Deck 8: Us Productivity and Growth

Question 1

If Q is total real output, K is capital in use, L is labor employed, an increase in the productivity of labor would imply a(n):

A) increase in K/L.
B) increase in L/K.
C) increase in Q/L.
D) decrease in Q/K.
E) decrease in (Q + K)/L.

Answer 1

increase in Q/L.

Question 2

The production possibilities curve for capital and consumer goods is concave to the origin because:

A) of decreasing opportunity costs of production.
B) resources are not perfectly adaptable to the production of both goods.
C) both consumer goods and capital goods equally contribute to economic growth.
D) the level of technology along the frontier is assumed to vary.
E) of constant returns to scale.

Answer 2

resources are not perfectly adaptable to the production of both goods.

Question 3

Suppose a production possibilities frontier (PPF) has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point outside the PPF represents:

A) a smaller quantity of consumer goods than that represented by a point inside the PPF.
B) an inefficient output combination of the two goods in the economy.
C) an unattainable output combination of the two goods in the economy.
D) an output combination of more consumer goods than capital goods.
E) a smaller quantity of capital goods than that represented by a point inside the PPF.

Answer 3

an unattainable output combination of the two goods in the economy.

Question 4

Which of the following does not contribute to an improved standard of living?

A) Increases in the amount and quality of available resources
B) Better technology
C) Higher prices for the necessities of life
D) Improvements in the "rules of the game"
E) Increases in the quality of labor

Question 5

Productivity is defined as:

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) average input divided by average output.
E) total input divided by average output.

Question 6

Surgeons earn more than janitors because:

A) of the negative correlation between level of education and productivity.
B) of the inverse relationship between wages and productivity.
C) the accumulation of human capital leads to an improvement in productivity.
D) of the negative relation between productivity and the amount of physical capital.
E) surgeons spend more time at work than janitors.

Question 7

If Q is total real output, K is capital in use, and L is labor employed, then _____ is the formula to calculate the productivity of labor.

A) K/L
B) L/K
C) Q/L
D) Q/K
E) (Q + K)/L

Question 8

Labor cost on an average accounts for about _____ percent of the total cost of production.

A) 10
B) 30
C) 50
D) 70
E) 98

Question 9

Human capital represents:

A) the equipment that labor uses on-the-job to improve labor productivity.
B) the ratio of capital to labor.
C) the education, skill, and training embodied in workers.
D) the technology developed by humans that is embodied in equipment.
E) the social institutions created by people which promote the accumulation of equipment for production.

Question 10

Which of the following can expand the production possibilities frontier?

A) Improved patent laws
B) Legal reforms that increase transaction costs
C) Reductions in the length of patent protection
D) Stringent tax laws for R&D companies
E) The advent of a labor deepening technology

Question 11

Which of the following is the correct formula to calculate productivity?

A) Output + quantity of input
B) Output ─ quantity of input
C) Quantity of input ÷ output
D) Output ÷ quantity of input
E) Output × quantity of input

Question 12

Long-term growth in production can be explained by:

A) an improvement in the quality of resources available.
B) a gradual but consistent rise in the price level.
C) a rapid and accelerating increase in the price level.
D) a trade surplus that leads to the accumulation of gold.
E) the peaks and troughs of economic fluctuations.

Question 13

In an iron and steel plant with 4 blast furnaces, 40 laborers produce 160 tons of pig iron every day. The labor productivity in the firm is equal to _____.

A) 0.25 ton per worker
B) 4 tons per worker
C) 10 tons per worker
D) 0.1 ton per worker
E) 40 tons per worker

Question 14

Which of the following could cause the production possibilities frontier to shift to the right?

A) More government regulation that stunts economic growth
B) Changes in the rules of the game that stunt economic growth
C) Lower quality resources
D) Fewer productive resources
E) Production of more capital goods and fewer consumer goods

Question 15

_____ is the resource whose productivity is most commonly measured.

A) Labor
B) Capital
C) Land
D) Energy
E) Money

Question 16

Productivity measures:

A) how efficiently resources are turned into goods and services.
B) how efficiently goods and services are consumed by the consumers.
C) the level of skills embodied in a unit of labor.
D) the ratio of inputs to a specific amount of output.
E) the availability of resources in an economy.

Question 17

The production possibilities frontier of an economy is based on the assumption that the:

A) amount of consumer goods produced in the economy is constant during a given year.
B) quality of labor available in the economy is variable during a given year.
C) patent laws applicable in the economy are constant during a given year.
D) level of technology available in the economy is variable during a given year.
E) economy can either produce capital goods or consumer goods during a given year.

Question 18

Which of the following factors can influence the production possibilities frontier in the future?

A) The amount of capital produced
B) A fall in the rate of inflation
C) A decrease in consumption in an economy
D) An increase in the tax rate
E) A legal reform that increases transaction costs

Question 19

Suppose a production possibilities frontier (PPF) has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point inside the PPF represents:

A) a larger quantity of capital goods than that represented by a point along the PPF.
B) an inefficient output combination of the two goods in the economy.
C) an unattainable output combination of the two goods in the economy.
D) an output combination of more consumer goods than capital goods.
E) a larger quantity of consumer goods than that represented by a point along the PPF.

Question 20

The rules of the game refer to:

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 rules that a firm must follow in order to earn a profit.
E) the requirement that households must supply labor to firms.

Question 21

The movement from point A to point B in the figure below illustrates the effect of: 

A) an increase in the capital stock relative to the workforce.
B) an increase in the labor productivity growth rate.
C) an increase in labor productivity because of higher quality capital.
D) a decrease in labor productivity.
E) a decrease in the capital stock.

Question 22

The per-worker production function illustrates the fact that as the amount of capital per worker increases, output per worker:

A) increases at an increasing rate.
B) increases then decreases.
C) decreases but at an increasing rate.
D) decreases.
E) increases but at a decreasing rate.

Question 23

If a nation moves upward along its per-worker production function relating output per worker to capital per worker, then:

A) labor productivity rises.
B) labor productivity falls.
C) the amount of capital decreases, other things constant.
D) labor input decreases.
E) the productivity of capital rises.

Question 24

Joe runs a pizzeria at a busy place in a city. Around 125 customers visit every day and they each buy 3 pizzas on average. Joe has employed 20 laborers to make pizzas. The productivity of one laborer per day in the pizzeria is equal to _____.

A) 6.25 pizzas per worker
B) 18.75 pizzas per worker
C) 6.67 pizzas per worker
D) 41.67 pizzas per worker
E) 20.75 pizzas per worker

Question 25

Which of the following factors of production is likely to be most productive?

A) A certified doctor working in a well-equipped hospital
B) A medical student working as a volunteer in a rural health clinic
C) A trained nurse without access to the latest medical technology
D) A knowledgeable chemist without a degree in medical sciences
E) A specialist doctor working in a hospital with poor infrastructure

Question 26

An improvement in the quality of capital would:

A) rotate the per-worker production function upward.
B) make the per-worker production function flatter.
C) shift the per-worker production function downward.
D) rotate the per-worker production function downward.
E) have no effect on the per-worker production function.

Question 27

The law of diminishing marginal returns states that as the quantity of capital per worker increases, other things constant, output per worker eventually:

A) increases at a constant rate.
B) increases at a decreasing rate.
C) increases at an increasing rate.
D) decreases.
E) remains constant.

Question 28

Which of the following implies a decline in labor productivity in an economy?

A) A high rate of growth in capital formation
B) An improvement in input quality
C) A decrease in the production of goods and services
D) An increase in the budget surplus in the economy
E) A decrease in the prices of goods and services

Question 29

The slope of the per-worker production function diminishes as the amount of capital per-worker increases. This is a reflection of the law of _____.

A) increasing marginal returns
B) diminishing marginal returns
C) constant marginal returns
D) first diminishing then increasing marginal returns
E) demand

Question 30

The figure below shows three different per-worker production functions: PF₁, PF₂, and PF₃. The diminishing slopes of the curves reflect _____.

A) increasing returns to scale
B) increasing marginal returns from capital
C) diminishing marginal returns from capital
D) decreasing returns to scale
E) diminishing marginal returns from labor

Question 31

An increase in the amount of capital per worker will:

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 32

The figure below shows three different per-worker production functions: PF₁ , PF₂ , and PF₃ . If PF₁ is the initial per-worker production function, which of the following reflects the impact of an increase in the level of technology?

A) A movement from point D to point C
B) An upward shift from PF₁ to PF₂
C) A downward shift from PF₁ to PF₃
D) A movement from point C to point D
E) A movement from point D to point F

Question 33

A point on the per-worker production function shows:

A) the total output produced by the labor force of an industry on the vertical axis for each level of capital per worker on the horizontal axis.
B) the marginal output per worker on the vertical axis for each level of worker per unit of capital on the horizontal axis.
C) the marginal output per worker on the vertical axis for each level of capital per worker on the horizontal axis.
D) the level of capital per worker on the vertical axis for respective average output per worker on the horizontal axis.
E) the average output per worker on the vertical axis for each level of capital per worker on the horizontal axis.

Question 34

A decrease in the capital-labor ratio would result in:

A) higher labor productivity because labor does more work.
B) lower labor productivity because labor is working with relatively less capital.
C) higher labor productivity because labor is producing less capital and more of other goods.
D) lower labor productivity because more capital is available.
E) higher labor productivity because more capital is available.

Question 35

A water bottle manufacturing plant uses a three-step procedure to produce each unit of bottle. The first step is casting, which needs 35 workers to operate the furnace. The second step is quenching, which needs 35 workers. At the third step, bottles are prepared for dispatch in the assembly line with the help of 70 workers. If the factory produces 14,000 bottles per day, then the productivity of labor in the factory is equal to _____.

A) 200 bottles per worker
B) 400 bottles per worker
C) 100 bottles per worker
D) 140 bottles per worker
E) 220 bottles per worker

Question 36

If increases in capital per worker lead to increased output per worker, but by decreasing amounts as capital increases, the per-worker production function _____.

A) is vertical
B) has a decreasing slope
C) has an increasing slope
D) has a negative slope
E) is horizontal

Question 37

Which of the following would increase labor productivity?

A) A labor deepening production method
B) A decrease in the amount of capital per unit of labor
C) A lower unemployment rate
D) Recruitment of new and young labor force
E) An increase in the education level of per unit of labor

Question 38

Which of the following does not contribute to labor productivity growth?

A) A steepening of the per-worker production function
B) An increase in the amount of capital per unit of labor
C) A growth in the labor force
D) An improvement in the quality of capital
E) A decrease in the labor-capital ratio

Question 39

The figure below shows three different per-worker production functions: PF₁, PF₂, and PF₃. If PF₁ is the initial per-worker production function for a farm, which of the following reflects an increase in the number of tractors per worker in the farm?

A) A movement from point D to point C
B) An upward shift from PF₁ to PF₂
C) A downward shift from PF₁ to PF₃
D) A movement from point C to point D
E) A movement from point D to point B

Question 40

Which of the following factors pushes the per-worker production function of an economy downward?

A) A stable political environment
B) A high risk of terror attack
C) An increase in educated workforce in the country
D) An increase in road networks in the country
E) A law encouraging foreign investment

Question 41

According to Simon Kuznets, which of the following is likely to induce economic growth in the automobile industry of a country?

A) An increase in the amount of labor used in the industry
B) A government subsidy for automobile production
C) An increase in the import of spare parts for the engines
D) An increase in the number of paint bays per factory
E) The replacement of manual assembly lines with robots

Question 42

Which of the following would be considered a developed country?

A) Pakistan
B) Hong Kong
C) India
D) Argentina
E) Brazil

Question 43

According to Simon Kuznets, _____.

A) the main force behind economic growth is increases in the quantity of labor
B) the main force behind economic growth is increases in the quantity of capital
C) the main force behind economic growth is increases in the quality of inputs
D) government regulations increase labor productivity
E) government regulations decrease labor productivity

Question 44

Capital deepening refers to:

A) an increase in the amount of capital per worker.
B) an increase in the amount of workers per unit of capital.
C) a decrease in the amount of capital per unit of output.
D) an increase in the amount of output per unit of capital.
E) an increase in the productivity of capital.

Question 45

Which of the following would increase labor productivity?

A) A decrease in the amount of capital per unit of labor
B) A change in technology that improves the quality of capital
C) A decrease in the unemployment rate
D) An increase in the number of inexperienced workers entering the labor force
E) A decrease in the quality of capital

Question 46

_____ is a resource whose quality is most often enhanced by technological change.

A) Capital
B) Land
C) Labor
D) Entrepreneurship
E) Credit

Question 47

Industrial market countries make up about _____ of the world population but produce more than _____ of the world's output.

A) 16 percent; 50 percent
B) 40 percent; 75 percent
C) 40 percent; 58 percent
D) 55 percent; 65 percent
E) 38 percent; 55 percent

Question 48

_____ is an important determinant of its standard of living in the long run.

A) A nation's net exports
B) The productivity of a nation's resources
C) A nation's population growth rate
D) The deficit in a nation's capital account
E) The deficit in a nation's current account

Question 49

Which of the following is a reason behind low standards of living in developing countries?

A) High human and physical capital per worker
B) Low human and physical capital per worker
C) Low birth rates
D) High tax rates
E) Low public expenditure

Question 50

Which of the following is included in physical capital?

A) Roads and bridges
B) A university graduate in physics
C) An astrophysicist
D) A high school diploma or college degree
E) A successful entrepreneur

Question 51

An increase in the quantity of capital per worker would:

A) rotate the per-worker production function outward.
B) rotate the per-worker production function inward.
C) shift the per-worker production function downwards.
D) shift the per-worker production function upwards.
E) result in a rightward movement along the current per-worker production function.

Question 52

Which of the following is not included in the rules of the game?

A) The laws, customs, conventions, and other institutional elements associated with trade
B) Property rights
C) Ensuring that the market process generates a fair price for all
D) A stable political environment
E) A stable legal system

Question 53

According to Nobel Laureate Simon Kuznets, the greatest increase in output and economic growth comes from changes in the _____.

A) quantity of resources
B) quantity of natural resources (land)
C) quantity of labor
D) quality of resources
E) quantity of capital

Question 54

Which of the following is likely to cause a decrease in labor productivity?

A) An increase in student achievement scores
B) A service sector that is growing slower than the growth rate of GDP
C) An increased spending on research and development
D) A decrease in capital formation
E) A low federal budget deficit

Question 55

An economy's standard of living grows over the long run because of:

A) better protection of domestic industries from foreign competition.
B) centralized planning and decision making.
C) technological improvements.
D) stringent foreign trade policies.
E) high growth rate of population.

Question 56

Which of the following is assumed to be constant along a per-worker production function?

A) Output per worker
B) Capital per worker
C) Level of technology
D) Amount of capital
E) Amount of output

Question 57

A(n) _____ implies an increase in human capital.

A) addition of a new machine that laborers use in production
B) increase in wealth
C) more educated labor force
D) increase in the number of schools in a country
E) increase in the quantity of the capital used by a firm

Question 58

Which of the following countries had the highest percentage of young adults with a college degree in 2012?

A) Norway
B) Canada
C) Japan
D) France
E) Italy

Question 59

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

A) Reduced capital formation
B) Decreased human capital
C) Increased research and development
D) Increased government regulation
E) Higher price of a raw material

Question 60

Which of the following is true of an improvement in technology?

A) An improvement in technology shifts the per-worker production upward.
B) An improvement in technology shifts the per-worker production downward.
C) An improvement in technology increases the concavity of the production possibilities frontier.
D) An improvement in technology decreases the concavity of the production possibilities frontier.
E) An improvement in technology increases the quantity of input in the production process.

Question 61

Which of the following will be true if employment grows faster than the population as a whole?

A) Output per capita will increase faster than productivity per worker.
B) The standard of living will increase.
C) Output per capita and productivity per worker will grow at an equal pace.
D) Output per worker and productivity per worker will remain unaffected.
E) Output per capita will increase at a diminishing rate.

Question 62

Which of the following was the average yearly increase in U.S. labor productivity growth between the 1870s and the early years of the 21st century?

A) About 1 percent
B) About 2 percent
C) About 5 percent
D) About 10 percent
E) Between 0 and 1 percent

Question 63

The gross domestic product of Solvasa, a small island country, is U.S. $68 billion. The adult population of the country is 8.70 million and 11.3 million citizens are below 18 years of age. The output per capita of Solvasa is approximately equal to _____.

A) $7,800
B) $3,400
C) $6,017
D) $5,201
E) $6,950

Question 64

Over the past century, the growth of labor productivity in the United States was highest in the _____.

A) 1940s
B) 1950s
C) 1960s
D) 1970s
E) 1980s

Question 65

Over the last 100 years, the U.S. labor productivity growth rate experienced its largest declines _____.

A) during the Great Depression
B) in the 1940s
C) during the 1950s
D) during the 1980s
E) during the 1990s

Question 66

Since 1996, _____.

A) U.S. productivity growth has skyrocketed, at least initially, as more computers were installed
B) the computer sector has grown faster than the U.S. economy as a whole
C) spending on computers has been approximately constant as a fraction of total U.S. investment spending
D) the contribution of computers to U.S. productivity growth has been negative
E) computing technology has not improved enough to have a measurable impact on U.S. productivity

Question 67

Which of the following would slow down productivity growth?

A) A change in the composition of the workforce so that more middle-aged people and fewer young people are working
B) A change in the composition of the workforce so that organizations hire more men who work steadily throughout the year than men who frequently enter and leave the workforce
C) The quality of education remaining unchanged
D) People starting to invest more in capital goods
E) Firms starting to cut down the size of their labor force

Question 68

In the period 2005-2012, the annual productivity growth rate was approximately _____.

A) 1.6 percent per year
B) 3 percent per year
C) 4.2 percent per year
D) 5 percent per year
E) 6 percent per year

Question 69

Which of the following is true of small changes in productivity growth rates?

A) Small changes in productivity growth rates decrease the productivity of workers in the short run compounding the problem.
B) The effects of small changes in productivity growth rates are compounded over the years leading to large cumulative effects.
C) Small increases in productivity growth rates cause output to fall.
D) The effects of small changes in productivity growth rates are negligible.
E) Small decreases in productivity growth rates cause output to increase.

Question 70

The cumulative power of productivity growth:

A) emphasizes the importance of short-term growth.
B) emphasizes the importance of long-term growth.
C) emphasizes the importance of capital-labor ratio.
D) increases poverty in an economy.
E) leads to capital deepening

Question 71

The output per capita of a country is equal to _____.

A) its population divided by its GDP
B) its GDP divided by its population
C) its population divided by its GNP
D) its GNP divided by its population
E) its GDP divided by the total value of capital available

Question 72

Which of the following countries has the highest output per capita?

A) The United Kingdom
B) The United States
C) France
D) Italy
E) Germany

Question 73

A small change in the rate of productivity growth will have:

A) a small impact on output in both the short run and the long run.
B) a large impact on output in both the short run and the long run.
C) a small impact on output in the short run but a large impact in the long run.
D) a large impact on output in the short run but a small impact in the long run.
E) no effect on output at all.

Question 74

Charlston, a newly industrialized country, has a female population of 2.8 million. There are 1.08 million employed males in the country, while the number of dependent males is equal to 1.52 million. The GDP of Charlston is U.S. $298 billion. The output per capita of Charlston is approximately equal to _____.

A) $275,925
B) $55,185
C) $196,035
D) $275,955
E) $79,810

Question 75

The per capita output of an economy is likely to increase if:

A) the number of workers in the economy grows faster than its population.
B) the population of the country grows faster than its labor force.
C) the government increases the tax rates.
D) the government controls the number of illegal immigrant workers in the economy.
E) the government manages the foreign investment in the economy.

Question 76

Over the last century, U.S. labor productivity has:

A) fallen.
B) been constant, on average.
C) grown at about 2 percent per year.
D) grown at about 8 percent per year.
E) grown at about 15 percent per year.

Question 77

Gulmirah, a small underdeveloped country, has an adult population of 16.8 million, and the remaining 13.75 million of the population is below 18 years of age. The approximate output per capita of this country is $644.80. The GDP of Gulmirah is equal to approximately _____.

A) $8.87 billion
B) $10.08 billion
C) $20.30 billion
D) $13.22 billion
E) $19.70 billion

Question 78

The impact of computers on U.S. productivity growth:

A) has been disappointingly small-about one-half percentage point annually between 1972 and 1996.
B) has been dramatic, contributing to significant growth during the early years of the 21st century.
C) has been significant in the health care sector but not elsewhere.
D) has actually been negative in most industries.
E) was greater during the period 1972-1990 than it has been since that time.

Question 79

Productivity growth is important because:

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 80

Labor productivity in the United States has:

A) been growing at ever-increasing rates since World War II.
B) been growing but at lower rates in the last 25 years compared to the 25 years immediately after World War II.
C) been falling for the last 50 years.
D) remained largely unchanged over the last 50 years.
E) been growing more rapidly in the last 50 years than in most other developed economies.