Question 1

If labor productivity in a steel mine is 3.5 tons per worker,then 400 steel workers with a fixed amount of capital produce
A)87.5 tons.
B)1,400 tons.
C)1,750 tons.
D)4,000 tons.

Accepted Answer

The answer of If labor productivity in a steel mine...

Question 2

Thinking up a new idea is an example of
A)an invention.
B)an innovation.
C)human capital accumulation.
D)social overhead capital.

Accepted Answer

Invention refers to the creation of a new product, process, or technology. Thinking up a new idea is the first step in the invention process, making A) an invention the best choice. B) Innovation refers to the implementation of the invention, so it is not the most accurate choice. C) Human capital accumulation and D) social overhead capital are not related to the invention process.

Question 3

An increase in human capital
A)increases the productivity of labor.
B)decreases the productivity of labor.
C)increases the productivity of labor only if there is a corresponding technological change.
D)increases the capital-labor ratio.

Accepted Answer

An increase in human capital, such as education and training, leads to an increase in the knowledge and skills of workers. This, in turn, makes them more productive and efficient, leading to an increase in the overall productivity of labor.

Question 4

Which of the following is NOT an investment in human capital?
A)local governments begin providing free hepatitis vaccinations to any resident who wants one
B)the Precision Tool Company teaches all its workers how to repair all the machines in the factory
C)older workers return to school to update their skills
D)the Ferris Advertising Agency replaces its secretaries' typewriters with personal computers

Accepted Answer

The answer of Which of the following is NOT an...

Question 5

In all economies experiencing modern economic growth,
A)labor expands at a more rapid pace than capital.
B)capital and labor expand at a constant rate.
C)capital expands at a more rapid pace than labor.
D)capital expands,but labor remains constant.

Accepted Answer

In all economies experiencing modern economic growth, capital expands at a more rapid pace than labor. This is due to the fact that modern economic growth is characterized by an increase in productivity, which is largely driven by technological progress. Capital accumulation allows for the financing of new technological advances and the creation of more efficient production processes, which in turn increases output per worker and leads to economic growth.

Question 6

An increase in capital stock
A)enhances labor productivity.
B)provides valuable services directly.
C)causes economic growth.
D)all of the above

Accepted Answer

An increase in capital stock can enhance labor productivity by providing workers with better tools and equipment, which allows them to produce more output per hour. Additionally, an increase in capital stock can provide valuable services directly, such as transportation infrastructure or communication networks. Finally, an increase in capital stock is a key driver of economic growth, as it allows for more output to be produced and can lead to higher living standards for a country's citizens.

Question 7

Technical change which results in a change in the production process is known as
A)disembodied technical change.
B)embodied technical change.
C)per-capita technical change.
D)technical catch-up.

Accepted Answer

The answer of Technical change which results in a change...

Question 8

Suppose that growth in output that can be attributed to growth in labor and capital is 6%.If output grows at a rate of 6%,it must be the case that
A)the economy is not experiencing technological progress.
B)growth in labor force exceeds growth in capital.
C)growth in capital exceeds growth in labor.
D)the economy is experiencing technological progress.

Accepted Answer

If output growth is entirely attributed to growth in labor and capital, it implies there is no additional growth from technological progress or improvements in efficiency.

Question 9

Embodied technical change is one reason why
A)human capital is more valued in an economy than physical capital.
B)the quality of capital had decreased.
C)labor productivity has increased over time.
D)increases in population decrease labor productivity.

Accepted Answer

Embodied technical change refers to changes in the technology used to produce goods and services that are embodied in the capital goods. This means that investments in physical capital (such as machinery and equipment) can lead to increases in productivity and hence, economic growth. As a result, labor productivity can increase over time through embodied technical change. A and B are incorrect as it does not explain the relationship between the value of human and physical capital. D is incorrect because it is not related to the concept of embodied technical change.

Question 10

Suppose that growth in output that can be attributed to growth in labor and capital is 2%.If output grows at a rate of 5%,it must be the case that
A)growth in labor exceeds growth in capital.
B)growth in capital exceeds growth in labor.
C)the economy is experiencing technological progress.
D)the economy is not spending enough on acquiring human capital.

Accepted Answer

The difference between the total output growth (5%) and the growth attributed to labor and capital (2%) suggests that the additional growth is due to factors other than labor and capital, such as technological progress. This is known as growth in total factor productivity.

Question 11

A firm used to produce a product using three units of labor and one unit of capital.The firm discovers that it can produce more output at a lower cost if it combines two units of labor with two units of capital.This is an example of
A)an innovation.
B)an invention.
C)increasing returns.
D)economic growth.

Accepted Answer

This is an example of an innovation, as the firm has discovered a new and more efficient way of producing their product.

Question 12

An important source of increasing productivity is
A)an increase in the ratio of capital to labor.
B)an increase in the ratio of labor to capital.
C)a decrease in the ratio of capital to labor.
D)faster growth in the labor force than in the capital stock.

Accepted Answer

An increase in the ratio of capital to labor means there is more capital available for each worker, which can lead to increased productivity. With more capital available, workers can use more technologically advanced and efficient equipment, leading to greater output per worker.

Question 13

Which of the following is NOT an investment in human capital?
A)an individual decides to enroll in a vocational training program
B)a firm engages in on-the-job training
C)the government expands its programs to improve health care
D)the government increases the level of unemployment benefits

Accepted Answer

Unemployment benefits are not an investment in human capital as they do not directly contribute to the skills, knowledge, or productivity of individuals in the workforce. They are a form of social safety net to support individuals who are temporarily out of work.

Question 14

An increase in the quality of capital is a result of
A)population growth.
B)disembodied technical change.
C)embodied technical change.
D)an increase in the labor force.

Accepted Answer

A increase in the quality of capital is due to embodied technical change, which is the improvement in the quality of capital goods themselves through innovation and research and development. Population growth, an increase in the labor force, do not directly lead to an increase in the quality of capital. Disembodied technical change refers to the improvement in production methods and techniques, rather than the improvement in capital goods themselves.

Question 15

A company uses 200 workers and 50 units of capital to produce 1,000 units of output.Its average labor productivity is
A)4.
B)5.
C)20.
D)25.

Accepted Answer

Average labor productivity is calculated by dividing the total output by the number of workers. In this case, the company produces 1,000 units of output with 200 workers. Therefore, the average labor productivity is 1,000/200 = 5. None of the other answer choices match this calculation.

Question 16

An increase in the capital stock
A)can increase output,even if it is not accompanied by an increase in the labor force.
B)provides valuable services directly,but not indirectly.
C)can increase output,but only if it is accompanied by an increase in the labor force.
D)cannot increase output,even if it is accompanied by an increase in the labor force.

Accepted Answer

Increasing the capital stock can increase output by increasing productivity and efficiency, even without an increase in labor force. More capital can mean technological advancements, better equipment, and more resources which can lead to increased output.

Question 17

Labor productivity increases when
A)labor and output increase proportionately.
B)capital increases and labor remains constant.
C)output decreases and labor increases.
D)capital/labor ratio decreases.

Accepted Answer

When capital increases while labor remains constant, labor productivity increases because the additional capital improves the efficiency of the labor.

Question 18

A company uses 100 workers and 30 units of capital to produce 500 units of output.If this company increases its capital to 50 units and,as a result,its output increases by 300 units,the productivity of labor ________ to ________ units per worker.
A)increases;8
B)increases;1
C)increases;3
D)decreases;4

Accepted Answer

Initially, the productivity of labor is 500 units of output / 100 workers = 5 units per worker. After increasing capital, output increases to 800 units (500 + 300). With the same number of workers (100), the new productivity of labor is 800 units / 100 workers = 8 units per worker. Therefore, productivity increases to 8 units per worker.

Question 19

Which of the following could result in negative disembodied technical change?
A)environmental regulations
B)health regulations
C)safety regulations
D)all of the above

Accepted Answer

Disembodied technical change refers to improvements in technology or production processes that lead to increased productivity without requiring additional inputs or resources. Negative disembodied technical change refers to the opposite, where technological progress leads to decreased productivity or increased costs. Environmental, health, and safety regulations may result in negative disembodied technical change because they can require companies to invest in new technologies or change production processes to meet regulatory standards, which can increase costs and decrease productivity. Consequently, all of the given options result in negative disembodied technical change.

Question 20

A researcher discovered the adhesive that allows a piece of paper to be attached to a surface temporarily and then removed and reattached many times.It was many years before a use was found for this adhesive.Which of the following is TRUE?
A)The discovery represents an invention and the finding of a use for the adhesive represents an innovation.
B)The discovery represents an innovation and the finding of a use for the adhesive represents an invention.
C)This is an example of an invention only.
D)This is an example of an innovation only.

Accepted Answer

The discovery of the adhesive represents an invention because it is a new and original creation. The finding of a use for the adhesive represents an innovation because it is the application of the invention in a new way.

Quiz 17: Long-Run Growth

If labor productivity in a steel mine is 3.5 tons per worker,then 400 steel workers with a fixed amount of capital produce

Thinking up a new idea is an example of

An increase in human capital

Which of the following is NOT an investment in human capital?

In all economies experiencing modern economic growth,

An increase in capital stock

Technical change which results in a change in the production process is known as

Suppose that growth in output that can be attributed to growth in labor and capital is 6%.If output grows at a rate of 6%,it must be the case that

Embodied technical change is one reason why

Suppose that growth in output that can be attributed to growth in labor and capital is 2%.If output grows at a rate of 5%,it must be the case that

A firm used to produce a product using three units of labor and one unit of capital.The firm discovers that it can produce more output at a lower cost if it combines two units of labor with two units of capital.This is an example of

An important source of increasing productivity is

Which of the following is NOT an investment in human capital?

An increase in the quality of capital is a result of

A company uses 200 workers and 50 units of capital to produce 1,000 units of output.Its average labor productivity is

An increase in the capital stock

Labor productivity increases when

A company uses 100 workers and 30 units of capital to produce 500 units of output.If this company increases its capital to 50 units and,as a result,its output increases by 300 units,the productivity of labor to units per worker.

Which of the following could result in negative disembodied technical change?

A researcher discovered the adhesive that allows a piece of paper to be attached to a surface temporarily and then removed and reattached many times.It was many years before a use was found for this adhesive.Which of the following is TRUE?