Question 1

Productivity growth is important because

Accepted Answer

A) it is the only way an economy can increase GDP 
B) a small decrease in productivity growth causes a large decline in GDP 
C) a large increase in productivity growth causes a small decrease in GDP 
D) it causes an increase in the quantity of all resources available to an economy 
E) it ultimately increases a nation's standard of living 
A) it is the only way an economy can increase GDP 
B) a small decrease in productivity growth causes a large decline in GDP 
C) a large increase in productivity growth causes a small decrease in GDP 
D) it causes an increase in the quantity of all resources available to an economy 
E) it ultimately increases a nation's standard of living

Question 2

Between the 1880s and the early 21st century, U.S. productivity increased at a constant annual rate.

Accepted Answer

A) True 
 B)False

Question 3

Labor productivity is measured as

Accepted Answer

A) the value of total output times total employment 
B) total output of all workers employed 
C) total output divided by the number of units of labor employed 
D) total labor input divided by output 
E) average output per unit of capital 
A) the value of total output times total employment 
B) total output of all workers employed 
C) total output divided by the number of units of labor employed 
D) total labor input divided by output 
E) average output per unit of capital

Question 4

Which of the following is not an example of an event that fosters instability?

Accepted Answer

A) September 11, 2001 
B) A greater threat to airport security 
C) The Frankfurt Book Fair where publishers from around the world gather 
D) Suicide bombers attacking shops and restaurants 
E) All of the answers foster instability 
A) September 11, 2001 
B) A greater threat to airport security 
C) The Frankfurt Book Fair where publishers from around the world gather 
D) Suicide bombers attacking shops and restaurants 
E) All of the answers foster instability

Question 5

Which of the following is not likely to cause a decrease in labor productivity?

Accepted Answer

A) a decline in student achievement scores 
B) a service sector that is growing as a percentage of GDP 
C) decreased spending on research and development 
D) increases in capital formation 
E) high federal budget deficits 
A) a decline in student achievement scores 
B) a service sector that is growing as a percentage of GDP 
C) decreased spending on research and development 
D) increases in capital formation 
E) high federal budget deficits

Question 6

In order for a society to have a rising standard of living, output per worker must grow

Accepted Answer

A) more slowly than the labor force 
B) at the same rate as the population 
C) faster than the population 
D) more slowly than the population 
E) at a rate of 3 percent per year and population must grow at a rate of 5 percent per year 
A) more slowly than the labor force 
B) at the same rate as the population 
C) faster than the population 
D) more slowly than the population 
E) at a rate of 3 percent per year and population must grow at a rate of 5 percent per year

Question 7

Productivity is defined as

Accepted Answer

A) the ratio of a specific measure of output to a specific measure of input 
B) the production of worthwhile goods and services 
C) the market value of goods, services, and resources produced per time period (e.g., per year) 
D) the average input divided by average output 
E) total input divided by average output 
A) the ratio of a specific measure of output to a specific measure of input 
B) the production of worthwhile goods and services 
C) the market value of goods, services, and resources produced per time period (e.g., per year) 
D) the average input divided by average output 
E) total input divided by average output

Question 8

The only way the standard of living can increase is for labor productivity to increase.

Accepted Answer

A) True 
 B)False

Question 9

The reason why small changes in productivity growth rates have large long-term effects on economic growth over the long run is that

Accepted Answer

A) lower productivity growth makes labor discouraged, compounding the problem 
B) lower productivity growth effects on the economy are compounded over the years, leading to large cumulative effects 
C) when the productivity growth rate falls, output actually falls 
D) lower productivity growth for one resource means lower productivity growth for all resources 
E) output usually falls when productivity grows 
A) lower productivity growth makes labor discouraged, compounding the problem 
B) lower productivity growth effects on the economy are compounded over the years, leading to large cumulative effects 
C) when the productivity growth rate falls, output actually falls 
D) lower productivity growth for one resource means lower productivity growth for all resources 
E) output usually falls when productivity grows

Question 10

The reason why productivity growth is so important is that

Accepted Answer

A) it is the key to long-run increases in the standard of living 
B) per capita GDP ultimately depends on labor productivity 
C) total GDP cannot increase without increases in resource productivity levels 
D) all of the above 
E) both a and b 
A) it is the key to long-run increases in the standard of living 
B) per capita GDP ultimately depends on labor productivity 
C) total GDP cannot increase without increases in resource productivity levels 
D) all of the above 
E) both a and b

Question 11

Between 1959 and 2003, the average annual growth rate of real GDP per capita in the United States was about

Accepted Answer

A) 1 percent per year 
B) 2.2 percent per year 
C) 3.1 percent per year 
D) 4.2 percent per year 
E) 5 percent per year 
A) 1 percent per year 
B) 2.2 percent per year 
C) 3.1 percent per year 
D) 4.2 percent per year 
E) 5 percent per year

Question 12

Which of the following is most likely to increase productivity growth, as measured using GDP statistics?

Accepted Answer

A) reduced capital formation 
B) decreased human capital 
C) increased research and development 
D) increased government regulation 
E) higher prices for raw materials 
A) reduced capital formation 
B) decreased human capital 
C) increased research and development 
D) increased government regulation 
E) higher prices for raw materials

Question 13

Over the last 100 years, U.S. labor productivity grew the fastest

Accepted Answer

A) during the Depression 
B) in the 1940s 
C) in the first half of the period 
D) during the 1960s 
E) during the 1980s 
A) during the Depression 
B) in the 1940s 
C) in the first half of the period 
D) during the 1960s 
E) during the 1980s

Question 14

An increase in the amount of capital per worker is called

Accepted Answer

A) capital deepening 
B) marginal capital 
C) per-worker production function 
D) human capital 
E) diminishing marginal returns from capital 
A) capital deepening 
B) marginal capital 
C) per-worker production function 
D) human capital 
E) diminishing marginal returns from capital

Question 15

Suppose the growth rate of employment is positive but labor productivity remains unchanged. What will happen to real GDP?

Accepted Answer

A) it will either decrease or remain constant 
B) it will decrease 
C) it will remain constant 
D) it will either increase or remain constant 
E) it will increase 
A) it will either decrease or remain constant 
B) it will decrease 
C) it will remain constant 
D) it will either increase or remain constant 
E) it will increase

Question 16

An increase in the amount of capital per worker will

Accepted Answer

A) increase labor productivity but not capital productivity 
B) increase capital productivity but not labor productivity 
C) increase both labor and capital productivity 
D) shift the per-worker production function upward 
E) increase total output but not the productivity levels of individual workers 
A) increase labor productivity but not capital productivity 
B) increase capital productivity but not labor productivity 
C) increase both labor and capital productivity 
D) shift the per-worker production function upward 
E) increase total output but not the productivity levels of individual workers

Question 17

The rules of the game refer to

Accepted Answer

A) any factor that facilitates production and exchange, such as tax laws and property rights 
B) a gradual but consistent change in the price level until a fair price is attained 
C) the set of election laws that ensure that all elections are fair 
D) the requirements placed on firms in earning a profit 
E) the requirements that households must supply labor to firms 
A) any factor that facilitates production and exchange, such as tax laws and property rights 
B) a gradual but consistent change in the price level until a fair price is attained 
C) the set of election laws that ensure that all elections are fair 
D) the requirements placed on firms in earning a profit 
E) the requirements that households must supply labor to firms

Question 18

Improvements in technology shift the per-worker production function downward.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would not slow down productivity growth?

Accepted Answer

A) The composition of the work force changes so that more young people and fewer middle-aged people are working. 
B) The composition of the work force changes so that more women, who enter and leave the work force more frequently than men, are included. 
C) The quality of education decreases. 
D) Investment declines. 
E) Firms switch from providing services to producing goods. 
A) The composition of the work force changes so that more young people and fewer middle-aged people are working. 
B) The composition of the work force changes so that more women, who enter and leave the work force more frequently than men, are included. 
C) The quality of education decreases. 
D) Investment declines. 
E) Firms switch from providing services to producing goods.

Question 20

In contrast to government research and development, private sector R&D has

Accepted Answer

A) more impact on productivity, since much government R&D focuses narrowly on military applications 
B) more impact on productivity, since much government R&D focuses narrowly on the service sector 
C) more impact on productivity, since much government R&D focuses narrowly on not-for-profit activities 
D) less impact on productivity, since the government is more motivated and able to hire better people and facilities 
E) less impact on productivity, since firms tend to hold back on research when results are easily copied 
A) more impact on productivity, since much government R&D focuses narrowly on military applications 
B) more impact on productivity, since much government R&D focuses narrowly on the service sector 
C) more impact on productivity, since much government R&D focuses narrowly on not-for-profit activities 
D) less impact on productivity, since the government is more motivated and able to hire better people and facilities 
E) less impact on productivity, since firms tend to hold back on research when results are easily copied

Exam 9: Productivity and Growth

Productivity growth is important because

Between the 1880s and the early 21st century, U.S. productivity increased at a constant annual rate.

Labor productivity is measured as

Which of the following is not an example of an event that fosters instability?

Which of the following is not likely to cause a decrease in labor productivity?

In order for a society to have a rising standard of living, output per worker must grow

Productivity is defined as

The only way the standard of living can increase is for labor productivity to increase.

The reason why small changes in productivity growth rates have large long-term effects on economic growth over the long run is that

The reason why productivity growth is so important is that

Between 1959 and 2003, the average annual growth rate of real GDP per capita in the United States was about

Which of the following is most likely to increase productivity growth, as measured using GDP statistics?

Over the last 100 years, U.S. labor productivity grew the fastest

An increase in the amount of capital per worker is called

Suppose the growth rate of employment is positive but labor productivity remains unchanged. What will happen to real GDP?

An increase in the amount of capital per worker will

The rules of the game refer to

Improvements in technology shift the per-worker production function downward.

Which of the following would not slow down productivity growth?

In contrast to government research and development, private sector R&D has

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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