Question 1

When a country removes trade barriers and imports appliances and exports engineering services,

Accepted Answer

By importing appliances and exporting engineering services, the country is essentially transforming its more advanced and valuable service sector into a less advanced and lower-value manufacturing sector. This can lead to a decline in the country's skills and capacity in engineering services, while increasing its focus on manufacturing and potentially reducing its overall economic well-being.

Question 2

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

Accepted Answer

While rankings of countries by income do change over time due to various economic and political factors, growth rates across countries can greatly impact their relative positions in those rankings.

Question 3

Economists differ in their views of the role of the government in promoting economic growth.A controversial idea is that government should

Accepted Answer

The answer of Economists differ in their views of the...

Question 4

If they could increase their growth rates slightly,countries with low income would catch up with rich countries in about ten years.

Accepted Answer

This statement is not accurate. Catching up with rich countries is not just about increasing growth rates slightly, but also about addressing structural issues such as inequality, education, and governance. Additionally, catch-up growth tends to slow down once countries reach middle-income status.

Question 5

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.

Accepted Answer

Productivity is measured by the amount of goods and services produced per unit of labor. In this case, Country A produces 10 units per hour of labor (7000 units/700 hours) while Country B produces 11 units per hour of labor (5500 units/500 hours). Therefore, Country B has a higher productivity than Country A.

Question 6

The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1.Reduce corruption in the legal system; 2.Reduce reliance on market forces because they allocate goods and services in an unfair manner; 3.Restrict investment in domestic industries by foreigners because they take some of the profits out of the country; 4.Encourage trade with neighboring countries; and 5.Increase the fraction of GDP devoted to consumption.How many of these measures will have a positive effect on growth?

Accepted Answer

Reducing corruption in the legal system will have a positive effect on growth by improving the efficiency and effectiveness of the legal system. However, reducing reliance on market forces and restricting investment by foreigners will likely have a negative effect on growth by limiting competition and innovation. Encouraging trade with neighboring countries can have a positive effect on growth by increasing exports and access to new markets, but increasing consumption alone will not necessarily increase growth. Therefore, only reducing corruption and encouraging trade have the potential to positively impact growth.

Question 7

Which of the following terms is used to refer to the ability of people to exercise authority over the resources they own?

Accepted Answer

Property rights refer to the ability of individuals to own and exercise authority over the resources they possess. Natural rights refer to inherent rights that are not dependent on laws or customs. Input control and collective control are not relevant to this concept.

Question 8

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

Accepted Answer

This statement is true. Real GDP per person is a measure of the average economic output per person in a country, adjusted for inflation. Rich countries generally have higher real GDP per person than poor countries, with some having more than 10 times the real GDP per person of the poorest countries. For example, according to World Bank data from 2021, Germany had a real GDP per capita of $51,825, while India had a real GDP per capita of $2,060. This means that Germany's real GDP per person is more than 25 times higher than India's.

Question 9

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

Accepted Answer

A higher saving rate leads to more investment in capital goods, which leads to an increase in productivity in the long run. This is known as the Solow growth model.

Question 10

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

Accepted Answer

Human capital is indeed the term used to refer to the knowledge and skills that workers acquire through education, training, and experience. This is a key concept in understanding how a country or company's workforce contributes to economic growth and productivity.

Question 11

Petroleum is an example of a nonrenewable resource.

Accepted Answer

Petroleum is a nonrenewable resource because it took millions of years to form, and once it is used up, it cannot be replaced in our lifetime.

Question 12

If over a short time there is an increase in the number of people retired and a decrease in the number of people working,then productivity

Accepted Answer

The answer of If over a short time there is...

Question 13

In medieval Europe an important technological advance was the use of the padded horse collar for plowing.Once this idea was thought of,other people used it.This illustrates that knowledge is generally a

Accepted Answer

The fact that the use of padded horse collar was adopted and spread widely suggests that knowledge is a public good, which can be shared and used by many individuals without restricting its availability to others.

Question 14

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

Accepted Answer

International data on real GDP per person is commonly used as an indicator of standards of living, as it takes into account the average income and purchasing power of individuals in a country. However, it is not the only measure and should be considered alongside other factors such as inequality, access to basic services and goods, and environmental factors.

Question 15

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

Accepted Answer

Productivity is measured as output divided by input, not the other way around.

Question 16

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

Accepted Answer

This statement is true. China has had an annual average growth rate of about 12 percent over the last two decades.

Question 17

Inward-oriented policies

Accepted Answer

Inward-oriented policies include imposing tariffs and other trade restrictions, which are meant to protect domestic industries from foreign competition. However, such policies have not been very successful in promoting growth and development, and have often led to inefficiencies and higher costs for consumers. Therefore, they are generally discouraged by economists and policymakers.

Question 18

Educational attainment tends to be

Accepted Answer

Countries with high population growth tend to have limited resources for education, resulting in lower educational attainment levels.

Question 19

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

Accepted Answer

Constant returns to scale means that if all inputs are increased by the same factor, the output will increase by the same factor. Therefore, if all inputs double, production will also double.

Question 20

Countries that pursued outward-oriented policies in the 20th century

Accepted Answer

Countries that pursued outward-oriented policies in the 20th century, such as Singapore, South Korea, and Taiwan, experienced higher rates of economic growth than did countries that pursued inward-oriented policies. Additionally, these countries were able to reduce poverty levels and improve living standards for their citizens. Political instability is not necessarily a consequence of outward-oriented policies and can be affected by a variety of factors.

Quiz 25: Production and Growth