Deck 7: Production and Growth

Question 1

Which of the following nations experienced average rates of economic growth of more than 2.0 percent between 1900 and 2008?

A)Brazil
B)India
C)Pakistan
D)Argentina

Answer 1

Brazil

Question 2

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

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

Answer 2

the United Kingdom

Question 3

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

A)100 years
B)70 years
C)35 years
D)25 years

Answer 3

35 years

Question 4

Which of the following statements 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 5

Of the following countries,which grew the slowest between 1870 and 2008?

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

Question 6

How large was the growth rate of Japan over the period 1890-2008?

A)1.5 percent
B)1.75 percent
C)2.40 percent
D)2.71 percent

Question 7

Which of the following 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

Question 8

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

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

Question 9

Which of the following statements 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 100 years are the ones that had the highest level of real GDP 100 years ago.
B)Countries that were rich a century 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 100 years, Japan had the highest real GDP growth rate, and now it has the highest real GDP per person.

Question 10

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

A)It is about 4 times that in China and 8 times that in India.
B)It is about 6 times that in China and 12 times that in India.
C)It is about 12 times that in China and 6 times that in India.
D)It is about 8 times that in China and 4 times that in India.

Question 11

In Canada,approximately how much higher is GDP per person today than it was a century ago?

A)3 times higher
B)6 times higher
C)8 times higher
D)12 times higher

Question 12

Compared to the income of the typical Canadian 138 years previously,how much was the income of the typical Pakistani in 2008?

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

Question 13

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

A)2 times higher
B)4 times higher
C)6 times higher
D)8 times higher

Question 14

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 6 percent per year

Question 15

Which of the following countries had the lowest growth rate over the period 1870 and 2008?

A)United Kingdom
B)Germany
C)Canada
D)United States

Question 16

Which of the following statements 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 a country's wealth.
C)It is a useful measure of the cost of living.
D)It is a useful measure of well-being.

Question 17

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

A)It's about 1/10 or less of that in developed countries like Japan and Canada.
B)It's about 1/8 of that in developed countries like Japan and Canada.
C)It's about 1/5 of that in developed countries like Japan and Canada.
D)It's about 1/3 to 1/2 of that in developed countries like Japan and Canada.

Question 18

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 25 years,then what will Canadian real GDP per person be a century from now?

A)4 times higher than it is now
B)8 times higher than it is now
C)12 times higher than it is now
D)16 times higher than it is now

Question 19

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

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

Question 20

Which of the following 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 21

Tom works 6 hours a day and Jerry works 8 hours.Tom can produce 6 baskets of goods while Jerry can produce 7 baskets.Which of the following 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 22

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)16 percent
B)13 percent
C)10 percent
D)7 percent

Question 23

Which of the following would NOT be considered physical capital?

A)a new factory building
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 24

In 2012,real GDP in Latania was $750 billion and the population was 3 million.In 2013,real GDP was $990 billion and the population was 3.3 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 25

What would an economist call the saws,lathes,and drill presses that woodworkers at Cedar Valley Furniture use to produce chests and cabinets?

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

Question 26

Which of the following would be considered physical capital?

A)the pizza oven at the Liquidity Preferences Tavern
B)soy beans used to make soy milk
C)the skills and knowledge of a barber
D)the number of hours people spend in the gym

Question 27

Cedar Valley Furniture uses 5 workers working 8 hours to produce 80 rocking chairs.What is the productivity of these workers?

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

Question 28

Laurie works 8 hours and produces 7 units of goods per hour.Iris works 6 hours and produces 10 units of goods per hour.Which of the following can we conclude?

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

Question 29

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 how much it has relative to others

Question 30

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 31

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 GNP
C)productivity
D)human capital

Question 32

Last year,real GDP per person in Olympus was $5500.The year before,it was $4500.What was the growth rate of real GDP per person?

A)18.18 percent
B)20 percent
C)22.2 percent
D)24 percent

Question 33

Which of the following 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 population

Question 34

Which of the following best describes 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 35

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 36

In 2012,Freedonia had a population of 2700 and real GDP of about $1 080 000.In 2011,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 2011 and 2012?

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

Question 37

Dawn looks over reports on five of her workers.Carol made 25 baskets in 5 hours.Peter made 36 baskets in 6 hours.Rob made 40 baskets in 10 hours.Jack made 55 baskets in 10 hours.Darby made 22 baskets in 3 hours.Who has the greatest productivity?

A)Darby
B)Peter
C)Rob
D)Jack

Question 38

Which of the following is a direct determinant of productivity?

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

Question 39

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

A)physical capital
B)human capital
C)the production function
D)technology

Question 40

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 41

Jessica Smith is a teacher.Which of the following is a part of her human capital?

A)her work experience
B)the textbooks she uses
C)the software she uses when delivering her lectures
D)the amount of time she spends with her students

Question 42

Which of the following 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 43

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 44

Which of the following is an example of a nonrenewable resource?

A)coal
B)honey
C)livestock
D)lumber

Question 45

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 growth will not slow down for several centuries.
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 46

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 47

Which of the following lists contains,in this order,natural resources,human capital,and physical capital?

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

Question 48

Which of the following is human capital?

A)breakfasts served in a company's cafeteria
B)understanding how to use a company's accounting software
C)computers that show training videos for new corporate employees
D)the average number of holiday days per year

Question 49

Which of the following 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.

Question 50

In the country of Krypton,the price of lead increased from $20 per kilogram to $22 per kilogram during a time when the overall price level increased by 8 percent.During this period,what happened to the real price of lead?

A)It has increased by about 2 percent.
B)It has decreased by about 6 percent.
C)It has decreased by about 8 percent.
D)It has increased by about 10 percent.

Question 51

Which of the following best states 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 be poor.
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 52

Which of the following best defines proprietary technology?

A)It is knowledge that is known but no longer used much.
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 53

Which of the following 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 54

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 55

Which of the following 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 hours worked in an economy
D)the total amount that is paid in wages in an economy

Question 56

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 57

Which of the following 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 58

Based on historical data on the prices of natural resources,which of the following 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 59

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 60

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 on-the-job training

Question 61

Which of the following 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 about new, unexploited natural resources.

Question 62

Which of the following would increase productivity,everything else being the same?

A)an increase in population
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

Question 63

Your company discovers a better way to produce mousetraps,but your better methods are not apparent from the mousetraps 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 64

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 65

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 66

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

A)natural resources per worker
B)human capital per worker
C)output per worker
D)physical capital per worker

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 of the following 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 69

Which of the following 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 70

Which of the following 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 71

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 72

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 73

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 74

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 75

Suppose that over the past ten years productivity grew faster in Oceania than in Freedonia and the population of both countries was unchanged.Which of the following can we conclude?

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

Question 76

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)L = A F(Y, K, H, N)

Question 77

Suppose that real GDP grew more in Country A than in Country B last year.Which of the following does this imply concerning productivity or standard of living?

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

Question 78

Suppose you bake cookies.One day,you double the time you spend baking and double the number of chocolate chips,flour,eggs,and all your other inputs in order to bake twice as many cookies.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 79

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 80

Which of the following does Y/L refer to?

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