Deck 3: Economic Growth

Question 1

If a Brazilian works in U.S,the value of final goods and services he produced is counted in Brazil's ____ and U.S.'s ____.

A) GDP; GDP
B) GDP; GNP
C) GNP; GDP
D) GNP; GNP

Answer 1

C

Question 2

Economic growth is defined as:

A) the rate of increase in an economy's nominal GDP.
B) the rate of increase in an economy's real GDP.
C) the rate of increase in an economy's average income.
D) the rate of increase in an economy's price level.

Answer 2

C

Question 3

When the World Bank use the "Atlas" conversion factors in comparing GDP per capita across countries,the developing countries tend to look ____ relative to the developed countries than when the comparison employs PPP exchange rates.

A) poorer
B) richer
C) the same
D) these two methods cannot be compared

Answer 3

A

Question 4

Constant returns to scale refers to a situation that when capital and labor both double,

A) output more than doubles
B) output less than doubles
C) output just doubles
D) output does not change

Question 5

Gross Domestic Product (GDP)is defined as the total value of ____ goods and services produced within a country's borders over a year.

A) intermediate
B) final
C) consumption
D) capital

Question 6

If we graph the average product of labor as a function of the quantity of capital employed by a firm operating along its production function.When the capital per worker increases,the average product of labor curve is

A) upward sloping
B) shifts upwards
C) downward sloping
D) shifts downwards

Question 7

For three years,Dreamland has been growing at a steady annually compounded rate of 10 percent,if Dreamland's GDP per capita starts with $20,000,what will be the GDP per capita after three years?

A) $20,000
B) $26,000
C) $26,620
D) $200,000

Question 8

Diminishing marginal product of labor refers to as the quantity of labor increases,

A) average product of labor reaches a maximum.
B) marginal product of labor decreases.
C) total product of labor reaches a maximum.
D) average product of labor decreases.

Question 9

Nominal GDP growth is calculated as the growth rate of the value of goods and services using ____ prices while real GDP growth is calculated as the growth rate of the value of goods and services using ____ prices.

A) current; real
B) current; constant
C) constant; current
D) constant; real

Question 10

Which of the following best describes a production function?

A) The maximum profit generated from given levels of factors of production.
B) The maximum level of output generated from given levels of factors of production.
C) All levels of factors of production that could produce a given level of output.
D) All levels of output that can be generated from given levels of factors of production.

Question 11

A loaf of bread purchased by your professor would be described as

A) an intermediate good.
B) a final good.
C) a financial good.
D) a used good.

Question 12

The per capita value of income earned by everyone in an economy is equal to the per capita value of ____.

A) government expenditure
B) expenditure of all businesses in the economy
C) goods produced in the economy
D) goods and services produced in the economy

Question 13

The following graph shows: No Systematic Tendency for Poorer Countries to "Catch Up"
Source: Heston,et al.(2012).

A) lower income countries consistently grew faster than higher income countries.
B) the average income of lower income countries eventually will catch up with developed country levels.
C) no tendency that lower income countries are growing faster than higher income countries.
D) the growth rates of many lower income countries are similar

Question 14

The marginal product of labor ( $$M P _ { L }$$ )is the increase in total output associated with a

A) one unit increase in the quantity of labor,while holding the quantity of capital and technology constant.
B) one unit increase in the quantity of labor,while also increasing the quantity of capital by one unit and technology constant.
C) one unit increase in the quantity of labor,while also increasing the quantity of capital and technology by the same proportion.
D) one dollar increase in the price of labor,while holding the price of capital constant.

Question 15

The value added of a production activity is:

A) the profit this production activity generates.
B) the value of the final goods produced minus the value of intermediate goods used in this activity.
C) the value of intermediate goods used in this activity.
D) the value of the final goods produced minus the costs of this production.

Question 16

If one country is growing at a growth rate of 2 percent per year,how many years would you expect for it to double income per capita?

A) 36 years
B) 72 years
C) 14 years
D) 100 years

Question 17

The average product of labor ( $$A P _ { L }$$ )is the equal to

A) total quantity of labor employed divided by the total output.
B) total amount of output produced divided by price of the output.
C) the increase in total output.
D) total amount of output produced divided by the quantity of labor employed.

Question 18

If Nike,an American corporation,produces shoes in China.This would:

A) count as part of U.S. GDP since it is a American corporation.
B) count for both U.S. GDP and Chinese GDP.
C) count for U.S. GDP but not for Chinese GDP.
D) count for Chinese GDP but not for U.S. GDP.

Question 19

Increasing returns to scale refers to a situation that when capital and labor both double,

A) output more than doubles
B) output less than doubles
C) output just doubles
D) output does not change

Question 20

Economic growth takes place when total income grows ______ the population.

A) faster than
B) slower than
C) at the same speed as
D) independently of

Question 21

Decreasing returns to scale refers to a situation that when capital and labor both double,

A) output more than doubles
B) output less than doubles
C) output just doubles
D) output does not change

Question 22

________ provides a method to examine the differences in GDP per capita across countries at the same time.

A) Growth accounting
B) Development accounting
C) Total factor productivity
D) Growth theory

Question 23

________ provides a method to examine the differences determinants in GDP per capita growth over time within individual countries.

A) Growth accounting
B) Development accounting
C) Total factor productivity
D) Growth theory

Question 24

An economy is growing at 5%,suppose physical capital per worker grows at 4%,human capital per worker grows at 3% and assume that physical capital share of output is 0.3,how much does total factor productivity grow?

A) 0.7 percentage points
B) 1 percentage points
C) 1.2 percentage points
D) 1.7 percentage points

Question 25

Provide a list of proximate sources of economic growth.

Question 26

The purpose of growth accounting exercises is to identify

A) how fast the capital per worker grows.
B) how much of GDP per capita growth can be attributed to factor accumulation versus TFP growth.
C) how fast technology improves
D) how fast GDP per capita grows

Question 27

An economy is growing at 5%,suppose physical capital per worker grows at 4%,human capital per worker grows at 3% and assume that physical capital share of output is 0.3,how much growth does it contribute to the growth in physical capital per worker?

A) 0.7 percentage points
B) 1 percentage points
C) 1.2 percentage points
D) 1.7 percentage points

Question 28

If we graph the average product of labor as a function of the quantity of capital employed by a firm operating along its production function,when the technology improves while holding both labor and capital constant,the average product of labor curve is

A) upward sloping
B) shifts upwards
C) downward sloping
D) shifts downwards

Question 29

Which of the following may increase labor productivity for a firm?

A) increasing capital per worker
B) improving technology
C) increasing its technical efficiency
D) all of the above

Question 30

Which of the following does not contribute in the growth in total factor productivity?

A) increasing capital per worker
B) technology improvement
C) reductions in unemployment
D) reductions in rent-seeking and other wasteful activities

Question 31

Why is understanding growth in aggregate labor productivity important for understanding economic growth?

Question 32

Does success in economic growth guarantee success in development?