Deck 7: Economic Growth: Theory and Policy

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

The term "capital formation" actually implies adding new equipment to a nation's factories.

Answer 3

True

Question 4

The production function shifts upward as the capital stock increases.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

All increases in the level of human capital take place in schools.

Question 10

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

Question 11

Productivity growth rates are usually higher in rich countries than in poor countries.

Question 12

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

Question 13

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

Question 14

Imitation is not only the highest form of flattery but also an easier way for poorer countries to develop new technology.

Question 15

Labor productivity rises as the amount of capital available to workers increases.

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

The capital gains tax cut enacted in 2003 will hinder capital formation.

Question 28

There is now general agreement among economists regarding the sources of the U.S.productivity slowdown that occurred between 1973 and 1995.

Question 29

Because it is a market economy,in the United States all research and development is done by private business firms.

Question 30

Technological change was a major contributor to the productivity speed-up from 1995-2000.

Question 31

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

Question 32

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

Question 33

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

Question 34

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

Question 35

Real wages usually lag behind the increases in labor productivity.

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

The threat of confiscated private property diminishes the incentive to invest.

Question 41

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 42

College tuition expenses have risen from 1979 to 2009 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 43

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

Question 44

Which of the following would tend to shift the production function upward?

A) an increase in the number of hours worked
B) an increase in population
C) an increase in the size of the labor force
D) an increase in the level of technology

Question 45

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 46

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

Question 47

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

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

Question 48

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 49

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 made by grade school-educated workers
D) furniture made in an automated furniture factory

Question 50

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

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

Question 51

The "cost disease of personal services" phenomenon predicts that the price of tickets to baseball games and cell phone rates will increase at approximately the same rate.

Question 52

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

Question 53

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 made by grade school-educated workers
D) furniture made in an automated furniture factory

Question 54

The productivity slowdown in the U.S.can be explained by geographic limitations and instability in the government.

Question 55

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

Question 56

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 57

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

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

Question 58

Poor health in developing countries encourages economic growth because working is a matter of life and death.

Question 59

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

Question 60

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

Question 61

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 62

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) All would have the same costs.

Question 63

One of the key factors in the economic success of South Korea was

A) an increase in years of schooling.
B) a reduction in the amount of imports.
C) the creation of new technology.
D) all of the above.

Question 64

Workforce quality can be improved by

A) years of education.
B) on-the-job training.
C) workplace learning.
D) all of the above.

Question 65

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 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 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 68

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 69

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

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

Question 70

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 71

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 72

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

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

Question 73

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

A) a small independent bookstore
B) a large retail bookstore chain
C) an Internet seller of books
D) All would have the same costs.

Question 74

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 75

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

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

Question 76

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.

Question 77

Which of the following countries would have the most difficulty raising its level of average educational attainment?

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

Question 78

The lessons of the Japanese recovery were most successfully repeated by

A) the Soviet Union.
B) Argentina and Brazil.
C) Taiwan, Singapore, and Hong Kong.
D) Bulgaria and Romania.

Question 79

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 80

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 made by grade school-educated workers
D) furniture made in an automated furniture factory