Deck 24: Economic Growth: Theory and Policy

Question 1

Some politicians argue that reducing the corporate income tax will increase business investment spending.

Answer 1

True

Question 2

All increases in the level of human capital take place in schools.

Answer 2

False

Question 3

Service sector outputs could be expected to increase in price less than industrial sector outputs as an economy grows.

Answer 3

False

Question 4

A superior level of technology is an important reason the productivity of workers in rich countries is high.

Question 5

Capital investment becomes more profitable for a business firm as the real interest rate decreases.

Question 6

Imitation is not only the highest form of flattery but also an easier way for poorer countries to develop new technology.

Question 7

Productivity growth rates are usually higher in rich countries than in poor countries.

Question 8

When the economy devotes more of its resources to investment goods, it must devote fewer resources to consumer goods.

Question 9

Labor productivity rises as the amount of capital available to workers increases.

Question 10

A nation's capital consists mainly of stocks, bonds, and other financial assets.

Question 11

Improvements in the level of technology will generally shift the production function downward.

Question 12

The production function shifts upward as the capital stock increases.

Question 13

The poorest countries in Africa have some of the highest growth rates, thus proving the convergence hypothesis.

Question 14

As the level of real interest rates rise, the amount of new investment will rise also.

Question 15

Productivity levels are higher in rich countries compared to poor countries.

Question 16

College tuition costs have risen faster than prices in general from 1979 to 2009.

Question 17

For a given technology, a higher capital stock will decrease labor productivity.

Question 18

Human capital includes the tools and equipment that human beings work with.

Question 19

The convergence hypothesis suggests that poor countries may close the income gap with rich countries.

Question 20

The term "capital formation" actually implies adding new equipment to a nation's factories.

Question 21

The slowing of the American economy in 2008-2009 gave businesses a strong incentive to raise capital investment.

Question 22

In the United States, the wage rates for high school graduates are growing faster than the wage rates for college graduates.

Question 23

Real wages usually lag behind the increases in labor productivity.

Question 24

Because the Soviet Union educated more scientists and engineers than the United States, their level of economic growth was higher.

Question 25

Improvements in human capital and education played a major role in the productivity improvements of the U.S.economy from 1995 to 2009.

Question 26

There is now general agreement among economists regarding the sources of the U.S.productivity slowdown that occurred between 1973 and 1995.

Question 27

The wage premium in the United States for college graduates over high school graduates has remained constant from 1978 to 2000.

Question 28

Technological change was a major contributor to the productivity speed-up from 1995-2000.

Question 29

Productivity growth rates in the United States have remained fairly constant from 1948 to 2000.

Question 30

Economists are still puzzled why growth rates in the United States fell from 1973 to 1995.

Question 31

The threat of confiscated private property diminishes the incentive to invest.

Question 32

The capital gains tax cut enacted in 2003 will hinder capital formation.

Question 33

Investment spending, capital formation, and rapid technological progress are directly related.

Question 34

In 2010 President Obama proposed more generous tax write-offs for businesses that invest in additional equipment in order to stimulate investment spending.

Question 35

Because it is a market economy, in the United States all research and development is done by private business firms.

Question 36

The prices of telecommunications services have decreased due to productivity increases.

Question 37

By enjoying more consumer goods today, the economy spurs growth in future consumer goods.

Question 38

The change in the contribution of capital formation was the chief cause of the productivity slowdown in 1973-1995.

Question 39

The fastest growing productivity increases in the United States have occurred in the personal services sector.

Question 40

All other things being equal, a greater supply of scientists and engineers will increase the level of technology.

Question 41

A productivity increase is illustrated by a shift in the production function

A)downward.
B)leftward.
C)upward.
D)rightward.

Question 42

The "cost disease of personal services" phenomenon helps explain why medical care has become so expensive.

Question 43

Economists believe that the same explanation for the rapid growth of costs applies to services, theatrical performances and restaurant meals.

Question 44

The productivity slowdown in the U.S.can be explained by geographic limitations and instability in the government.

Question 45

Industrialized countries generally have higher levels of educational attainment compared with poorer countries.

Question 46

In general, as the amount of labor input increases, the amount of output

A)increases.
B)decreases.
C)remains constant.
D)increases only if the capital stock also increases.

Question 47

Which of the following services have experienced declines in relative prices due to productivity increases?

A)medical services 
B)restaurant meals 
C)theatrical performances 
D)Internet access services

Question 48

A productivity decrease would be illustrated by a shift in the production function

A)downward.
B)leftward.
C)upward.
D)rightward.

Question 49

The distinction between productivity levels and productivity growth rates is theoretical, and has no practical application.​

Question 50

Poor health in developing countries encourages economic growth because working is a matter of life and death.

Question 51

Which of the following would tend to shift the production function upward?

A)an increase in the number of hours worked 
B)an increase in population 
C)an increase in the size of the labor force 
D)an increase in the level of technology

Question 52

When the difference between potential GDP and actual GDP increases, the nation usually suffers from increased inflation.

Question 53

The "cost disease of personal services" phenomenon predicts that the price of tickets to baseball games and cell phone rates will increase at approximately the same rate.

Question 54

Foreign direct investment generally leads to technological advancements in poorer countries.

Question 55

Development assistance is designed to spur population growth in poor countries.

Question 56

The graph that relates hours of labor input to output is called the

A)consumption function.
B)conjunction function.
C)capital function.
D)production function.

Question 57

The term "human capital" refers to how many people must work to produce a product.

Question 58

In general, as the amount of labor input decreases, the amount of output

A)increases.
B)decreases.
C)remains constant.
D)decreases only if the capital stock also decreases.

Question 59

The fall of actual GDP below the level of potential GDP is a signal that the economy is in a recession.

Question 60

College tuition expenses have risen from 1982 to 2012 by

A)an amount equal to prices in general.
B)an amount greater than average prices.
C)an amount less than average prices.
D)the amount of the percentage increase in the overall CPI.

Question 61

How is human capital most commonly measured?

A)By the organizational rank and seniority 
B)By the amount of pay and incentives 
C)By the amount of education and training 
D)By the compensation structure and work policies

Question 62

For given inputs of labor and capital, if technology is more primitive, labor productivity will be

A)higher.
B)lower.
C)unchanged.
D)characterized by increasing returns to scale.

Question 63

Which furniture production process would have the highest production function?

A)furniture made by handsaw and hammer 
B)furniture made with power equipment 
C)furniture made by grade school-educated workers 
D)furniture made in an automated furniture factory

Question 64

Which furniture production process would have the highest wage rates?

A)furniture made by handsaw and hammer 
B)furniture made with power equipment 
C)furniture made by grade school-educated workers 
D)furniture made in an automated furniture factory

Question 65

Which furniture production process would have the highest furniture prices?

A)furniture made by handsaw and hammer 
B)furniture made with power equipment 
C)furniture made by grade school-educated workers 
D)furniture made in an automated furniture factory

Question 66

Which of the following was NOT a factor in Japan's post-World War II economic success?

A)a high rate of investment 
B)a well-educated workforce 
C)a high rate of natural resource discovery 
D)a high rate of technological adoption

Question 67

One of the key factors in the economic success of South Korea was

A)an increase in years of schooling.
B)a reduction in the amount of imports.
C)the creation of new technology.
D)all of the above.

Question 68

Which of the following is not one of the three pillars of productivity growth?

A)rate of capacity utilization 
B)rate of technological improvement 
C)rate of improvement in workforce quality 
D)rate of capital expansion

Question 69

Which retail operation would have the highest costs per book sold?

A)a small independent bookstore 
B)a large retail bookstore chain 
C)an Internet seller of books 
D)All would have the same costs.

Question 70

An increase in the number of hours worked would

A)shift the production function upward.
B)shift the production function downward.
C)shift the production function outward.
D)not shift the production function.

Question 71

Compared to workers in richer countries, workers in developing countries have

A)lower productivity and lower wages.
B)higher productivity and higher wages.
C)higher productivity but lower wages.
D)the same productivity but lower wages.

Question 72

Human capital is the amount of

A)capital available to workforce.
B)skill embodied in the workforce.
C)output the labor force can produce.
D)healthy work force in the total population.

Question 73

For given inputs of labor and capital, if technology is better, labor productivity will be

A)higher.
B)lower.
C)unchanged.
D)characterized by increasing returns to scale.

Question 74

For a given technology and a given labor force, labor productivity will be ____ when the capital stock is ____.

A)higher; larger 
B)lower; larger 
C)lower; unchanged.
D)higher; smaller

Question 75

Human capital differs from physical capital in that

A)human capital is intangible.
B)human capital is tangible.
C)physical capital is intangible.
D)human capital has no cost to acquire.

Question 76

The definition of human capital refers to

A)worker education and workers' equipment.
B)worker education and workers' physical capital.
C)workers' equipment and workers' physical capital.
D)worker education and worker training.

Question 77

Which retail operation would have the lowest costs per book sold?

A)a small independent bookstore 
B)a large retail bookstore chain 
C)an Internet seller of books 
D)All would have the same costs.

Question 78

Compared to workers in poor countries, workers in richer countries have

A)lower productivity but higher wages.
B)higher productivity and higher wages.
C)higher productivity but lower wages.
D)the same productivity but higher wages.

Question 79

Which of the following countries has the lowest level of average educational attainment?

A)Canada 
B)Italy 
C)India 
D)Sudan

Question 80

Workforce quality can be improved by

A)years of education.
B)on-the-job training.
C)workplace learning.
D)all of the above.