Deck 25: Production and Growth

Question 1

Although growth rates across countries vary some,rankings of countries by income remain pretty much the same over time.

Answer 1

False

Question 2

In 2006,income per person in the United States was about 12 times that in India.

Answer 2

True

Question 3

Both the standard of living and the growth of real GDP per person vary widely across countries.

Answer 3

True

Question 4

Historical trends in the prices of most natural resources compared to prices of other goods indicate that natural resources have become scarcer over time.

Question 5

Real GDP per person in rich countries,such as Germany,is sometimes more than 10 times that of poor countries like Pakistan.

Question 6

International data on real GDP per person give us a sense of how standards of living vary across countries.

Question 7

Over the period 1900-2006,Brazil's rate of economic growth exceeded that of China.

Question 8

Human capital is the term economists use to refer to the knowledge and skills that workers acquire through education,training,and experience.

Question 9

Indonesians,for example,have a lower standard of living than Americans because they have a lower level of productivity.

Question 10

If a country has a higher level of productivity than another,then it also has a higher level of real GDP.

Question 11

Like physical capital,human capital is a produced factor of production.

Question 12

Over the period 1870-2006,the United States experienced an average annual growth rate of real GDP per person of about 4 percent per year.

Question 13

If they could increase their growth rates slightly,countries with low income would catch up with rich countries in about ten years.

Question 14

If Country A produces 6,000 units of goods and services using 600 hours of labor,and if Country B produces 5,000 units of goods and services using 450 units of labor,then productivity is higher in Country B than in Country A.

Question 15

A forest is an example of a nonrenewable resource.

Question 16

International data on the history of real GDP growth rates shows that over the last 100 years or so,rich countries got richer and poor countries got poorer.

Question 17

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

Question 18

In the United States real GDP per person is about $44,000,while in some poor countries real GDP per person is less than $3,000.

Question 19

If per capita real income grows by 2 percent per year,then it will double in approximately 20 years.

Question 20

Productivity can be computed as number of hours worked divided by output.

Question 21

Incentives for parents to send their children to school,such as small monthly payments to parents if their children have regular attendance,appear to increase school attendance.

Question 22

An increase in the saving rate does not permanently increase the growth rate of real GDP per person.

Question 23

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

Question 24

Economists generally believe that inward-oriented policies are more likely to foster growth than outward oriented policies.

Question 25

Studies confirm that controlling for other variables such as the percentage of GDP devoted to investment,poor countries tend to grow at a faster rate than rich countries.

Question 26

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Question 27

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

Question 28

If your company opens and operates a branch in a foreign country,you will be engaging in foreign direct investment.

Question 29

Countries with high population growth rates tend to have lower levels of educational attainment.

Question 30

Two countries with the same saving rates must have the same growth rate of real GDP per person.

Question 31

Other things the same,another unit of capital will increase output by more in a poor country than in a rich country.

Question 32

When Americans invest in Russia,the income of Russians (that is,Russian GNP)rises by more than does production in Russia (that is,Russian GDP).

Question 33

If a rich country reduced subsidies to domestic producers who produce goods for which poor countries have a comparative advantage,the standard of living in these poor countries would likely rise.

Question 34

The population growth rate tends to be higher in developed countries than in developing countries.

Question 35

If a country made it easier for people to establish and prove the ownership of their property,real GDP per person would likely rise.

Question 36

As capital per worker rises,output per worker rises.However,the increase in output per worker from an addition to capital is smaller,the larger is the existing amount of capital per worker.

Question 37

The catch-up effect refers to the idea that poor countries,despite their best efforts,are not likely ever to experience the economic growth rates of wealthier countries.

Question 38

In countries where women are discriminated against,policies that increase the likelihood of career success and educational opportunities for women are likely to decrease the birth rate.

Question 39

Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.

Question 40

Investment in human capital has opportunity costs,but investment in physical capital does not.

Question 41

The average income in a rich country,such as the United States or Japan,is more than

A) 3 times,but less than 5 times,the average income in a poor country,such as Indonesia or Nigeria.
B) 5 times,but less than 10 times,the average income in a poor country,such as Indonesia or Nigeria.
C) 10 times,but less than 20 times,the average income in a poor country,such as Indonesia or Nigeria.
D) more than 20 times the average income in a poor country,such as Indonesia or Nigeria.

Question 42

Over the past 100 years,U.S.real GDP per person has doubled about every 35 years.If,in the next 100 years,it doubles every 25 years,then a century from now U.S.real GDP per person will be

A) 4 times higher than it is now.
B) 8 times higher than it is now.
C) 12 times higher than it is now.
D) 16 times higher than it is now.

Question 43

Compare and contrast the population theories of Malthus and Kremer.

Question 44

Over the last century,U.S.real GDP per person grew at a rate of about

A) 2 percent per year,so that it is now 2 times as high as it was a century ago.
B) 2 percent per year,so that it is now 8 times as high as it was a century ago.
C) 4 percent per year,so that it is now 2 times as high as it was a century ago.
D) 4 percent per year,so that it is now 8 times as high as it was a century ago.

Question 45

In addition to investment in physical and human capital,what other public policies might a country adopt to increase productivity?

Question 46

During the past century the average growth rate of U.S.real GDP per person implies that it doubled,on average,about every

A) 100 years.
B) 70 years.
C) 35 years.
D) 25 years.

Question 47

In the United States,as measured by real GDP per person,average income is about how many times as high as average income a century ago?

A) 2
B) 4
C) 6
D) 8

Question 48

Use the data on U.S.real GDP below to compute real GDP per person for each year.Then use these numbers to compute the percentage increase in real GDP per person from 1987 to 2005.

Question 49

Some economists argue that it is possible to raise the standard of living by reducing population growth.As an economist interested in incentives rather than coercion,what kind of policy would you recommend to slow population growth?

Question 50

The catch-up effect says that countries with low income can grow faster than countries with higher income.However,in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity.Considering the determinants of productivity,list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

Question 51

Other things the same,an economy's factors of production are likely to be used more effectively if there is an economywide respect for property rights.

Question 52

Over the past century in the United States,real GDP per person has grown,on average,by about

A) 1 percent per year.
B) 2 percent per year.
C) 3 percent per year.
D) 5 percent per year.

Question 53

Why does a nation's standard of living depend on property rights?

Question 54

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.

Question 55

What is a production function? Write an equation for a typical production function,and explain what each of the terms represents.

Question 56

How do outward-oriented policies affect a nation's productivity?

Question 57

Some data that at first might seem puzzling: The share of GDP devoted to investment was similar for the United States and South Korea from 1960-1991.However,during these same years South Korea had a 6 percent growth rate of average annual income per person,while the United States had only a 2 percent growth rate.If the saving rates were the same,why were the growth rates so different?

Question 58

What is the difference between human capital and technology?

Question 59

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 labor productivity.

Question 60

Economist Michael Kremer found that world growth rates fell as population increased.

Question 61

In which of the following countries has economic growth been sufficiently strong in recent history to propel that country from being among the poorest in the world to being among the richest in the world?

A) India
B) Mexico
C) Nigeria
D) Singapore

Question 62

You are told that Country A experienced growth of real GDP per person of 4 percent per year throughout the 1900s.In view of other countries' experience,you would have to characterize Country A's growth as

A) exceptionally high.
B) moderately high.
C) moderately low.
D) exceptionally low.

Question 63

Which of the following statements is correct?

A) The level of real GDP is a good gauge of economic prosperity,and the growth of real GDP is a good gauge of economic progress.
B) The level of real GDP is a good gauge of economic progress,and the growth of real GDP is a good gauge of economic prosperity.
C) The level of real GDP is a good gauge of economic prosperity,and the level of real GDP per person is a good gauge of economic progress.
D) The level of real GDP is a good gauge of economic progress,and the level of real GDP per person is a good gauge of economic prosperity.

Question 64

In 2006,the typical Bangladeshi had about

A) 1/5 the real income of a typical American a century ago.
B) 2/3 the real income of a typical American a century ago.
C) 2 times as much real income as that of a typical American a century ago.
D) 4 times as much real income as that of a typical American a century ago.

Question 65

Which of the following statements is correct?

A) In 1870,real income per person was higher in the United Kingdom than in any other country at that time.
B) Between 1870 and 2006,India experienced significantly stronger growth of real income per person than did the United States.
C) Between 1870 and 2006,the United States experienced significantly stronger growth of real income per person than did Canada.
D) All of the above are correct.

Question 66

Average income has been stagnant for many years in

A) Argentina.
B) Singapore.
C) Nigeria.
D) All of the above are correct.

Question 67

Which of the following statements is correct? In 2006,

A) real income per person in the U.S.was about 6 times that in China.
B) real income per person in China was about 2 times that in India.
C) the typical resident of India had less real income than the typical resident of England in 1870.
D) All of the above are correct.

Question 68

Of the following countries,which grew most slowly,in terms of real GDP per person,over the last 100 years?

A) Brazil
B) Mexico
C) China
D) United States

Question 69

In some East Asian countries,average income,as measured by real GDP per person,has recently grown at an average annual rate that implies output will double about every

A) 10 years.
B) 15 years.
C) 20 years.
D) 25 years.

Question 70

As of 2006,using real GDP per person as a measure,we would classify

A) the United States and Mexico as advanced economies and Bangladesh as a middle-income country.
B) Canada as an advanced economy,Mexico as a middle-income country,and Mali as a poor country.
C) Japan and India as advanced economies and Mexico as a poor country.
D) Japan as an advanced economy,the United Kingdom as a middle-income country,and Argentina as a poor country.

Question 71

Over the period 1900-2006,which of the following countries experienced the highest average annual growth rate of real GDP per person?

A) Indonesia
B) India
C) Pakistan
D) Brazil

Question 72

Which of the following countries had the highest growth rate over the last 100 or so years?

A) Brazil
B) Germany
C) Canada
D) United States

Question 73

Countries that grew the fastest over the last 100 or so years had growth rates of real income per person of about

A) 0.5 percent per year.
B) 1.5 percent per year.
C) 2.0 percent per year.
D) 2.5 percent per year.

Question 74

If one wants to know how the material well-being of the average person has changed over time in a given country,one should look at the

A) level of real GDP.
B) growth rate of nominal GDP.
C) growth rate of real GDP.
D) growth rate of real GDP per person.

Question 75

You are told that Country A experienced growth of real GDP per person of 0.5 percent per year throughout the 1900s.In view of other countries' experience,you would have to characterize Country A's growth as

A) exceptionally high.
B) moderately high.
C) moderately low.
D) exceptionally low.

Question 76

A nation's standard of living is best measured by its

A) real GDP.
B) real GDP per person.
C) nominal GDP.
D) nominal GDP per person.

Question 77

The level of real GDP person

A) differs widely across countries,but the growth rate of real GDP per person is similar across countries.
B) is very similar across countries,but the growth rate of real GDP per person differs widely across countries.
C) and the growth rate of real GDP per person are similar across countries.
D) and the growth rate of real GDP per person vary widely across countries.

Question 78

In 2006,real GDP per person in Bangladesh was

A) about 3 times as high as it was in the U.S.in 1870.
B) about twice as high as it was in the U.S.in 1870.
C) about the same as it was in the U.S.in 1870.
D) less than it was in the U.S.in 1870.

Question 79

Over the past century in the United States,average income as measured by real GDP per person has grown about

A) 4 percent per year,which implies a doubling about every 18 years.
B) 4 percent per year,which implies a doubling about every 8 years.
C) 2 percent per year,which implies a doubling about every 35 years.
D) 2 percent per year,which implies a doubling about every 18 years.

Question 80

In recent decades,average income in some East Asian countries,such as South Korea,Singapore,and Taiwan,has risen about

A) 2 percent per year.
B) 4 percent per year.
C) 7 percent per year.
D) 10 percent per year.