Question 1

Accumulating capital

Accepted Answer

A) requires that society sacrifice consumption goods in the present. 
B) allows society to consume more in the present. 
C) decreases saving rates. 
D) involves no tradeoffs.

Question 2

Economist Robert Fogel focused on which of the following factors as one determinant of long-run economic growth?

Accepted Answer

A) education 
B) research and development 
C) nutrition 
D) trade restrictions

Question 3

"When workers already have a large quantity of capital to use in producing goods and services,giving them an additional unit of capital increases their productivity only slightly." This statement

Accepted Answer

A) represents an unconventional view of the production process. 
B) is an assertion that capital is subject to increasing returns. 
C) is made under the assumption that the quantities of human capital,natural resources,and technology are being held constant. 
D) All of the above are correct.

Question 4

Which of the following is correct?

Accepted Answer

A) There is no debate about the effects of higher population growth on economic growth. 
B) Natural resources clearly place limits on growth;there is simply no way to reduce either the amount or type of natural resources needed to produce goods. 
C) How much an increase in capital increases a country's output is independent of that country's current level of capital. 
D) Economists argue that outward rather than inward policies are likely to promote economic growth.

Question 5

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other.Finally,suppose that the saving rate in both countries increases from 4 percent to 7 percent.Over the next ten years we would expect that

Accepted Answer

A) the growth rate will not change in either country. 
B) the country that started with less capital per worker will grow faster. 
C) the country that started with more capital per worker will grow faster. 
D) both countries will grow and at the same higher rate.

Question 6

Because of its effect on the amount of capital per worker,in the short term an increase in the working population is likely to

Accepted Answer

A) raise productivity.Other things the same,this increase will be larger in a poor country. 
B) raise productivity.Other things the same,this increase will be larger in a rich country. 
C) reduce productivity.Other things the same,this decrease will be larger in a poor country. 
D) reduce productivity.Other things the same,this decrease will be larger in a rich country.

Question 7

In the U.S. ,each additional year of schooling has historically raised a person's wage on average by about

Accepted Answer

A) 2 percent. 
B) 5 percent. 
C) 10 percent. 
D) 15 percent.

Question 8

An increase in capital will increase real GNP per person

Accepted Answer

A) more in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. 
B) more in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment. 
C) less in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is from domestic rather than foreign investment. 
D) less in a poor country than a rich country.The increase in real GNP per person will be larger if the addition to capital is foreign rather than from domestic investment.

Question 9

Which of the following countries achieved higher economic growth,in part by mandating a reduction in population growth?

Accepted Answer

A) Great Britain 
B) China 
C) Australia 
D) France

Question 10

Suppose a country increases trade restrictions.This country would be pursing an

Accepted Answer

A) inward policy,which most economists believe has beneficial effects on the economy. 
B) inward policy,which most economists believe has adverse effects on the economy. 
C) outward policy,which most economists believe has beneficial effects on the economy. 
D) outward policy,which most economists believe has adverse effects on the economy.

Question 11

According to studies using international data,an increase in the saving rate

Accepted Answer

A) does not increase the growth rate of output. 
B) increases the growth rate of output for a few years. 
C) increases the growth rate of output for about a decade. 
D) increases the growth rate of output for several decades.

Question 12

The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries.She asks you to pick the one you think most likely explains her country's low growth.Which of the following contributes to low growth?

Accepted Answer

A) poorly enforced property rights 
B) outward-oriented trade policies 
C) policies that permit foreign investment 
D) All of the above are correct.

Question 13

Country A and country B are the same except country A currently has more capital.Assuming diminishing returns,if both countries increase their capital by 100 units and other factors that determine output are unchanged,then

Accepted Answer

A) output in country A increases by more than in country B. 
B) output in country A increases by the same amount as in country B. 
C) output in country A increases by less than in country B. 
D) None of the above is necessarily correct.

Question 14

Investment in

Accepted Answer

A) physical capital,unlike investment in human capital,has an opportunity cost. 
B) physical capital,like investment in human capital,has an opportunity cost. 
C) human capital is particularly attractive because it involves no externalities. 
D) human capital has been shown to be relatively unimportant,relative to investment in physical capital,for a country's long-run economic success.

Question 15

Other things the same,an increase in population growth

Accepted Answer

A) increases capital per worker.Further,there is some evidence that a higher population growth rate may increase the pace of technological progress. 
B) increases capital per worker.However,there is some evidence that a higher population growth rate may decrease the pace of technological progress. 
C) decreases capital per worker.Further,there is some evidence that a higher population growth rate may decrease the pace of technological progress. 
D) decreases capital per worker.However,there is some evidence that a higher population growth rate may increase the pace of technological progress.

Question 16

Real GDP per person is $10,000 in Country A,$20,000 in Country B,and $30,000 in Country C.The saving rate increases by the same rate in all three countries.Other things equal,we would expect that

Accepted Answer

A) all three countries will grow at the same rate. 
B) Country A will grow the fastest. 
C) Country B will grow the fastest. 
D) Country C will grow the fastest.

Question 17

If a country were to increase its saving rate,then in the long run it would also increase its

Accepted Answer

A) level of income. 
B) growth rate of income. 
C) growth rate of productivity. 
D) All of the above are correct.

Question 18

Some poor countries appear to be falling behind rather than catching up with rich countries.Which of the following could explain the failure of a poor country to catch up?

Accepted Answer

A) The poor country has outward-oriented trade policies. 
B) The poor country allows foreign direct investment. 
C) The poor country has poorly developed property rights. 
D) All of the above are correct.

Question 19

According to research by Robert Fogel,people in Britain grew taller because of

Accepted Answer

A) genetics.However this increase in height had no effect on productivity. 
B) genetics.This increase in height is associated with higher productivity. 
C) higher caloric intake.However,this increase in height had no effect on productivity. 
D) higher caloric intake.This increase in height is associated with higher productivity.

Question 20

If a country increases its saving rate,which of the following permanently grow at a higher rate?

Accepted Answer

A) productivity and real GDP per person 
B) productivity but not real GDP per person 
C) real GDP per person but not productivity 
D) neither real GDP per person nor productivity

Exam 12: Production and Growth: Economic Growth and Public Policy