Deck 25: Production and Growth

Question 1

Over the period 1890-2014, Japan experienced a 2.59 percent average annual growth rate of real GDP per person.

Answer 1

True

Question 2

According to some estimates, over the last two decades China has had an annual average growth rate of about 12 percent.

Answer 2

True

Question 3

Over the last 140 years or so, on average Canada's real GDP per-person grew faster than that of the U.K.

Answer 3

True

Question 4

If per capita real income grows by 2 percent per year, then it will double in approximately 20 years.

Question 5

In some countries in Sub-Saharan Africa real GDP per person has been stagnant for many years.

Question 6

Over the period 1870-2014, the United States experienced an average annual growth rate of real GDP per person of about 1.8 percent per year.

Question 7

Both the standard of living and the growth of real GDP per person vary widely across countries.

Question 8

Over the period 1900-2014, Brazil's rate of economic growth exceeded that of China.

Question 9

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

Question 10

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.

Question 11

Since 1870 Canadian and U.S real GDP per person grew from below to above that in the United Kingdom. The explanation for this is likely that productivity grew faster in Canada and the U.S. than in the United Kingdom.

Question 12

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

Question 13

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey's productivity was 1/4.

Question 14

If it could increase its growth rates slightly, a country with low income would catch up with rich countries in about ten years.

Question 15

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

Question 16

In the United States in 2014 real GDP per person was about $56,000, while in some poor countries real GDP per person was less than $5,000.

Question 17

International data on real GDP per person gives us a sense of how standards of living vary across countries.

Question 18

In 2014 income per person in the United States was about 10 times that in India.

Question 19

Productivity can be computed as the number of hours worked divided by output.

Question 20

If Country A produces 7,000 units of goods and services using 700 hours of labor, and if Country B produces 5,500 units of goods and services using 500 units of labor, then productivity is lower in Country A than in Country B.

Question 21

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

Question 22

The catch-up effect refers to the idea that poor countries, despite their best efforts, are not likely ever to experience the economic growth rates of wealthier countries.

Question 23

When Americans invest in Russia, the income of Russians (that is, Russian GNP) rises by more than production in Russia (that is, Russian GDP).

Question 24

Like physical capital, human capital is a produced factor of production.

Question 25

Petroleum is an example of a nonrenewable resource.

Question 26

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at smaller levels of existing capital per worker.

Question 27

An increase in the saving rate permanently increases the growth rate of real GDP per person.

Question 28

Two countries with the same saving rates must have the same growth rate of real GDP per person.

Question 29

A forest is an example of a nonrenewable resource.

Question 30

Increases in both human capital per worker and physical capital per worker increase productivity.

Question 31

Other things the same, another unit of capital will increase output by more in a poor country than in a rich country.

Question 32

Indonesians, for example, have a lower standard of living than Americans because they have a lower level of productivity.

Question 33

Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.

Question 34

Historical trends in the prices of most natural resources compared to prices of other goods indicate that most natural resources have become scarcer over time.

Question 35

Human capital is the term economists use to refer to the knowledge and skills that workers acquire through education, training, and experience.

Question 36

The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a country with a relatively high level of capital per worker than in a country with a relatively low level of capital per worker.

Question 37

An increase in a country's saving rate permanently raises its productivity.

Question 38

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

Question 39

Studies confirm that controlling for other variables such as the percentage of GDP devoted to investment, poor countries tend to grow at a faster rate than rich countries.

Question 40

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

Question 41

In countries where women are discriminated against, policies that increase the likelihood of career success and educational opportunities for women are likely to decrease the birth rate.

Question 42

Economists generally agree on the role the government should play in promoting productivity and economic growth.

Question 43

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.

Question 44

Economist Michael Kremer found that world growth rates fell as population increased.

Question 45

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

Question 46

A country's standard of living depends on its ability to produce goods and services.

Question 47

Countries with high population growth rates tend to have lower levels of educational attainment.

Question 48

​Income rises after a charity gives poor families free livestock. The harvest that year was also particularly bountiful. The charity should take full credit for the observed increase in the standard of living.

Question 49

If a rich country reduced subsidies to domestic producers of goods that poor countries have a comparative advantage producing, the standard of living in these poor countries would likely rise.

Question 50

Investment in human capital has opportunity costs, but investment in physical capital does not.

Question 51

If a country made it easier for people to establish and prove the ownership of their property, real GDP per person would likely rise.

Question 52

Economists generally believe that policies such as reducing barriers to trade are likely to foster economic growth.

Question 53

The population growth rate tends to be higher in developed countries than in developing countries.

Question 54

Randomized control trials can help economists evaluate the impact of global aid programs in the same way that doctors test drugs.

Question 55

Other things the same, an economy's factors of production are likely to be used more effectively if there is an economywide respect for property rights.

Question 56

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

Question 57

If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment.

Question 58

Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented policies.

Question 59

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Question 60

Other things the same, domestic investment will increase a country's real GDP by more than foreign investment.

Question 61

Without controlling for differences in natural resources and technological knowledge, diminishing returns can explain the entire difference in economic growth rates for China and the United States.

Question 62

Is physical capital a produced factor of production? Is human capital a produced factor of production?

Question 63

How would an economist typically assess the extent of economic progress in a nation?

Question 64

Does a country have to be blessed with large quantities of natural resources in order to enjoy a high standard of living? Briefly explain.

Question 65

In the United States over the past century, real GDP per person has grown by about __________ percent per year.

Question 66

John and Miguel are fishermen. When they go fishing, John consistently catches 2 or 3 fish per hour, while Miguel consistently catches 5 or 6 fish per hour. Miguel's __________ exceeds that of John.

Question 67

Susan and Calvin paint houses. Susan consistently paints about 400 square feet of a house's exterior per hour, while Calvin consistently paints about 300 square feet per hour. Susan's __________ exceeds that of Calvin.

Question 68

The level of real GDP is a good measure of economic prosperity, and the growth of real GDP is a good measure of __________.

Question 69

"When workers acquire tools, they become more productive." This statement reflects the general fact that __________ is a determinant of productivity.

Question 70

Consider the nations of Canada, the United Kingdom, and the United States. Since 1870, which of these nations has progressed, in an economic sense, more slowly than the other two nations?

Question 71

What word do we use to refer to the amount of goods and services produced for each hour of a worker's time?

Question 72

List the four determinants of an economy's productivity.

Question 73

Consider the nations of India, Indonesia, and Japan. Over the past century, which of these three nations has experienced, by far, more rapid economic growth than the other two nations?

Question 74

In order to assess the level of prosperity in a nation in a given year, should we examine the level of that nation's real GDP per person, or should we examine the growth rate of that nation's real GDP per person?

Question 75

Why do we refer to physical capital as a produced factor of production?

Question 76

The majority of economists believe that future innovations will not be transformational enough to sustain high economic growth rates in the U.S. and western Europe.

Question 77

Consider the nations of Brazil, Mexico, and Pakistan. Over the past century, which of these three nations has experienced, by far, slower economic growth than the other two nations?

Question 78

Consider the nations of China, Japan, and the United States. Over the past century, which of these nations has progressed, in an economic sense, more rapidly than the other two nations?

Question 79

Because of its vast oil reserves, Saudi Arabia is a rich country. Saudi Arabia exemplifies the general fact that differences in __________ are responsible for some of the differences in standards of living around the world.

Question 80

Which one of the factors of production originates as an output from the production process, and is subsequently used as an input into the production process?