Deck 7: Production and Growth

Question 1

According to a 1998 list published by American Heritage magazine, who was the richest American of all time?

A) Henry Ford
B) Warren Buffett
C) John D. Rockefeller
D) Bill Gates

Answer 1

John D. Rockefeller

Question 2

How large was the growth rate of Japan over the period 1890-2014?

A) 1.5 percent
B) 1.75 percent
C) 2.59 percent
D) 3.02 percent

Answer 2

2.59 percent

Question 3

What is the most appropriate measure of a nation's standard of living?

A) real GDP
B) real GDP per person
C) nominal GDP
D) nominal GDP per person

Answer 3

real GDP per person

Question 4

How does income in developing countries like India and Pakistan compare with that in Canada?

A) It's about 1/16 or less of that in developed countries like Canada.
B) It's about 1/8 of that in developed countries like Canada.
C) It's about 1/4 of that in developed countries like Canada.
D) It's about 1/3 to 1/2 of that in developed countries like Canada.

Question 5

Which statement best explains the importance of real GDP per person?

A) It is a useful measure of economic growth.
B) It is a useful measure of the health of citizens.
C) It is a useful measure of the cost of living.
D) It is a useful measure of well-being.

Question 6

Which statement best describes the relationship between the initial wealth and the growth rate of a country?

A) Countries with the highest growth rates over the past 140 years are the ones that had the highest level of real GDP 140 years ago.
B) Countries that were rich 140 years ago had little fluctuation around their average growth rates during the past 100 years.
C) Though the catch-up effect may suggest otherwise, the data show no strong relationship between initial conditions and growth rates.
D) Over the past 140 years, the United States had the highest real GDP growth rate, and now it has the highest real GDP per person.

Question 7

Compared to the income of the typical Canadian 144 years previously, how much was the income of the typical Pakistani in 2014?

A) about 1/2 as much
B) about 2/3 as much
C) about the same
D) about 2 times as much

Question 8

Which country had the highest growth rate between 1900 and 2014?

A) China
B) Brazil
C) Mexico
D) the United Kingdom

Question 9

As measured by real GDP per person, approximately how much higher is average income in Canada today than it was 140 years ago?

A) 8 times higher
B) 10 times higher
C) 13 times higher
D) 17 times higher

Question 10

Over the past century in Canada, by how much has average income grown as measured by real GDP per person?

A) about 1 percent per year, which implies a doubling about every 70 years
B) about 2 percent per year, which implies a doubling about every 35 years
C) about 3.5 percent per year, which implies a doubling about every 20 years
D) about 4 percent per year, which implies a doubling about every 17.5 years

Question 11

Which of the following best describes changes in the average well-being in a country?

A) the growth rate of the unemployed
B) the growth rate of nominal GDP
C) the growth rate of real GDP
D) the growth rate of real GDP per person

Question 12

In 1870, what was the richest country in the world?

A) Canada
B) the United States
C) the United Kingdom
D) France

Question 13

Which statement best defines productivity?

A) Productivity is the ability of a company to generate profit.
B) Productivity is the quantity of goods and services that a nation can produce in a year.
C) Productivity is the quantity of goods or services that a worker can produce in one hour.
D) Productivity is the ability of a company to produce goods and services.

Question 14

In approximately how many years will real GDP per person in Canada double, given its average growth rate during the past century?

A) 25 years
B) 35 years
C) 50 years
D) 80 years

Question 15

Which country had the lowest growth rate over the period 1870 and 2014?

A) the United Kingdom
B) Mexico
C) Brazil
D) the United States

Question 16

Which nation experienced average rates of economic growth of more than 2.0 percent between 1900 and 2014?

A) Brazil
B) India
C) Bangladesh
D) the United Kingdom

Question 17

Which statement best characterizes the variations in real GDP per person and its rate of growth across countries?

A) Real GDP per person differs widely across countries, but the growth rate of real GDP per person is similar across countries.
B) Real GDP per person is very similar across countries, but the growth rate of real GDP per person differs widely across countries.
C) Real GDP per person and the growth rate of real GDP per person are similar across countries.
D) Real GDP per person and the growth rate of real GDP per person vary widely across countries.

Question 18

Over the past century in Canada, by how much has real GDP per person grown?

A) by about 1 percent per year
B) by about 2 percent per year
C) by about 4 percent per year
D) by about 8 percent per year

Question 19

How does income per person in Canada compare with income per person in China and India?

A) It is about 3.5 times that in China and 8 times that in India.
B) It is about 12 times that in China and 10 times that in India.
C) It is about 10 times that in China and 13 times that in India.
D) It is about 18 times that in China and 16 times that in India.

Question 20

Over the past 100 years, Canadian real GDP per person has doubled about every 35 years. If in the next 100 years it doubles every 20 years, then what will Canadian real GDP per person be a century from now?

A) 10 times higher than it is now
B) 12 times higher than it is now
C) 16 times higher than it is now
D) 32 times higher than it is now

Question 21

Last year, real GDP in Oceania was $620 billion and the population was 2.3 million. The year before, real GDP was $502 billion and the population was 2.0 million. What was the approximate growth rate of real GDP per person?

A) 3 percent
B) 7 percent
C) 10 percent
D) 17 percent

Question 22

In 2018, real GDP in the Kingdom of Fife was $500 billion and the population was 2 million. In 2019, real GDP was $660 billion and the population was 2.2 million. What was the approximate growth rate of real GDP per person?

A) 11 percent
B) 14 percent
C) 17 percent
D) 20 percent

Question 23

What is a direct determinant of productivity?

A) human capital
B) wage
C) price of natural resources
D) unemployment rate

Question 24

Which of the following would NOT be considered physical capital?

A) a sewing machine in an alterations shop
B) a computer used to help Mercury Delivery Service keep track of their orders
C) on-the-job training
D) a desk used in an accountant's office

Question 25

What do economists call the equipment and structures available to produce goods and services?

A) physical capital
B) human capital
C) production inputs
D) technology

Question 26

Which of the following would be considered physical capital?

A) the projector at a cinema
B) milk and cheese
C) the skills and knowledge of a chef
D) the number of hours people spend in the gym

Question 27

Kawartha Furniture uses 8 workers working 10 hours to produce 160 rocking chairs. What is the productivity of these workers?

A) 1 chair per hour
B) 2 chairs per hour
C) 10 chairs per day
D) 80 chairs per day

Question 28

Monica works 8 hours and produces 7 units of goods per hour. Rachel works 6 hours and produces 10 units of goods per hour. What can we conclude?

A) Monica's productivity and output are greater that Rachel's.
B) Monica's productivity is greater than Rachel's, but Monica's output is less.
C) Rachel's productivity and output are greater than Monica's.
D) Rachel's productivity is greater that Monica's, but Rachel's output is less.

Question 29

Lesley looks over reports on four of her workers. Smith made 30 baskets in 6 hours. Dex made 40 baskets in 10 hours. Leo made 55 baskets in 10 hours. Neve made 21 baskets in 3 hours. Who has the greatest productivity?

A) Neve
B) Smith
C) Dex
D) Leo

Question 30

How does productivity explain the differences in standard of living across countries?

A) Productivity tends to be lower in countries with high population, and therefore in those countries standards of living are lower.
B) Productivity explains very little of the differences across countries in the standard of living.
C) Productivity explains some, but not most, of the differences across countries in the standard of living.
D) Productivity explains most of the differences across countries in the standard of living.

Question 31

In 2018, Freedonia had a population of 2700 and real GDP of about $1,080,000. In 2017, it had a population of 2500 and real GDP of about $1,000,000. What was the approximate growth rate of real GDP per person in Freedonia between 2017 and 2018?

A) 0 percent
B) 2.5 percent
C) 5 percent
D) 7.5 percent

Question 32

What is the average amount of goods and services produced from each hour of a worker's time called?

A) per capita GDP
B) per capita national income
C) productivity
D) human capital

Question 33

How is a nation's standard of living determined?

A) by its productivity
B) by its gross domestic product
C) by its national income
D) by the size of its labour force

Question 34

Tom works 6 hours a day and Jerry works 8 hours. Tom can produce 6 baskets of goods while Jerry can produce 7 baskets. What can we conclude?

A) Tom's productivity is greater than Jerry's.
B) Tom's and Jerry's productivities are equal because they both work one day.
C) Tom's and Jerry's productivities cannot be compared.
D) Tom's productivity is lower than Jerry's.

Question 35

Why are Canadian workers more productive than the Chinese?

A) because Canada is a federal state
B) because Canadians have more capital to work with
C) because prices are higher in Canada than in China
D) because the most productive Chinese workers have emigrated to Canada

Question 36

What would an economist call the tractors, hay balers, and combine harvesters that are used on a farm?

A) human capital
B) physical capital
C) production resources
D) technological knowledge

Question 37

Which statement best describe the relationship between productivity and standard of living?

A) International trade makes a country's productivity irrelevant.
B) A country's standard of living and its productivity are closely related.
C) Productivity only increases revenue to investors, while general well-being is not affected.
D) A rich country can enjoy a high standard of living without the need for high productivity.

Question 38

Last year, real GDP per person in Midlothian was $8000. The year before, it was $6000. What was the growth rate of real GDP per person?

A) 10 percent
B) 16.2 percent
C) 25 percent
D) 33.33 percent

Question 39

What do economists call the inputs used to produce goods and services?

A) productivity indicators
B) capitalization producers
C) production functions
D) factors of production

Question 40

What is a correct way to measure productivity?

A) divide the number of hours worked by output
B) divide output by the number of hours worked
C) divide the number of workers by output
D) divide output by the number of workers

Question 41

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

A) supply
B) demand
C) market prices
D) the stock of the resource

Question 42

Clive Lloyd is a professor. Which of the following is a part of his human capital?

A) his experience in the classroom
B) the computer he uses
C) the software he uses to assess students' work
D) the amount of time he spends with his students

Question 43

Which has been happening to the market prices of most natural resources (adjusted for inflation)?

A) They have been rising.
B) They have been stable or rising.
C) They have been stable or falling.
D) They have been falling.

Question 44

Based on historical data on the prices of natural resources, which statement best describes how natural resources limit economic growth?

A) Prices have been increasing, which shows that natural resources become scarcer and this impedes growth.
B) Prices of natural resources have been fluctuating, which shows that there is no correlation between growth and natural resources.
C) Prices of natural resources have been decreasing in constant dollars, which shows that natural resources are not scarcer than they were in the past, thus economic growth is not limited by natural resources.
D) Prices do not show whether resources limit growth because the natural resources that economies use are not the same today as those in the past.

Question 45

Which of the following is considered human capital?

A) the number of computers available in schools and universities
B) the average percentage of income people give to charity
C) the number of persons in the labour force
D) knowledge acquired from an apprenticeship program

Question 46

Which statement best defines proprietary technology?

A) It is knowledge that is known but no longer relevant in a market.
B) It is knowledge that is known, but has only recently been discovered.
C) It is knowledge that is known widely by those in a profession.
D) It is knowledge that is known only by the company that discovers it.

Question 47

Which statement best explains the falling inflation-adjusted prices of most of the natural resources?

A) Most are renewable; therefore, the supply of natural resources is increasing.
B) Our ability to conserve natural resources is increasing faster than their depletion.
C) The demand for natural resources is diminishing due to the discovery of new substitutes.
D) New deposits of natural resources have been discovered in emerging markets.

Question 48

What would we expect to happen with prices or quantities of natural resources if they were becoming scarcer?

A) We would expect prices to be rising relative to other prices, as they have been.
B) We would expect prices to be rising relative to other prices, but this has not occurred.
C) We would expect known quantities to be increasing, as they have been.
D) We would expect known quantities to be falling, but this has not occurred.

Question 49

In a market economy, what does the real, or inflation-adjusted, price of a resource measure?

A) contribution to revenue
B) relative scarcity
C) relative importance
D) contribution to efficiency

Question 50

Which statement best explains economists' understanding of the facts concerning the relationship between natural resources and economic growth?

A) A country with few or no domestic natural resources is destined to remain undeveloped.
B) Differences in natural resources have virtually no role in explaining differences in standards of living.
C) Some countries can be rich mostly because of their natural resources, and countries without natural resources need not be poor, but can never have very high standards of living.
D) Abundant domestic natural resources may help make a country rich, but even countries with few natural resources can have high standards of living.

Question 51

What indicates greater scarcity of a natural resource?

A) an increase in its demand
B) a decrease in its supply
C) an increase in its price
D) a decrease in its stock

Question 52

What is an example of a nonrenewable resource?

A) natural gas
B) wind power
C) livestock
D) a forest

Question 53

In a market economy, when do we know that a resource has become scarcer?

A) when its price rises relative to other prices
B) when it is nonrenewable and some of it is used
C) when substitutes exist
D) when there are no substitutes

Question 54

In the country of Kasnia, the price of copper increased from $6 per kilogram to $6.60 per kilogram during a time when the overall price level increased by 6 percent. During this period, what happened to the real price of copper?

A) It has increased by about 2 percent.
B) It has decreased by about 4 percent.
C) It has decreased by about 8 percent.
D) It has increased by about 10 percent.

Question 55

Which of the following is considered human capital?

A) lunches served in a school cafeteria
B) a new convection oven
C) an apprentice chef working in an upscale restaurant
D) the pots and pans used to prepare meals

Question 56

Which of the following best describes natural resources?

A) native abilities that workers might possess
B) production inputs such as land, rivers, and mineral deposits
C) knowledge that is freely available and is used in production
D) public schools and universities where workers are prepared for life, for which companies do not have to pay

Question 57

Which of the following is considered human capital?

A) better working conditions
B) safety in the workplace
C) the things you have learned this semester
D) machinery that requires a human to operate

Question 58

What best defines human capital?

A) the knowledge and skills that workers acquire through education, training, and experience
B) the stock of equipment and structures that is used to produce goods and services
C) the total number of workers in the labour force
D) the total amount that is paid in wages in an economy

Question 59

Which list contains, in this order, natural resources, human capital, and physical capital?

A) for a restaurant: the land where it stands; the things the kitchen; the freezers where the steaks are kept
B) for a furniture company: wood; the company cafeteria; saws
C) for a railroad: fuel; railroad engineers; railroad tracks
D) for an oil company: the oil it brings to surface; the rigs; the refineries using its oil

Question 60

A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. How would an economist respond to this report?

A) An economist would agree with the report, and would point to rising natural resource prices as evidence.
B) An economist would agree with the report, but wouldn't think it was important because emerging markets are likely to discover additional natural resources.
C) An economist would disagree with the report, in part because it ignores the mitigating effects of technological change.
D) An economist would disagree with the report because labour and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down.

Question 61

Suppose that real GDP grew more in El Dorado than in Atlantis last year. What does this imply concerning productivity or standard of living?

A) El Dorado must have a higher standard of living than Atlantis.
B) El Dorado's productivity must have grown faster than Atlantis's.
C) El Dorado must have a higher real GDP than Atlantis.
D) El Dorado's productivity must have been higher only if the population in the two countries grew at the same rate.

Question 62

Suppose you build bird houses. One day, you double the time you spend building and double the wood, nails, paint, and all the other inputs in order to build twice as many bird houses. What kind of production function is this?

A) decreasing returns to scale
B) zero returns to scale
C) constant returns to scale
D) increasing returns to scale

Question 63

What is one of the consequences of accumulating capital?

A) Accumulating capital requires that society sacrifice consumption in the present.
B) Accumulating capital allows society to consume more in the present.
C) Accumulating capital decreases saving rates.
D) Accumulating capital increases income inequality.

Question 64

If there are constant returns to scale, how is the production function written?

A) xY = 2 x A F(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) xL = A F(1,Y, K, H, N)

Question 65

Your company discovers a better way to produce lawn mowers, but your better methods are not apparent from the lawn mowers themselves. What kind of knowledge is this?

A) common technological knowledge
B) common, but not technological, knowledge
C) proprietary technological knowledge
D) proprietary, but not technological, knowledge

Question 66

How can a government encourage growth and, in the long run, raise the country's economic standard of living?

A) by encouraging population growth
B) by encouraging consumption
C) by encouraging saving and investment
D) by increasing government spending

Question 67

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

A) proprietary knowledge, because only who the person pays for the journal has access to the findings
B) common knowledge, because scientific publications are not subject to copyright
C) proprietary knowledge, because the discoverer has intellectual property rights over the findings
D) common knowledge, because all are free to use the findings

Question 68

Which statement best defines technological knowledge?

A) It is the same as human capital.
B) It is available information on how to produce things.
C) It is the resources expended transmitting society's understanding to the labour force.
D) It is knowledge related to computer literacy.

Question 69

Using the production function and notation in the text, what does K/L measure?

A) average wages per worker
B) human capital per worker
C) output per worker
D) physical capital per worker

Question 70

Which terms refers to the relationship between the quantity of output created and the quantity of inputs needed to create it?

A) the capital accumulation function
B) technological knowledge
C) the production function
D) human capital

Question 71

Which statement best explains how investment and growth rates relate across countries?

A) They are negatively related.
B) They are positively related.
C) They are negatively related for rich countries, but positively related for poor countries.
D) They are positively related for rich countries, but negatively related for poor countries.

Question 72

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, what would happen to productivity?

A) It would fall to half its former value.
B) It would fall, but by less than half.
C) It would stay the same.
D) It would rise, but by less than double.

Question 73

If a production function has constant returns to scale, how can output be doubled?

A) by doubling labour
B) by doubling any one of the inputs
C) by doubling all of the inputs
D) by increasing all inputs by more than double

Question 74

Suppose that over the past ten years productivity grew faster in Cayo than in San Marcos and the population of both countries was unchanged. What can we conclude?

A) Real GDP per person must be higher in Cayo than in San Marcos.
B) Real GDP per person grew faster in Cayo than in San Marcos.
C) The standard of living must be higher in Cayo than in San Marcos.
D) Cayo must have had a greater capital stock than San Marcos.

Question 75

Suppose that an economy with constant returns to scale doubled its physical capital stock, doubled its available natural resources, and doubled its human capital, but kept the size of the labour force the same. How does the change in output compare to the change in productivity?

A) Output would stay the same and so would its productivity.
B) Output and productivity would increase, but by less than double.
C) Output and productivity would increase by more than double.
D) Output would increase by less than double, but productivity would double.

Question 76

One of the ten principles of economics is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. What is the opportunity cost of that capital accumulation?

A) People need to work longer hours, thus having less time for leisure.
B) People need to consume less goods and services now in order to enjoy more consumption in the future.
C) People need to recycle resources so that future generations can produce goods and services with the accumulated capital.
D) People need to devote less time in school and more at work.

Question 77

Which of the following does Y/L refer to?

A) productivity
B) output
C) the availability of capital technology
D) the amount of human capital

Question 78

If your firm has constant returns to scale, what would happen to your firm's output if you doubled all your inputs?

A) It would not change.
B) It would increase, but by less than double.
C) It would double.
D) It would more than double.

Question 79

If the production function for an economy had constant returns to scale, the labour force doubled, and all other inputs stayed the same, what would happen to real GDP?

A) It would stay the same.
B) It would increase by 50 percent.
C) It would increase, but by something less than double.
D) It would double.

Question 80

What would increase productivity, everything else being the same?

A) an increase in immigration
B) an increase in the number of hours of work per week
C) an increase in prices
D) an increase in physical capital per worker