Deck 23: Economic Growth: Theory and Policy

Question 1

Imitation, rather than innovation, is a way for poorer countries to achieve growth.

Answer 1

True

Question 2

The poorest countries in Africa have some of the highest growth rates, thus proving the convergence hypothesis.

Answer 2

False

Question 3

The production function shifts upward as the capital stock increases.

Answer 3

True

Question 4

College tuition costs have risen faster than prices in general from 1979 to 2009.

Question 5

According to the convergence hypothesis, as a country grows wealthier, its productivity growth rate will slow down.

Question 6

A nation's capital consists mainly of stocks, bonds, and other financial assets.

Question 7

Service sector outputs could be expected to increase in price less than industrial sector outputs as an economy grows.

Question 8

A superior level of technology is an important reason the productivity of workers in rich countries is high.

Question 9

Some politicians argue that reducing the corporate income tax will increase business investment spending.

Question 10

As the level of real interest rates rise, the amount of new investment will rise also.

Question 11

Capital investment becomes more profitable for a business firm as the real interest rate decreases.

Question 12

When the economy devotes more of its resources to investment goods, it must devote fewer resources to consumer goods.

Question 13

The convergence hypothesis suggests that poor countries may close the income gap with rich countries.

Question 14

The ability to read, write, and run calculations are examples of human capital.

Question 15

Human capital includes the tools and equipment that human beings work with.

Question 16

Expansion of factories, investment in new computers and/or equipment are processes of capital formation.

Question 17

As the amount of capital to laborers increases, labor productivity diminishes.

Question 18

Improvements in the level of technology will generally shift the production function downward.

Question 19

For a given technology, a higher capital stock will decrease labor productivity.

Question 20

Productivity levels are higher in rich countries compared to poor countries.

Question 21

By enjoying more consumer goods today, the economy spurs growth in future consumer goods.

Question 22

Many poorer countries face political instability and insecure property rights.

Question 23

In the United States, the wage rates for high school graduates are growing faster than the wage rates for college graduates.

Question 24

All other things being equal, a greater supply of scientists and engineers will increase the level of technology.

Question 25

Economists are still puzzled why growth rates in the United States fell from 1973 to 1995.

Question 26

There is no general agreement among economists regarding the sources of the U.S. productivity slowdown that occurred between 1973 and 1995.

Question 27

Public sector and private sector collaboration is one way to support R&D.

Question 28

Improvements in human capital and education played a major role in the productivity improvements of the U.S. economy from 1995 to 2009.

Question 29

In 2010, President Obama proposed more generous tax write-offs for businesses that invest in additional equipment in order to stimulate investment spending.

Question 30

The fastest growing productivity increases in the United States have occurred in the personal services sector.

Question 31

The slowing of the American economy in 2008-2009 gave businesses a strong incentive to raise capital investment.

Question 32

Real wages usually lag behind the increases in labor productivity.

Question 33

The wage premium in the United States for college graduates over high school graduates has remained constant from 1978 to 2000.

Question 34

Because the Soviet Union educated more scientists and engineers than the United States, their level of economic growth was higher.

Question 35

The prices of telecommunications services have decreased due to productivity increases.

Question 36

Productivity growth rates in the United States have remained fairly constant from 1948 to 2000.

Question 37

The change in the contribution of capital formation was the chief cause of the productivity slowdown in 1973-1995.

Question 38

Higher corporate profit taxes stimulate capital formation in the private sector.

Question 39

Investment spending, capital formation, and rapid technological progress are directly related.

Question 40

The adoption of widespread use of computers contributed to the productivity speed-up from 1995 to 2000.

Question 41

More consumption rather than investment leads to stagnant growth in developing countries.

Question 42

The "cost disease of personal services" phenomenon helps explain why medical care has become so expensive.

Question 43

College tuition expenses have risen from 1982 to 2012 by

A) an amount equal to prices in general.
B) an amount greater than average prices.
C) an amount less than average prices.
D) the amount of the percentage increase in the overall CPI.

Question 44

The productivity slowdown in the United States can be explained by the use of social media, many are used for personal enjoyment rather than industrial productivity.

Question 45

When the difference between potential GDP and actual GDP increases, the nation usually suffers from increased inflation.

Question 46

A productivity decrease would be illustrated by a shift in the production function

A) downward.
B) leftward.
C) upward.
D) rightward.

Question 47

Development assistance is designed to spur population growth in poor countries.

Question 48

The distinction between productivity levels and productivity growth rates is theoretical and has no practical application.

Question 49

The graph that relates hours of labor input to output is called the

A) consumption function.
B) conjunction function.
C) capital function.
D) production function.

Question 50

A productivity increase is illustrated by a shift in the production function

A) downward.
B) leftward.
C) upward.
D) rightward.

Question 51

The three pillars of productivity growth does not include an

A) increase in the rate at which the economy builds up its stock of capital.
B) increase in population.
C) increase in the rate at which technology improves.
D) increase in the rate at which workforce quality improves.

Question 52

Foreign direct investment generally leads to technological advancements in poorer countries.

Question 53

The improvement in human capital can be shown by a(n)

A) increase along the production function.
B) decrease along the production function.
C) shift up of the production function.
D) shift down of the production function.

Question 54

In general, as the amount of labor input decreases, the amount of output

A) increases.
B) decreases.
C) remains constant.
D) decreases only if the capital stock also decreases.

Question 55

The cost of education, professional athletes' pay, and medical services rise faster than the rate of goods and services because their average productivity has remained the same.

Question 56

Which of the following services have experienced declines in relative prices due to productivity increases?

A) Medical services
B) Restaurant meals
C) Theatrical performances
D) Internet access services

Question 57

Economists believe that the same explanation for the rapid growth of costs applies to services, theatrical performances and restaurant meals.

Question 58

Industrialized countries generally have higher levels of educational attainment compared with poorer countries.

Question 59

The term "human capital" refers to how many people must work to produce a product.

Question 60

The fall of actual GDP below the level of potential GDP is a signal that the economy is in a recession.

Question 61

Which of the following is not one of the three pillars of productivity growth?

A) Rate of capacity utilization
B) Rate of technological improvement
C) Rate of improvement in workforce quality
D) Rate of capital expansion

Question 62

Which business would have the lowest costs per record album sold?

A) An independently operated local music shop
B) A large retailer selling electronics, music, and appliances
C) An online seller of music and books
D) Only the music shop and large retailer

Question 63

One of the main drivers of industrialization in South Korea was

A) an increase in human capital.
B) decreased trade with developed countries.
C) the accumulation of new technology.
D) trade with North Korea.

Question 64

Which furniture production process would have the highest furniture prices?

A) Furniture made by handsaw and hammer
B) Furniture made with power equipment
C) Furniture with a mix of handmade and automated labor
D) Furniture made in an automated furniture factory

Question 65

Which retail operation would have the highest costs per book sold?

A) A small independent bookstore
B) A large retail bookstore chain
C) An Internet seller of books
D) The Internet seller and retailer

Question 66

How is human capital most commonly measured?

A) By the organizational rank and seniority
B) By the amount of pay and incentives
C) By the amount of education and training
D) By the compensation structure and work policies

Question 67

Compared to workers in poor countries, workers in richer countries have

A) lower productivity but higher wages.
B) higher productivity and higher wages.
C) higher productivity but lower wages.
D) the same productivity but higher wages.

Question 68

Which furniture production process would have the highest wage rates?

A) Furniture made by handsaw and hammer
B) Furniture made with power equipment
C) Furniture with a mix of handmade and automated labor
D) Furniture made in an automated furniture factory

Question 69

Compared to workers in richer countries, workers in developing countries have

A) lower productivity and lower wages.
B) higher productivity and higher wages.
C) higher productivity but lower wages.
D) the same productivity but lower wages.

Question 70

Human capital differs from physical capital in that

A) human capital is intangible.
B) human capital is tangible.
C) physical capital is intangible.
D) human capital has no cost to acquire.

Question 71

Which of the following was not a factor in Japan's post-World War II economic success?

A) A high rate of investment
B) A well-educated workforce
C) A high rate of natural resource discovery
D) A high rate of technological adoption

Question 72

Human capital does not improve with

A) higher learning.
B) on-the-job training.
C) higher wages.
D) learning on the job.

Question 73

An increase in the number of hours worked would

A) shift the production function upward.
B) shift the production function downward.
C) shift the production function outward.
D) not shift the production function.

Question 74

Which of the following countries has the lowest level of average educational attainment?

A) Canada
B) Italy
C) India
D) Sudan

Question 75

Human capital is the amount of

A) capital available to workforce.
B) skill embodied in the workforce.
C) output the labor force can produce.
D) healthy work force in the total population.

Question 76

Countries that adopt the most advanced technologies will have

A) stagnant labor productivity.
B) highly productive labor and capital.
C) decreasing profitability.
D) constant returns to scale.

Question 77

The definition of human capital refers to

A) worker education and workers' equipment.
B) worker education and workers' physical capital.
C) workers' equipment and workers' physical capital.
D) worker education and worker training.

Question 78

For a given technology and a given labor force, labor productivity will be ____ when the capital stock is ____.

A) higher; larger
B) lower; larger
C) lower; unchanged
D) higher; smaller

Question 79

Which furniture production process would have the highest production function?

A) Furniture made by handsaw and hammer
B) Furniture made with power equipment
C) Furniture with a mix of handmade and automated labor
D) Furniture made in an automated furniture factory

Question 80

For given inputs of labor and capital, if technology is better, labor productivity will be

A) higher.
B) lower.
C) unchanged.
D) characterized by increasing returns to scale.