Question 1

The total U.S.productivity growth rate decreased during the 1990s during massive technological innovations.

Accepted Answer

The total U.S. productivity growth rate actually increased during the 1990s, despite the massive technological innovations that occurred during that decade. This increase in productivity growth rate is commonly referred to as the "productivity paradox."

Question 2

Productivity in the services industry may be underestimated because measurements of productivity do not take into account the quality of the service provided.

Accepted Answer

Productivity in the services industry often involves intangible outputs such as customer satisfaction, which are not easily quantifiable. Traditional productivity measures may not account for the value added by providing high-quality services.

Question 3

The labor force typically grows faster in developing countries than in industrial ones because mortality rates are higher in low-income countries.

Accepted Answer

This statement is false. The labor force growth is determined by several factors including population growth, education and training, immigration, and retirement rates. Mortality rates can impact the size of the labor force indirectly by affecting population growth, but they are not the main driver of labor force growth. In fact, high mortality rates can actually reduce the size of the labor force by increasing the number of deaths and reducing the number of individuals available to work.

Question 4

Assume that the economy grows by 3 percent, total factor productivity grows by 2 percent, and the labor force grows at 2 percent.If labor contributes 40 percent to real GDP, then the stock of capital must have risen by 0.33 percent.

Accepted Answer

The correct answer is true because the formula for calculating the growth rate of real GDP is:Growth rate of real GDP = Growth rate of total factor productivity + Growth rate of labor force + Growth rate of capital stockIn this case, the growth rate of total factor productivity is 2 percent, the growth rate of labor force is 2 percent, and the growth rate of real GDP is 3 percent. Therefore, the growth rate of capital stock must be 1 percent.

Question 5

Poor countries grow faster than rich countries because of rapid growth in the labor force.

Accepted Answer

Economic growth in poor countries is not solely due to rapid labor force growth; it also depends on factors like capital accumulation, technology adoption, and institutional quality.

Question 6

A country with a low living standard can save easily.

Accepted Answer

A country with a low living standard typically has limited resources and income, making it difficult for individuals and the nation to save money.

Question 7

The development of a financial market is not important in determining the economic growth of a nation.

Accepted Answer

The development of a financial market plays a crucial role in determining the economic growth of a nation. A well-functioning financial market can channel savings into productive investments, provide access to capital for businesses, and facilitate the efficient allocation of resources. Additionally, a developed financial market can attract foreign investments and boost investor confidence, leading to increased economic activity and growth.

Question 8

The long-run growth of the economy depends on productive resources (land, labor, and capital)and on technological advances.

Accepted Answer

Productive resources (land, labor, and capital) are the inputs for production, while technological advances increase productivity and efficiency, allowing for sustained economic growth over time.

Question 9

In economics, the term technology refers to different ways of combining resources to produce output.In this sense, technological advances make possible the production of more output from a given amount of resources.

Accepted Answer

This is the correct definition of technology in economics, where it is understood as the methods and techniques used to produce goods and services. Technological advances can increase productivity and efficiency, allowing more output to be produced with the same resources or fewer resources to be used to produce a given amount of output.

Question 10

Abundance of natural resources is a necessary but not sufficient condition for economic growth.

Accepted Answer

The answer of Abundance of natural resources is a necessary...

Question 11

Other things equal, a country's long-run aggregate supply will shift to the right when the productivity of labor rises.

Accepted Answer

An increase in the productivity of labor leads to an increase in the output of goods and services produced with the same amount of inputs, which leads to an increase in potential output in the long run, shifting the long-run aggregate supply curve to the right.

Question 12

Contrary to popular belief, U.S.productivity growth did not actually improve in the mid 1990s despite the massive growth in technological innovation.

Accepted Answer

U.S. productivity growth did actually improve in the mid 1990s alongside the massive growth in technological innovation, which is known as the "productivity paradox."

Question 13

Because fewer people are now needed to perform an average job, it is said that the information technology revolution has played an important role in slowing down productivity in the United States.

Accepted Answer

The statement is incorrect. In fact, the information technology revolution has led to significant increases in productivity in the United States. While it is true that some jobs may require fewer people to perform due to technological advancements, overall productivity has increased as a result of IT.

Question 14

As all available statistics show us, because the average annual population growth is 1.4 percent higher in developing countries than in industrial nations, economic growth is lower in low-income countries.

Accepted Answer

Higher population growth does not necessarily lead to lower economic growth; other factors such as investment, education, and infrastructure also play significant roles in determining economic growth.

Question 15

A lack of current saving can be offset by borrowing, but the availability of borrowing is limited by the prospects for future saving.

Accepted Answer

This statement is true because if there is a lack of current saving, individuals or businesses may need to borrow funds to invest or cover expenses. However, the ability to borrow is limited by the lender's confidence in the borrower's ability to repay the loan, which depends on their prospects for future saving. If the borrower cannot demonstrate their ability to save in the future, lenders may be less likely to offer loans or may charge higher interest rates to compensate for the increased risk.

Question 16

If the growth rate of resources is 2 percent and per capita real output is growing at 4 percent, then total factor productivity has fallen by 4 percent.

Accepted Answer

The growth rate of resources and per capita real output are not sufficient indicators to determine changes in total factor productivity. Total factor productivity measures the efficiency and effectiveness in the use of resources, and cannot be calculated with just these two factors. Therefore, the statement is false.

Question 17

U.S.labor productivity had slowed down in the 1970s and 1980s, but recent data shows that labor productivity has once again increased in the country.

Accepted Answer

According to recent data, U.S. labor productivity has indeed increased in recent years after a period of slowdown in the 1970s and 1980s.

Question 18

Other things equal, advances in technology make resources more productive.

Accepted Answer

Advances in technology often result in improved efficiency and effectiveness of resource utilization, leading to increased productivity. This can include innovations in machinery, software, materials, or processes.

Question 19

Other things equal, if the labor input grows faster than total output, total factor productivity falls.

Accepted Answer

If labor input grows faster than total output, it implies that the efficiency of converting inputs into outputs has decreased, leading to a fall in total factor productivity.

Quiz 28: Economic Growth