Question 1

Copper is an example of

Accepted Answer

A)  a renewable natural resource. 
B)  human capital. 
C)  physical capital. 
D)  technology. 
E)  a non-renewable natural resource. 
A)  a renewable natural resource. 
B)  human capital. 
C)  physical capital. 
D)  technology. 
E)  a non-renewable natural resource. E

Question 2

Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labour productivity.

Accepted Answer

The standard of living is a measure of how well people live. Income per person is an important dimension of the standard of living and is positively correlated with other things such as nutrition and life expectancy that make people better off. Productivity measures how much people can produce in an hour. As productivity increases, people can produce more (and use less to produce the same amount) and so their standard of living increases.
The factors that determine labour productivity include the amounts of physical capital (equipment and structures), human capital (knowledge and skills), and natural resources available to workers, as well as the state of technological knowledge in society.

Question 3

Most economists believe that inward-oriented policies that protect infant industries improve the growth rates of developing nations.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following represents a productivity-enhancing investment in human capital?

Accepted Answer

A)  a new labour-saving technology 
B)  a new health clinic 
C)  a new factory that will employ 1,000 workers 
D)  an increase in fringe benefits, such as paid vacations and overtime pay 
A)  a new labour-saving technology 
B)  a new health clinic 
C)  a new factory that will employ 1,000 workers 
D)  an increase in fringe benefits, such as paid vacations and overtime pay

Question 5

Compare and contrast the population theories of Thomas Malthus and Michael Kremer.

Accepted Answer

The difference is that Malthus predicted

Question 6

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

Accepted Answer

Once someone comes up with an idea it is

Question 7

To increase growth, governments should do all of the following except

Accepted Answer

A)  encourage foreigners to invest in your country. 
B)  encourage saving and investment. 
C)  nationalize major industries. 
D)  encourage research and development. 
E)  promote free trade. 
A)  encourage foreigners to invest in your country. 
B)  encourage saving and investment. 
C)  nationalize major industries. 
D)  encourage research and development. 
E)  promote free trade.

Question 8

Poor countries often have a difficult time attracting foreign direct investment funds because

Accepted Answer

A)  wages are low in poor countries. 
B)  investment risks are quite low in poor countries so rates of return are low. 
C)  property rights are not protected so investors fear their property may be confiscated. 
D)  All of the above are correct. 
A)  wages are low in poor countries. 
B)  investment risks are quite low in poor countries so rates of return are low. 
C)  property rights are not protected so investors fear their property may be confiscated. 
D)  All of the above are correct.

Question 9

Human capital is

Accepted Answer

A)  the capital, such as machinery, owned by humans. 
B)  the amount of physical capital per person in the economy. 
C)  the knowledge and skills that individual people have. 
D)  the capital that has been produced by humans. 
A)  the capital, such as machinery, owned by humans. 
B)  the amount of physical capital per person in the economy. 
C)  the knowledge and skills that individual people have. 
D)  the capital that has been produced by humans.

Question 10

Which of the following would decrease the likelihood that foreign business firms will invest in a country?

Accepted Answer

A)  a low corporate profit tax rate 
B)  political stability 
C)  a well-established legal system 
D)  political instability 
A)  a low corporate profit tax rate 
B)  political stability 
C)  a well-established legal system 
D)  political instability

Question 11

The United Kingdom should grow faster than Belgium because the United Kingdom has a larger economy.

Accepted Answer

A) True 
 B)False

Question 12

An important link between politics and economics is that

Accepted Answer

A)  democracies are more productive than non-democracies. 
B)  democracies must constantly make difficult budgetary choices. 
C)  political instability is incompatible with long-term private investment. 
D)  conservative governments tend to focus development on military industries. 
A)  democracies are more productive than non-democracies. 
B)  democracies must constantly make difficult budgetary choices. 
C)  political instability is incompatible with long-term private investment. 
D)  conservative governments tend to focus development on military industries.

Question 13

Inward-oriented policies hold back economic growth because

Accepted Answer

A)  international trade leads to lower domestic employment. 
B)  they encourage the brain drain. 
C)  infant industries are unable to compete with the rest of the world. 
D)  they do not allow a country to take advantage of the gains from trade. 
A)  international trade leads to lower domestic employment. 
B)  they encourage the brain drain. 
C)  infant industries are unable to compete with the rest of the world. 
D)  they do not allow a country to take advantage of the gains from trade.

Question 14

Suppose everyone working the land in Exland knows the usefulness of investing in land irrigation systems. Those who work the land may choose not to invest in these profitable irrigation systems as long as

Accepted Answer

A)  the investment is too expensive. 
B)  the natural climate, such as abundant rain, makes the irrigation projects unnecessary. 
C)  their property rights, with respect to the land, are subject to change. 
D)  the government dictates the choice of investment. 
A)  the investment is too expensive. 
B)  the natural climate, such as abundant rain, makes the irrigation projects unnecessary. 
C)  their property rights, with respect to the land, are subject to change. 
D)  the government dictates the choice of investment.

Question 15

The opportunity cost of growth is

Accepted Answer

A)  a reduction in current investment. 
B)  a reduction in current consumption. 
C)  a reduction in taxes. 
D)  a reduction in current saving. 
A)  a reduction in current investment. 
B)  a reduction in current consumption. 
C)  a reduction in taxes. 
D)  a reduction in current saving.

Question 16

If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

Accepted Answer

A) True 
 B)False

Question 17

If a production function exhibits constant returns to scale, doubling all of the inputs

Accepted Answer

A)  more than doubles output due to the catch-up effect. 
B)  has absolutely no impact on output because output is constant. 
C)  less than doubles output due to diminishing returns. 
D)  doubles output. 
A)  more than doubles output due to the catch-up effect. 
B)  has absolutely no impact on output because output is constant. 
C)  less than doubles output due to diminishing returns. 
D)  doubles output.

Question 18

A reasonable measure of the standard of living in a country is

Accepted Answer

A)  real GDP per capita. 
B)  nominal GDP per person. 
C)  real GDP. 
D)  the growth rate of nominal GDP per person. 
E)  nominal GDP. 
A)  real GDP per capita. 
B)  nominal GDP per person. 
C)  real GDP. 
D)  the growth rate of nominal GDP per person. 
E)  nominal GDP.

Question 19

For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except

Accepted Answer

A)  labour. 
B)  physical capital/worker. 
C)  human capital/worker. 
D)  natural resources/worker. 
A)  labour. 
B)  physical capital/worker. 
C)  human capital/worker. 
D)  natural resources/worker.

Question 20

If Toyota builds a new plant in the north of England,

Accepted Answer

A)  there has been an increase in foreign portfolio investment in the UK. 
B)  once the plant starts producing cars UK GDP will rise less than UK GNP. 
C)  once the plant starts producing cars UK GDP and GNP will both fall because some income from this investment will accrue to foreigners. 
D)  once the plant starts producing cars UK GDP will rise more than UK GNP. 
A)  there has been an increase in foreign portfolio investment in the UK. 
B)  once the plant starts producing cars UK GDP will rise less than UK GNP. 
C)  once the plant starts producing cars UK GDP and GNP will both fall because some income from this investment will accrue to foreigners. 
D)  once the plant starts producing cars UK GDP will rise more than UK GNP.

Exam 22: Production and Growth

Copper is an example of

Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labour productivity.

Most economists believe that inward-oriented policies that protect infant industries improve the growth rates of developing nations.

Which of the following represents a productivity-enhancing investment in human capital?

Compare and contrast the population theories of Thomas Malthus and Michael Kremer.

At first patents might seem like a deterrent to growth because in effect they restrict the use of new technology. Yet many economists believe that patents generate growth. Explain why.

To increase growth, governments should do all of the following except

Poor countries often have a difficult time attracting foreign direct investment funds because

Human capital is

Which of the following would decrease the likelihood that foreign business firms will invest in a country?

The United Kingdom should grow faster than Belgium because the United Kingdom has a larger economy.

An important link between politics and economics is that

Inward-oriented policies hold back economic growth because

Suppose everyone working the land in Exland knows the usefulness of investing in land irrigation systems. Those who work the land may choose not to invest in these profitable irrigation systems as long as

The opportunity cost of growth is

If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

If a production function exhibits constant returns to scale, doubling all of the inputs

A reasonable measure of the standard of living in a country is

For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except

If Toyota builds a new plant in the north of England,

What Is Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

Background to Demand: Consumer Choices

Background to Supply: Firms in Competitive Markets

Consumers, Producers and the Efficiency of Markets

Supply, Demand and Government Policies

The Tax System

Public Goods, Common Resources and Merit Goods

Market Failure and Externalities

Information and Behavioural Economics

Firms Production Decisions

Market Structures I: Monopoly

Market Structures Ii: Monopolistic Competition

Market Structures Iii: Oligopoly

The Economics of Factor Markets

Income Inequality and Poverty

Interdependence and the Gains From Trade

Measuring a Nations Well-Being

Measuring the Cost of Living

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Issues in Financial Markets

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Supply-Side Policies

Common Currency Areas and European Monetary Union

The Financial Crisis and Sovereign Debt

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