Deck 17: Long-Run Growth

Question 1

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2
Refer to Figure 17.2.The highest unemployment rate occurs when the economy is at Point

A)A.
B)B.
C)C.
D)D.

Answer 1

A

Question 2

The strict definition of economic growth that serves to increase living standards is

A)an increase in real GDP per capita.
B)an increase in nominal GDP per capita.
C)an increase in capital accumulation per capita.
D)an increase in investment per capita.

Answer 2

A

Question 3

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
Refer to Figure 17.1.Economic growth is represented by

A)a movement from point D to point C.
B)a movement from point A to point C.
C)a movement from point D to point A.
D)all of the above

Answer 3

D

Question 4

Economic growth allows a society to consume

A)more goods per person.
B)more than it should.
C)more than is sustainable.
D)exactly what it needs.

Question 5

Output growth is defined as the growth rate of output

A)per person in the economy.
B)per worker in the economy.
C)for capitalist economies.
D)of the entire economy.

Question 6

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
Refer to Figure 17.1.Which of the following CANNOT cause a movement from Point A to Point C?

A)an expansionary monetary policy
B)technological progress
C)an increase in capital stock
D)an increase in the productivity of workers

Question 7

Labor productivity growth is the growth rate of output

A)per person in the economy.
B)per worker in the economy.
C)for labor-intensive economies.
D)for the entire economy.

Question 8

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
Refer to Figure 17.1.An economic decline is represented by a movement from

A)point A to point B.
B)point D to point A.
C)point C to point A.
D)point B to point A.

Question 9

Per-capita output growth is the growth rate of output

A)per person in the economy.
B)per worker in the economy.
C)for capitalist economies.
D)of the entire economy.

Question 10

Which of the following is a source of economic growth?

A)more resources
B)active economic policies
C)technology
D)both A and C

Question 11

In Vidalia,real GDP increased by 6% and the population increased by 9% in 2012.In 2012,Vidalia experienced

A)economic growth,but not an increase in living standards.
B)economic growth and an increase in living standards.
C)no economic growth,but an increase in living standards.
D)an economic decline.

Question 12

In Polynomia,real GDP increased by 8% and the population increased by 3% in 2012.In 2012,Polynomia experienced

A)economic growth,but not an increase in living standards.
B)economic growth and an increase in living standards.
C)no economic growth,but an increase in living standards.
D)an economic decline.

Question 13

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
Refer to Figure 17.1.Economic growth is represented by

A)a movement from Point A to Point B along ppf1.
B)a movement from Point B to Point C.
C)a movement from Point B to Point A.
D)a shift in the production possibilities frontier from ppf2 to ppf1.

Question 14

Economic growth allows a society to consume

A)more goods per person.
B)a higher quality of goods.
C)a wider variety of goods.
D)all of the above

Question 15

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
Refer to Figure 17.1.Which of the following causes the ppf to shift from ppf2 to ppf3?

A)technological progress
B)a decrease in capital stock
C)a decrease in the labor force
D)an increase in the population

Question 16

For economic growth to increase living standards,

A)society must discover ways of using available resources more efficiently.
B)the choices available to consumers must increase.
C)the rate of growth must exceed the rate of population increase.
D)society must acquire more resources.

Question 17

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
Refer to Figure 17.1.Which of the following causes the ppf to shift from ppf2 to ppf1?

A)technological progress
B)a decrease in capital stock
C)an increase in the labor force
D)an increase in per capita income

Question 18

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2
Refer to Figure 17.2.An economy that chooses to be at Point ________ can achieve higher economic growth rate in the future.

A)A
B)B
C)C
D)D

Question 19

Convergence theory suggests that gaps in ________ tend to close over time.

A)national income
B)population levels
C)unemployment rates
D)inflation rates

Question 20

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2
Refer to Figure 17.2.Point ________ can not be produced by the people of this society.

A)A
B)B
C)C
D)D

Question 21

The aggregate production function is Y = 3KL.If there are 30 units of capital and 40 units of labor,aggregate output is

A)3,600 units.
B)2,500 units.
C)2,100 units.
D)400 units.

Question 22

If a society acquires more human capital,per capita production will fall unless it gets more physical capital too.

Question 23

If a society gets more capital,its production possibility curve increases.

Question 24

The production possibility frontier shows the maximum output a nation can produce with available resources.

Question 25

The mathematical representation of the technological relationship between inputs and national output is known as the

A)aggregate supply function.
B)production possibilities frontier.
C)aggregate production function.
D)input-output table.

Question 26

The aggregate production function is Y = 5K0.5L0.5.If there are 49 units of capital and 16 units of labor,aggregate output is

A)60 units
B)70 units.
C)140 units.
D)325 units.

Question 27

If the capital stock remains fixed while the supply of labor increases,it is likely that

A)the productivity of labor will rise.
B)the productivity of labor will fall.
C)the productivity of labor will not change.
D)output per capita will rise.

Question 28

Human capital increases with on-the-job training.

Question 29

Technological progress shifts the production possibility curve away from the origin.

Question 30

Labor productivity growth is the growth rate of output per person in the economy.

Question 31

Thomas Malthus and David Ricardo believed that to increase agricultural output,people would be forced to

A)farm land more intensively,in which case the returns to successive increases in population would diminish.
B)farm land less intensively,in which case the returns to successive increases in population would increase.
C)farm land more intensively,in which case the returns to successive increases in population would increase.
D)farm land less intensively,in which case the returns to successive increases in population would diminish.

Question 32

With a fixed amount of capital,300 workers produce 9,000 cars.The average labor productivity is

A)0.03.
B)3.
C)27.
D)30.

Question 33

Diminishing returns to a factor implies that with capital fixed,

A)as labor increases output always increases.
B)as output increases,labor increases.
C)as labor increases,output decreases.
D)as labor increases,labor productivity eventually decreases.

Question 34

From 1993-2012,China had an average growth rate per year that was more than four times as high as that in the United States.

Question 35

Of the following countries,which one had the highest average growth rate per year from 1993-2012?

A)China
B)the United States
C)India
D)Japan

Question 36

Convergence theory suggests that when less developed countries begin to develop,they typically have higher growth rates as they catch up with more developed nations.

Question 37

The aggregate production function is Y = 2K0.5L0.5.If there are 225 units of capital and 196 units of labor,aggregate output is

A)420 units.
B)508 units.
C)700 units.
D)842 units.

Question 38

Average productivity of labor is measured as the additional output produced by an additional worker.

Question 39

Output growth is the growth rate of output of the entire economy.

Question 40

The aggregate production function is the mathematical representation of the technological relationship between

A)national output and fiscal policy.
B)national output and inputs.
C)fiscal and monetary policy changes and national output.
D)the rate of capital accumulation and national output.

Question 41

If labor productivity in a steel mine is 3.5 tons per worker,then 400 steel workers with a fixed amount of capital produce

A)87.5 tons.
B)1,400 tons.
C)1,750 tons.
D)4,000 tons.

Question 42

Thinking up a new idea is an example of

A)an invention.
B)an innovation.
C)human capital accumulation.
D)social overhead capital.

Question 43

An increase in human capital

A)increases the productivity of labor.
B)decreases the productivity of labor.
C)increases the productivity of labor only if there is a corresponding technological change.
D)increases the capital-labor ratio.

Question 44

Which of the following is NOT an investment in human capital?

A)local governments begin providing free hepatitis vaccinations to any resident who wants one
B)the Precision Tool Company teaches all its workers how to repair all the machines in the factory
C)older workers return to school to update their skills
D)the Ferris Advertising Agency replaces its secretaries' typewriters with personal computers

Question 45

In all economies experiencing modern economic growth,

A)labor expands at a more rapid pace than capital.
B)capital and labor expand at a constant rate.
C)capital expands at a more rapid pace than labor.
D)capital expands,but labor remains constant.

Question 46

An increase in capital stock

A)enhances labor productivity.
B)provides valuable services directly.
C)causes economic growth.
D)all of the above

Question 47

Technical change which results in a change in the production process is known as

A)disembodied technical change.
B)embodied technical change.
C)per-capita technical change.
D)technical catch-up.

Question 48

Suppose that growth in output that can be attributed to growth in labor and capital is 6%.If output grows at a rate of 6%,it must be the case that

A)the economy is not experiencing technological progress.
B)growth in labor force exceeds growth in capital.
C)growth in capital exceeds growth in labor.
D)the economy is experiencing technological progress.

Question 49

Embodied technical change is one reason why

A)human capital is more valued in an economy than physical capital.
B)the quality of capital had decreased.
C)labor productivity has increased over time.
D)increases in population decrease labor productivity.

Question 50

Suppose that growth in output that can be attributed to growth in labor and capital is 2%.If output grows at a rate of 5%,it must be the case that

A)growth in labor exceeds growth in capital.
B)growth in capital exceeds growth in labor.
C)the economy is experiencing technological progress.
D)the economy is not spending enough on acquiring human capital.

Question 51

A firm used to produce a product using three units of labor and one unit of capital.The firm discovers that it can produce more output at a lower cost if it combines two units of labor with two units of capital.This is an example of

A)an innovation.
B)an invention.
C)increasing returns.
D)economic growth.

Question 52

An important source of increasing productivity is

A)an increase in the ratio of capital to labor.
B)an increase in the ratio of labor to capital.
C)a decrease in the ratio of capital to labor.
D)faster growth in the labor force than in the capital stock.

Question 53

Which of the following is NOT an investment in human capital?

A)an individual decides to enroll in a vocational training program
B)a firm engages in on-the-job training
C)the government expands its programs to improve health care
D)the government increases the level of unemployment benefits

Question 54

An increase in the quality of capital is a result of

A)population growth.
B)disembodied technical change.
C)embodied technical change.
D)an increase in the labor force.

Question 55

A company uses 200 workers and 50 units of capital to produce 1,000 units of output.Its average labor productivity is

A)4.
B)5.
C)20.
D)25.

Question 56

An increase in the capital stock

A)can increase output,even if it is not accompanied by an increase in the labor force.
B)provides valuable services directly,but not indirectly.
C)can increase output,but only if it is accompanied by an increase in the labor force.
D)cannot increase output,even if it is accompanied by an increase in the labor force.

Question 57

Labor productivity increases when

A)labor and output increase proportionately.
B)capital increases and labor remains constant.
C)output decreases and labor increases.
D)capital/labor ratio decreases.

Question 58

A company uses 100 workers and 30 units of capital to produce 500 units of output.If this company increases its capital to 50 units and,as a result,its output increases by 300 units,the productivity of labor ________ to ________ units per worker.

A)increases;8
B)increases;1
C)increases;3
D)decreases;4

Question 59

Which of the following could result in negative disembodied technical change?

A)environmental regulations
B)health regulations
C)safety regulations
D)all of the above

Question 60

A researcher discovered the adhesive that allows a piece of paper to be attached to a surface temporarily and then removed and reattached many times.It was many years before a use was found for this adhesive.Which of the following is TRUE?

A)The discovery represents an invention and the finding of a use for the adhesive represents an innovation.
B)The discovery represents an innovation and the finding of a use for the adhesive represents an invention.
C)This is an example of an invention only.
D)This is an example of an innovation only.

Question 61

A decrease in capital/labor ratio enhances economic growth.

Question 62

Higher energy prices in the 1970s reduced labor productivity because

A)energy and capital are substitute inputs.
B)the rise in energy prices tended to push firms away from labor-intensive measures and toward more capital-intensive techniques.
C)a great deal of investment went into transforming the existing capital stock into more energy-efficient forms.
D)labor productivity has been lower when used with more capital-intensive techniques.

Question 63

Which of the following caused the productivity problem of the 1970s in the U.S.?

A)low saving rate
B)increased governmental regulations
C)low spending on research and development
D)all of the above

Question 64

If an economy experiences growth in productivity without growth in its labor force,it will grow.

Question 65

Technical change that results in a change in the production process is known as disembodied technical change.

Question 66

Which of the following was NOT one of the likely causes of the productivity problem in the 1970s?

A)a reduction in government regulation
B)reduced research and development spending
C)a slowdown in investment spending
D)low saving rates

Question 67

Related to the Economics in Practice on p.640: The emigration of Jewish scientists from Germany to the United States in the late 1930s and early 1940s is an example of a(n)________ in the United States.

A)increase in human capital
B)increase in physical capital
C)decrease in embodied technical change
D)decrease in disembodied technical change

Question 68

An increase in human capital will decrease output.

Question 69

Which of the following was one of the likely causes of the productivity problem of the 1970s?

A)rapid growth in investment spending
B)a reduction in government regulation
C)low saving rates
D)an increase in research and development spending

Question 70

Labor productivity can increase even if the labor force increases.

Question 71

Which of the following was NOT one of the likely causes of the productivity problem in the 1970s?

A)the increase in energy prices in the 1970s
B)high saving rates
C)an increase in government regulation
D)a slowdown in investment spending

Question 72

Foreign direct investment is any investment made in a country by residents outside that country.

Question 73

An invention is an advance in knowledge.

Question 74

Any investment made in a country by residents outside that country is

A)foreign direct investment.
B)foreign exchange.
C)gross private domestic investment.
D)net exports.

Question 75

Economists agree that the cause of the slow economic growth during the 1970s was the tight monetary policy.

Question 76

Related to the Economics in Practice on p.636: According to a study cited in the Economics in Practice,if a country is relatively far from the technological frontier of the rest of the world,its best strategy would be to

A)adopt other countries' policies until it reaches the frontier of the rest of the world.
B)support its own innovative efforts until it reaches the frontier of the rest of the world.
C)first adopt other countries' policies,and as the country approaches the frontier,shift to supporting its own innovative efforts.
D)first support its own innovative efforts,and as the country approaches the frontier,shift to adopting other countries' policies.

Question 77

The 1970s was a period of high productivity growth in the United States.

Question 78

Technical change that results in an improvement in the quality of capital is known as disembodied technical change.

Question 79

A key problem facing Sub-Saharan Africa in terms of human capital is health.

Question 80

One reason that labor productivity has increased is because of disembodied technical change.