathan owns a coffee kiosk. All of his employees work 8 hours per day. In 2009, he employed 5 people who produced a total of 900 cups of coffee each day. In 2010, he hired a sixth employee and production increased to 1188 cups of coffee each day. In Nathan's kiosk, productivity

Correct AnswerverifiedShow Answer

Evidence shows that other things the same, poor countries grow

Correct AnswerverifiedShow Answer

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Correct AnswerverifiedShow Answer

If a country has a higher level of productivity than another, then it also has a higher level of real GDP.

Correct AnswerverifiedShow Answer

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 12.5.

Correct AnswerverifiedShow Answer

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

Correct AnswerverifiedShow Answer

Over the period 1900-2008, Brazil's rate of economic growth exceeded that of China.

Correct AnswerverifiedShow Answer

Over the last century, U.S. real GDP per person grew at a rate of about

Correct AnswerverifiedShow Answer

Average income has been stagnant for many years in

Correct AnswerverifiedShow Answer

Human capital is the

Correct AnswerverifiedShow Answer

Which of the following would be considered physical capital?

Correct AnswerverifiedShow Answer

Megan is a landscaper. Which of the following are included in her human capital?

Correct AnswerverifiedShow Answer

Figure 12-1. On the horizontal axis, K/L represents capital (K) per worker (L) . On the vertical axis, Y/L represents output (Y) per worker (L) . -Refer to Figure 12-1. The curve becomes flatter as the amount of capital per worker increases because of

Correct AnswerverifiedShow Answer

Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

If a good has become more scarce, then we know for sure that

Correct AnswerverifiedShow Answer

The behavior of market prices over time indicates that natural resources are

Correct AnswerverifiedShow Answer

In the U.S., each additional year of schooling has historically raised a person's wage on average by about

Correct AnswerverifiedShow Answer

Suppose that a country increased its saving rate. In the long run it would have

Correct AnswerverifiedShow Answer

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