Deck 8: Productivity and Growth

Question 1

Which resource is often enhanced by technological change?  

A) capital 
B) land 
C) labour 
D) entrepreneurship

Answer 1

 capital 

Question 2

How is labour productivity measured?  

A) as total employment divided by total output 
B) as total output divided by total employment 
C) as labour force divided by total output 
D) as total output divided by labour force

Answer 2

 as total output divided by total employment 

Question 3

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) lower prices for the necessities of life 
D) improvements in the rules of the game

Answer 3

 lower prices for the necessities of life 

Question 4

Suppose Q is total real output, K is capital in use, and L is labour employed.How is the productivity of labour measured?  

A) as K/L 
B) as L/K 
C) as Q/L 
D) as Q/K

Question 5

What is the difference between human capital and physical capital?  

A) Human capital is used by humans whereas physical capital is NOT. 
B) Human capital increases labour productivity, but physical capital does NOT. 
C) Human capital is related to education whereas physical capital relates to machines. 
D) Physical capital requires investment, but human capital does NOT.?.

Question 6

What will an increase in the amount of capital per worker do to labour and capital productivities?  

A) Labour productivity will increase, but capital productivity will stay the same. 
B) Capital productivity will increase, but labour productivity will stay the same. 
C) Labour productivity will increase and capital productivity will increase. 
D) Labour productivity will decrease and capital productivity will decrease.

Question 7

How is labour productivity measured?  

A) as total output times total employment 
B) as the total output of all workers employed 
C) as total output divided by the number of units of labour employed 
D) as total labour input divided by output

Question 8

Refer to the graph in the exhibit.Consider the movement from point A to point B.What might this movement illustrate?  

A) the result of an increase in the capital stock relative to the work force 
B) the result of an increase in the labour productivity growth rate 
C) the result of an increase in labour productivity because of higher quality capital 
D) the result of an increase in capital stock because of new-found natural resources

Question 9

Suppose a nation moves upward along its per-worker production function.In terms of relating output per worker to capital per worker, how will labour productivity be affected?  

A) Labour productivity will rise. 
B) Labour productivity will fall. 
C) Labour productivity will remain the same. 
D) Labour productivity will first rise and then fall.

Question 10

What is the definition of productivity?  

A) output plus quantity of input 
B) output minus quantity of input 
C) quantity of input divided by output 
D) output divided by quantity of input

Question 11

Which of the following is an example of an increase in human capital?  

A) a new machine that humans use to produce more wealth 
B) an increase in wealth 
C) a more educated labour force 
D) finding new oil reserves

Question 12

Which of the following does NOT contribute to labour productivity growth?  

A) a steepening of the per-worker production function 
B) an increase in the amount of capital per unit of labour 
C) growth of the labour force 
D) an improvement in the quality of capital

Question 13

Which of the following would NOT increase labour productivity?  

A) technological change 
B) an increased amount of capital per unit of labour 
C) a lower unemployment rate 
D) greater job experience in the work force

Question 14

What does the phrase "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 election laws which ensure that all elections are fair 
D) the requirements placed on firms in earning a profit

Question 15

What is the definition of productivity?  

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 
D) the average input divided by average output

Question 16

What does labour productivity measure?  

A) the input per unit of labour 
B) the output per unit of labour 
C) the average input per unit of labour 
D) the units of capital per unit of labour

Question 17

For which resource is productivity most commonly measured?  

A) labour 
B) capital 
C) land 
D) entrepreneurship

Question 18

Economies grow for a variety of reasons.Which of the following is NOT a primary cause of economic growth?  

A) government regulations 
B) growth in the availability of productive resources 
C) improvements in the quality of resources 
D) technological changes

Question 19

What does long-term growth in production mean?  

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) the peaks and troughs of economic fluctuations

Question 20

What does human capital represent?  

A) the equipment that labour uses on the job to improve labour productivity 
B) a direct method of measuring output per worker 
C) the education, skills, and training embodied in workers 
D) the technology, developed by humans, that is embodied in equipment

Question 21

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) a market process that generates a fair price for all 
D) a stable political environment

Question 22

According to the law of diminishing marginal returns, what will eventually happen to the output per worker if, other things constant, the quantity of capital per worker increases?  

A) Output per worker will increase at a constant rate. 
B) Output per worker will increase at a decreasing rate. 
C) Output per worker will increase at an increasing rate. 
D) Output per worker will remain constant.

Question 23

Which of the following countries has the highest percentage of younger adults with at least a university degree (1999- 2012)?  

A) Canada 
B) Germany 
C) Italy 
D) France

Question 24

From 1962 to 2010, what was the average yearly increase in Canadian labour productivity growth?  

A) 0 percent 
B) about 2 percent 
C) about 5 percent 
D) about 10 percent

Question 25

What does a decrease in the capital-labour ratio mean?  

A) higher labour productivity, because labour does more work 
B) lower labour productivity, because labour works with relatively less capital 
C) higher labour productivity, because labour produces less capital and more of other goods 
D) lower labour productivity, because more capital is available

Question 26

According to the per-worker production function, how will the output per worker be affected as the amount of capital per worker increases?  

A) It will increase at an increasing rate. 
B) It will first increase and then decrease. 
C) It will decrease, but at an increasing rate. 
D) It will increase, but at a decreasing rate.

Question 27

According to Nobel Prize winner Simon Kuznets, which changes cause the greatest increase in output and economic growth?  

A) changes in the quantities of capital 
B) changes in the quantities of natural resources 
C) changes in the quantities of labour 
D) changes in the qualities of inputs

Question 28

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

Question 29

Suppose increases in capital per worker lead to increased output per worker, but by decreasing amounts as capital increases.What does this indicate about the per-worker production function?  

A) It is linear. 
B) It has a decreasing slope. 
C) It has an increasing slope. 
D) It has a negative slope.

Question 30

What would an improvement in the quality of capital do to the per-worker production function?  

A) It would rotate the per-worker production function upward. 
B) It would make the per-worker production function flatter. 
C) It would shift the per-worker production function downward. 
D) It would rotate the per-worker production function downward.

Question 31

Why is productivity growth important?  

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

Question 32

What is the term for an increase in the amount of capital per worker?  

A) capital deepening 
B) marginal capital 
C) per-worker production function 
D) human capital

Question 33

Which of the following did Simon Kuznets find to be the driving force behind most modern economic growth?  

A) changes in the quantity of labour 
B) changes in the quantity of capital 
C) changes in the quantities of labour and capital 
D) improvements in input quality

Question 34

Which of the following would increase labour productivity?  

A) a decrease in amount of capital per unit of labour 
B) technological improvements 
C) a decrease in the unemployment rate 
D) an increase in the number of inexperienced workers entering the labour force

Question 35

The slope of the per-worker production function diminishes as the amount of capital per worker increases.What is this a reflection of?  

A) the law of increasing marginal returns 
B) the law of diminishing marginal returns 
C) the law of constant marginal returns 
D) the law of demand

Question 36

Why do small changes in productivity growth rates have large long-term effects on economic growth over the long run?  

A) because lower productivity growth makes labour discouraged, which compounds the problem 
B) because the effects of lower productivity growth on the economy are compounded over the years, which leads to large cumulative effects 
C) because when the productivity growth rate falls, output actually falls 
D) because lower productivity growth for one resource means lower productivity growth for all resources

Question 37

According to Simon Kuznets, what is the main force behind economic growth?  

A) increases in the quantity of labour 
B) increases in the quantity of capital 
C) increases in the quality of inputs 
D) increases in government regulations

Question 38

What has happened to Canadian labour productivity since 1962?  

A) It has fallen. 
B) It has grown at about 2 percent per year. 
C) It has grown at about 8 percent per year. 
D) It has grown at about 15 percent per year.

Question 39

Suppose there is a small change in the rate of productivity growth.What would be the effects on output in the short run and long run?  

A) a small effect on output in the short run, and a small effect on output in the long run 
B) a large effect on output in the short run, and a large effect on output in the long run 
C) a small effect on output in the short run, but a large effect on output in the long run 
D) a large effect on output in the short run, but a small effect on output in the long run

Question 40

How would an increase in the quantity of capital per worker affect the per-worker production function?  

A) rotate the per-worker production function outward 
B) create movement down along the current per-worker production function 
C) shift the per-worker production function upwards 
D) create movement up along the current per-worker production function

Question 41

Which of the following is the indicator for standard of living?  

A) nominal GDP 
B) real GDP 
C) real GDP per capita 
D) productivity

Question 42

In the long run, on average, what has changing technology led to?  

A) lower employment and lower wage rates 
B) higher employment and lower wage rates 
C) higher incomes and more leisure time 
D) higher employment but no change in wage rates

Question 43

Over the past century in Canada, when was the growth of labour productivity at its highest?  

A) in the 1960s 
B) in the 1970s 
C) in the 1980s 
D) in the 1990s

Question 44

How does research and development contribute most to productivity growth?  

A) through its effect on quantity of labour available 
B) through its effect on quantity of capital goods available 
C) through its effect on quality of labour available 
D) through its effect on quality of capital goods available

Question 45

Which major industrial country had the lowest growth rate in per capita GDP between 1979 and 2009?  

A) the United Kingdom 
B) Italy 
C) Canada 
D) the United States

Question 46

Which of the following would NOT slow down productivity growth?  

A) if the composition of the work force changes such that more young people are working but fewer middle-aged people are working 
B) if the composition of the work force changes such that more women are included 
C) if the quality of education decreases 
D) if firms switch from providing services to producing goods

Question 47

Between 1962 and 2010, what was the average annual growth rate of real GDP per capita in Canada?  

A) 1 percent per year 
B) 2 percent per year 
C) 3 percent per year 
D) 4 percent per year

Question 48

From 2000 to 2007, what was the approximate annual productivity growth rate?  

A) about 1 percent per year 
B) about 2 percent per year 
C) about 3 percent per year 
D) about 4 percent per year

Question 49

When would an increase in labour productivity necessarily lead to an increase in real GDP per capita?  

A) when real GDP increases 
B) when the employment growth rate is greater than the population growth rate 
C) when the employment growth rate is less than the population growth rate 
D) when the size of the labour force remains constant

Question 50

What is the difference between basic research and applied research?  

A) Basic research does NOT promote resource productivity but applied research does. 
B) Applied research does NOT promote resource productivity but basic research does. 
C) Basic research has less immediate payoff to society than applied research typically does. 
D) Basic research occurs in science but applied research occurs in industry.

Question 51

Which major industrialized country had the highest level of per capita real output in 2013?  

A) Canada 
B) the United States 
C) Italy 
D) France

Question 52

Which of the following best explains the meaning of applied research?  

A) Applied research is designed to answer particular questions. 
B) Applied research is more open-ended than basic research. 
C) Applied research contributes less to visible output changes than basic research does. 
D) Applied research is research done by a firm to market a good.

Question 53

Which of the following best describes the effect of technological change on labour?  

A) Technological change causes unemployment in the short run and lower incomes in the long run. 
B) Technological change causes unemployment in the short run and higher incomes in the long run. 
C) Technological change causes unemployment in the long run and higher incomes in the short run. 
D) Technological change causes unemployment in the long run and lower incomes in the short run.

Question 54

Suppose the growth rate of employment is positive, but labour productivity remains the same.What will happen to real GDP?  

A) It will increase. 
B) It will decrease. 
C) It will remain constant. 
D) It will become negative.

Question 55

In order for a society to have a rising standard of living, what must happen to the growth of the output per worker?  

A) The output per worker must be growing more slowly than the labour force. 
B) The output per worker must be growing at the same rate as the population. 
C) The output per worker must be growing faster than the population. 
D) The output per worker must be growing more slowly than the population.

Question 56

Which of the following is likely to cause an increase in labour productivity?  

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

Question 57

Which of the following is NOT physical capital?  

A) a bridge 
B) a factory 
C) a communications network 
D) a high school diploma

Question 58

Suppose both total employment and total output always grew by 2 percent each year.What would be the annual growth in labour productivity in an economy over a decade?  

A) 0 percent 
B) 2 percent 
C) 10 percent 
D) 20 percent

Question 59

Which of the following is the least likely to cause an increase in economic growth?  

A) a population increase 
B) an increase in the labour force 
C) an increase in the labour force participation rate 
D) technological improvements

Question 60

Which of the following best explains the meaning of basic research?  

A) Basic research usually has a larger immediate payoff than applied research. 
B) Basic research is a search for general knowledge without a specific product or procedure in mind. 
C) Basic research is research done by a firm to market a good. 
D) Basic research is research done by a firm during production of a good.

Question 61

Which of the following is an example of basic research?  

A) Soft-drink bottlers test consumer reactions to their advertisements. 
B) A statistician calculates the odds of winning a promotional sweepstakes. 
C) A catalogue-sales company monitors its telephone operators to see how many calls each is handling per day. 
D) A chemist builds a mathematical model of the atmosphere of Jupiter.

Question 62

Which of the following best defines basic research?  

A) the search for knowledge without regard to how that knowledge will be used 
B) research that is NOT complex because it addresses elementary questions 
C) research that seeks to apply scientific discoveries to the development of specific products 
D) the search for knowledge to solve a particular problem

Question 63

According to the convergence theory, compared to advanced economies, what should be the outcome in less-developed economies?  

A) Less-developed economies should grow faster than advanced ones because of the ability of the less-advanced economies to copy new technology. 
B) The growth rates of all economies should converge because, in the long run, all resources are alike. 
C) Less developed economies should grow slower than advanced ones because they CANNOT copy new technologies. 
D) The growth rates of all economies should converge because, in the long run, basic research and applied research converge.

Question 64

In contrast to government research and development, what effect does private sector R&D have on productivity?  

A) Private sector R&D has more effect on productivity than government R&D does, because much government R&D focuses narrowly on military applications. 
B) Private sector R&D has more effect on productivity than government R&D does, because much government R&D focuses narrowly on the service sector. 
C) Private sector R&D has less effect on productivity than government R&D does, because the government is more motivated and able to hire better people and facilities. 
D) Private sector R&D has less effect on productivity than government R&D does, because private firms tend to hold back on research when results are likely to be easily copied.

Question 65

Which government policy uses taxes, subsidies, and regulation for the purpose of giving domestic industry an advantage?  

A) research and development policy 
B) economic development policy 
C) industrial policy 
D) trade policy

Question 66

Which of the following is an example of a tool of industrial policy?  

A) subsidies to industry 
B) forced savings of households 
C) allowing the market to allocate resources 
D) active monetary policy

Question 67

One economic theory states that as time passes, economic systems become much more similar, such that they have common rates of growth, common employment levels, and common rates of inflation.What is the name of this theory?  

A) divergence theory 
B) parallel path theory 
C) convergence theory 
D) noncompeting economic systems theory

Question 68

What does the term industrial policy refer to?  

A) the policy that industries develop to promote growth 
B) industry policy related to marketing strategies 
C) the illegal activity that firms sometimes engage in to reduce competition 
D) government policy aimed at enhancing competitiveness with foreign industry