Question 1

If an outflow of workers leaves a country with a smaller but more productive workforce and the capital per hour worked does not change, there will be ________ the per-worker production function in that country.

Accepted Answer

An outflow of workers would lead to a smaller labor force in the country, but if the remaining workers are more productive, the capital per hour worked would not change. As a result, the per-worker production function would shift upwards, indicating an increase in output per worker.

Question 2

An increase in ________ shifts the production function ________, and makes it possible to produce a higher level of GDP with ________ capital per hour worked.

Accepted Answer

An increase in technology shifts the production function up, allowing for a higher level of GDP to be produced using the same amount of capital per hour worked.

Question 3

In the long run, a country will experience an increasing standard of living only if it experiences

Accepted Answer

Continuous technological change is crucial for long-term improvements in productivity and efficiency, which are essential for increasing a country's standard of living.

Question 4

A small economy increased its capital per hour worked (K/L)from $40,000 to $50,000.As a result, real GDP per worker (Y/L)grew from $20,000 to $25,000.If the economy increases its capital per hour worked by another $10,000 to $60,000, but there is no change in technology, by how much more and in what direction will output per worker change?

Accepted Answer

The increase in capital per hour worked from $50,000 to $60,000 is smaller than the previous increase from $40,000 to $50,000. Therefore, the increase in output per worker is also likely to be smaller than the previous increase from $20,000 to $25,000. Additionally, since there is no change in technology, the increase in output per worker will be solely due to the increase in capital per hour worked. Therefore, the increase in output per worker will be less than $5,000.

Question 5

The former Soviet Union consistently increased the amount of capital available to its workers, but found that increases in capital resulted in progressively smaller and smaller increases in GDP per worker.This phenomenon is referred to as

Accepted Answer

Diminishing returns to capital occurs when adding more capital to an existing labor force results in decreasing marginal output. This is what the former Soviet Union experienced as they increased the amount of capital available to workers but found that the increase in GDP per worker became smaller and smaller.

Question 6

Figure 7.3  Alt text for Figure 7.3: In figure 7.3, a graph, comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.3: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.2 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000), B ($60000, $16000), C ($70000, $16400), D ($80000, $16500), and E ($60000, $17000)are plotted.The curve labelled Production function 1, passes through points A, B, C, and D.The curve labelled Production function 2, passes through point E.These 5 points are connected to their respective coordinates on the x and y-axis with dotted lines.
-Refer to Figure 7.3. A large group of new workers entering the labour force is shown in the figure above by a movement from

Accepted Answer

The answer of Figure 7.3  Alt text for Figure...

Question 7

The per-worker production function shows the relationship between ________ per hour worked and ________ per hour worked, holding ________ constant.

Accepted Answer

The per-worker production function shows the relationship between capital per hour worked and real GDP per hour worked, holding technology constant. This reflects how changes in the amount of capital available to each worker (like machinery or equipment) can affect the productivity or output (measured in real GDP) of that worker, assuming that technological advancements remain unchanged.

Question 8

Figure 7.3  Alt text for Figure 7.3: In figure 7.3, a graph, comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.3: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.2 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000), B ($60000, $16000), C ($70000, $16400), D ($80000, $16500), and E ($60000, $17000)are plotted.The curve labelled Production function 1, passes through points A, B, C, and D.The curve labelled Production function 2, passes through point E.These 5 points are connected to their respective coordinates on the x and y-axis with dotted lines.
-Refer to Figure 7.3.Which of the following would cause an economy to move from a point like A in the figure above to a point like B?

Accepted Answer

Moving from point A to B requires an increase in capital per hour worked, as point B has a higher level of capital per hour worked than point A.

Question 9

In a small Asian country, it is estimated that a $10,000 increase in capital per hour worked will increase real GDP per hour worked by $600.Based on this information, what is the slope of the per-worker production function in this range?

Accepted Answer

The slope of the per-worker production function is calculated as the change in output (ΔY) over the change in capital per hour worked (ΔK), which is $600 / $10,000 = 0.06.

Question 10

If there is a change in the ability of a firm to produce a given level of output with a given level of inputs, we say there is

Accepted Answer

Technological change refers to a change in the ability of a firm to produce a given level of output with a given level of inputs. It is often driven by improvements in technology or changes in production methods.

Question 11

Technological change will

Accepted Answer

Technological change will shift the per-worker production function up, meaning that with the same amount of labor input, output will increase due to improvements in technology. This can lead to economic growth and higher living standards.

Question 12

What is human capital?

Accepted Answer

Human capital refers to the accumulated knowledge and skills that workers acquire from education, training, and life experiences. It is a measure of the economic value of a worker's skill set.

Question 13

Figure 7.3  Alt text for Figure 7.3: In figure 7.3, a graph, comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.3: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.2 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000), B ($60000, $16000), C ($70000, $16400), D ($80000, $16500), and E ($60000, $17000)are plotted.The curve labelled Production function 1, passes through points A, B, C, and D.The curve labelled Production function 2, passes through point E.These 5 points are connected to their respective coordinates on the x and y-axis with dotted lines.
-Refer to Figure 7.3.Technological change is shown in the figure above by the movement from

Accepted Answer

Technological change typically results in an increase in productivity, allowing more output to be produced from the same amount of inputs. This is represented by a shift from point B to E, where the economy can produce more of both goods without increasing the input, indicating an improvement in technology.

Question 14

Figure 7.3  Alt text for Figure 7.3: In figure 7.3, a graph, comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.3: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.2 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000), B ($60000, $16000), C ($70000, $16400), D ($80000, $16500), and E ($60000, $17000)are plotted.The curve labelled Production function 1, passes through points A, B, C, and D.The curve labelled Production function 2, passes through point E.These 5 points are connected to their respective coordinates on the x and y-axis with dotted lines.
-Refer to Figure 7.3. Many workers leaving a region is shown in the figure above by a movement from

Accepted Answer

The correct answer is A because the movement from B to C represents workers leaving the region.

Question 15

Which of the following describes the former Soviet Union's economy through most of the second half of the 20th century?

Accepted Answer

The answer of Which of the following describes the former...

Question 16

New growth theory

Accepted Answer

New growth theory states that the rate of technological change is caused by economic incentives, such as profit opportunities or intellectual property rights, incentivizing businesses to invest in research and development to create new technologies.

Question 17

If the per-worker production function shifts up,

Accepted Answer

If the per-worker production function shifts up, it means that with the same level of capital per hour worked, an economy can produce more real GDP per hour worked. Therefore, the economy can increase its real GDP per hour worked without changing the level of capital per hour worked.

Question 18

The per-worker production function has a ________ slope, indicating that increases in capital per hour worked ________ real GDP.

Accepted Answer

The per-worker production function has a positive slope, indicating that increases in capital per hour worked increase real GDP. This is because with more capital per hour worked, each worker can be more productive, leading to an overall increase in output.

Question 19

If, after an outflow of workers in a country, it now takes more capital per hour worked to get the same amount of GDP per hour worked, this indicates ________ the per-worker production function in that country.

Accepted Answer

The outflow of workers means there are fewer workers available, which decreases the labor input in the production function. Therefore, the only way to maintain the same level of output is by increasing the capital per worker. This indicates a downward shift of the per-worker production function.

Question 20

Knowledge capital is ________ in production and ________.As a result, firms ________ free ride.

Accepted Answer

Knowledge capital is nonrival because its use by one firm does not reduce its availability to others, and it is nonexcludable because it is difficult to prevent others from using it. As a result, firms can free ride on the knowledge created by others.

Quiz 7: Long-Run Economic Growth: Sources and Policies