Question 1

A political system that promotes the free and open exchange of ideas:
A)will not have well-defined property rights.
B)slows the development of new technologies and products.
C)increases average labor productivity.
D)is detrimental to economic growth.

Accepted Answer

Political stability and transparency creates a favorable business climate because firm owners can rely on government rules.

Question 2

Entrepreneurs contribute to increased average labor productivity in each of the following ways except by:
A)introducing new production methods.
B)implementing new technological processes.
C)developing new products.
D)assigning workers to jobs.

Accepted Answer

Entrepreneurs take risks when they start new business enterprises whereas managers run the business but often do not bear the business risks.

Question 3

The establishment of well-defined property rights increases:
A)average labor productivity.
B)the amount of pollution.
C)the unemployment rate.
D)the labor force participation rate.

Accepted Answer

Well-defined property rights give individuals and business firms incentives to amass wealth because they know property is protected. This induces firms to invest, which increases average labor productivity. Property rights are also often an essential part in obtaining credit for firms and individuals.

Question 4

Governments contribute to increased average labor productivity in each of the following ways except by:
A)establishing well-defined property rights.
B)maintaining political stability.
C)imposing taxes on wages.
D)allowing the free and open exchange of ideas.

Accepted Answer

Imposing taxes on wages discourage work, which reduces labor productivity.

Question 5

Managers contribute to increased average labor productivity in each of the following ways except by:
A)developing new products.
B)obtaining financing.
C)assigning workers to jobs.
D)dealing with suppliers.

Accepted Answer

Managers run the business but often do not bear business risks, whereas entrepreneurs take risks when they start new business activities.

Question 6

Developing new products and services as well as introducing new production methods are among the ways that ________ increases average labor productivity.
A)human capital
B)physical capital
C)an entrepreneur
D)a manager

Accepted Answer

Entrepreneurs take risks when they start new businesses. The intent of these new activities is to increase factor productivity.

Question 7

Well-defined property rights:
A)are clearly written in English.
B)restrict the use of land and natural resources to productive uses.
C)allow the government to confiscate property.
D)clearly state who owns resources and how the resources can be used.

Accepted Answer

Well-defined property rights clearly state who owns resources and how the resources can be used.

Question 8

________ start new economic enterprises, while ________ run the enterprises on a day-to-day basis.
A)Entrepreneurs; managers
B)Mangers; entrepreneurs
C)Mangers; laborers
D)Entrepreneurs; laborers

Accepted Answer

Entrepreneurs take risks when they start new business enterprises whereas managers run the business but often do not bear the business risks.

Question 9

Each of the following increases average labor productivity except :
A)more human capital.
B)more physical capital.
C)more central planning.
D)more natural resources.

Accepted Answer

Centralized governmental planning agencies stifle incentives and have done a poor job increasing average labor productivity.

Question 10

The introduction of an overnight delivery service that guarantees the delivery of packages anywhere in the world overnight would increase:
A)average labor productivity.
B)the share of population employed.
C)the labor force participation rate.
D)the unemployment rate.

Accepted Answer

This new service would create the opportunity for fewer business interruptions and therefore would increase average labor productivity.

Question 11

The average annual growth rates of labor productivity from 1947 to 1973 were ________ the average rates over the period from 1973 to 1995.
A)more rapid than
B)slower than
C)about the same as
D)more rapid in the U.S., but slower in other industrialized countries than

Accepted Answer

The 1947-1973 period saw high annual growth in labor productivity averaging 2.8 percent per year, however labor productivity fell by half to about 1.4 percent annually during the 1973-1995 period.

Question 12

The productivity slowdown of the 1970's occurred:
A)only in the U.S.
B)only in the U.S. and the United Kingdom.
C)only in the U.S, the United Kingdom, and Japan.
D)around the world.

Accepted Answer

The productivity slowdown of the 1970's, arguably due to higher oil prices, was experienced worldwide.

Question 13

Average labor productivity is determined by:
A)consumption, investment, government spending, and net exports.
B)the number employed, unemployed, and the labor force participation rate.
C)the quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment.
D)the real interest rate, the nominal interest rate, and the rate of inflation.

Accepted Answer

Average labor productivity depends on many things. These can be summarized by saying it depends on those conditions which help workers do their jobs better.

Question 14

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ________ increases average labor productivity.
A)human capital
B)physical capital
C)an entrepreneur
D)a manager

Accepted Answer

Managers run the business but often do not bear business risks.

Question 15

Most political scientists and economists agree that ________ is detrimental to economic growth.
A)a set of well-defined property rights
B)the free and open exchange of ideas
C)political instability
D)a just-in-time inventory system

Accepted Answer

Political instability creates an undesirable business climate because firm owners cannot anticipate when the government might change the rules.

Question 16

The quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment determine the:
A)unemployment rate.
B)labor force participation rate.
C)average labor productivity.
D)real interest rate.

Accepted Answer

Average labor productivity depends on many things. These can be summarized by saying it depends on those conditions which help workers do their jobs better.

Question 17

People who create new economic enterprises are called:
A)owners of physical capital.
B)entrepreneurs.
C)engineers.
D)technology experts.

Accepted Answer

Entrepreneurs take business risks to earn profits. As entrepreneurs they create new economic enterprises.

Question 18

The implementation of new production methods by managers, such as the "just-in-time" inventory system, increases:
A)average labor productivity.
B)the share of the population employed.
C)the unemployment rate.
D)the quantity of human capital.

Accepted Answer

New inventions and innovations make workers more efficient, thus increase average labor productivity.

Question 19

People who run businesses on a day-to-day basis are called:
A)entrepreneurs.
B)engineers.
C)business managers.
D)technology experts.

Accepted Answer

This is the definition of "business managers." Note: they are different from entrepreneurs because entrepreneurs take risks whereas business managers often do not.

Question 20

Each of the following statements describes how the political and legal environment encourages productivity except:
A)Well-defined property rights encourage production and saving.
B)Political stability promotes economic growth.
C)Price changes in markets give suppliers incentives to supply goods to markets.
D)Pay rates determined by a governmental planning agency provide workers with incentives to work hard.

Accepted Answer

Centralized governmental planning agencies, because of the complexity of economies, have done a poor job of setting proper pay rates. Most economists agree that par rates based on performance provides much better incentives to work hard.

Quiz 19: Economic Growth, Productivity, and Living Standards

A political system that promotes the free and open exchange of ideas:

Entrepreneurs contribute to increased average labor productivity in each of the following ways except by:

The establishment of well-defined property rights increases:

Governments contribute to increased average labor productivity in each of the following ways except by:

Managers contribute to increased average labor productivity in each of the following ways except by:

Developing new products and services as well as introducing new production methods are among the ways that ________ increases average labor productivity.

Well-defined property rights:

start new economic enterprises, while run the enterprises on a day-to-day basis.

Each of the following increases average labor productivity except :

The introduction of an overnight delivery service that guarantees the delivery of packages anywhere in the world overnight would increase:

The average annual growth rates of labor productivity from 1947 to 1973 were ________ the average rates over the period from 1973 to 1995.

The productivity slowdown of the 1970's occurred:

Average labor productivity is determined by:

Organizing production, obtaining financing, assigning workers to jobs, and dealing with suppliers are among the ways that ________ increases average labor productivity.

Most political scientists and economists agree that ________ is detrimental to economic growth.

The quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment determine the:

People who create new economic enterprises are called:

The implementation of new production methods by managers, such as the "just-in-time" inventory system, increases:

People who run businesses on a day-to-day basis are called:

Each of the following statements describes how the political and legal environment encourages productivity except: