Macroeconomics Q30 CH25

CH25 Productivity is the amount of goods and services a an economy produces It is not linked to a nation’s economic policies b an economy produces It is linked to a nation’s economic policies c produced for each hour of a worker’s time It is not linked to a nation’s economic policies d produced for each hour of a worker’s time It is linked to a nation’s economic policies Which of the following can be measured by the level of real GDP per person? a productivity and the standard of living b productivity but not the standard of living c the standard of living but not productivity d neither the standard of living nor productivity If there are constant returns to scale, the production function can be written as a xY = 2xAF(L, K, H, N) b Y/L = A F(xL, xK, xH, xN) c Y/L = A F( 1, K/L, H/L, N/L) d L = AF(Y, K, H, N) In order for the standard of living within a country to be enhanced over time, which of the following is essential? a The role of the country’s government in the economy must become larger b The population of the country must increase c More domestic natural resources must be discovered and used d The level of productivity must increase Table 25-1 Athens and Troy both produce only ribs and baked potatoes Athens Troy Quantities Ribs 200,000 300,000 Baked Potatoes 400,000 250,000 Base year prices Ribs $10 $10 Baked Potatoes $4 $4 Population and Employment Population 6,000 8,000 Total hours of employment 40,000 60,000 Refer to Table 25-1 Which of the following is correct? a Both real GDP and real GDP per person are higher in Athens than Troy b Real GDP is higher in Athens while real GDP per person is higher in Troy c Real GDP is higher in Troy while real GDP per person is higher in Athens d Both real GDP and real GDP per person are higher in Troy than Athens 6 Refer to Table 25-1 Which of the following is correct? a Both productivity and the standard of living are higher in Athens than Troy b Productivity is higher in Athens while the standard of living is higher in Troy c Productivity is higher in Troy while the standard of living is higher in Athens d Both productivity and the standard of living are higher in Troy than Athens Which of the following is an example of physical capital? a the available knowledge on how to make semiconductors b a taxi-cab driver’s knowledge of the fastest routes to take c bulldozers, backhoes and other construction equipment d All of the above are correct Ralph is a plumber Which of the following are included in his human capital? a the knowledge he learned on the job, and the tools he uses b the knowledge he learned on the job, but not the tools he uses c the tools he uses, but not the knowledge he learned on the job d neither the knowledge he learned on the job nor the tools he uses Which of the following statements is correct? a By definition, all natural resources are nonrenewable b Market prices give us reason to believe that natural resources are a limit to economic growth c An economy must be blessed with ample quantities of natural resources if it is to be a highly productive economy d Differences in natural resources can explain some of the differences in standards of living around the world 10 Technological knowledge refers to a human capital b available information on how to produce things c resources expended transmitting society's understanding to the labor force d All of the above are technological knowledge 11 Consider three imaginary countries In Aziria, saving amounts to $3,000 and consumption amounts to $7,000; in Graniva, saving amounts to $2,000 and consumption amounts to $8,000; and in Tanistan, saving amounts to $4,500 and consumption amounts to $10,500 The saving rate is a higher in Aziria than in Tanistan, and it is higher in Tanistan than in Graniva b higher in Graniva than in Tanistan, and it is higher in Tanistan than in Aziria c higher in Tanistan than in Graniva, and it is the same in Graniva and Aziria d higher in Aziria than in Graniva, and it is the same in Aziria and Tanistan 12 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? a The poor country has a health epidemic such as the Zika virus b The poor country imposes heavy tariffs to protect infant industries c The poor country has many corrupt officials d All of the above 13.Other things the same, when an economy increases its saving rate a consumption and production rise now b consumption rises now and production rises later c consumption falls now and production rises later d consumption falls now and production falls later 14 Suppose an economy experiences an increase in its saving rate The higher saving rate leads to a higher growth rate of productivity a in the short run, but not in the long run b in the long run, but not in the short run c in both the short run and the long run d in neither the short run nor the long run 15 “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 a represents the traditional view of the production process b is an assertion that capital is subject to diminishing 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 16 The president of Suldinia, a developing country, proposes that his country needs to help domestic firms by reducing trade restrictions a These are outward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia b These are outward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia c These are inward-oriented policies and most economists believe they would have beneficial effects on growth in Suldinia d These are inward-oriented policies and most economists believe they would have adverse effects on growth in Suldinia 17 Suppose that over the last year the price of copper increased from $1.70 a pound to $1.79 per pound Over the same time a measure of the overall price level increased from 300 to 309 The price of copper increased by a less than inflation, and this means it became relatively less scarce b less than inflation, and this means it became scarcer c more than inflation, and this means it became scarcer d more than inflation, but this doesn’t necessarily mean that it become scarcer 18 Other things the same, an increase in population growth 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 19 In 2011, Modern Electronics, Inc produced 60,000 calculators, employing 80 workers, each of whom worked hours per day In 2012, the same firm produced 76,500 calculators, employing 85 workers, each of whom worked 10 hours per day Productivity at Modern Electronics a decreased by 4% b remained constant c increased by 8.33% d increased by 27.50% 20 Which of the following is an example of the "brain drain?" a A country's most highly educated workers emigrate to rich countries b A country has such a poor educational system that human capital falls over time c The population of a country grows so fast that the educational system can't keep up d A country steals patented technology from another country 21 If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same, a its output would stay the same and so would its productivity b its output and productivity would increase, but less than double c its output and productivity would increase by more than double d None of the above is correct 22 If your firm’s production function has constant returns to scale, then if you double all your inputs, your firm's output will a double and productivity will rise b double but productivity will not change c more than double and productivity will rise d more then double but productivity will not change 23 The logic behind the catch-up effect is that a workers in countries with low incomes will work more hours than workers in countries with high incomes b the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital c new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital d None of the above is correct 24.Assuming diminishing returns, a the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, rich countries should grow faster than poor ones b the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, rich countries should grow faster than poor ones c the increase in output growth from an increase in the saving rate rises over time, and that, other things the same, poor countries should grow faster than rich ones d the increase in output growth from an increase in the saving rate falls over time, and that, other things the same, poor countries should grow faster than rich ones 25 Which of the following statements is correct? a In an economy-wide sense, property rights are an important prerequisite for the price system to work b Property rights give people the ability to exercise authority over the resources they own c Based on the available evidence, the existence of well-established and well-enforced property rights appears to be associated with an enhanced standard of living d All of the above are correct 26 If WarmWear, a U.S.manufacturer of winter clothing, opens a new factory in Austria, then a Austrian GNP increases by more than Austrian GDP, because GDP includes income earned by foreigners working in Austria b Austrian GNP increases by more than Austrian GDP, because GDP excludes income earned by foreigners working in Austria c Austrian GNP increases by less than Austrian GDP, because GDP includes income earned by foreigners working in Austria d Austrian GNP increases by less than Austrian GDP, because GDP excludes income earned by foreigners working in Austria 27.If a Japanese company opens a new factory in South Korea, it makes a foreign direct investment The factory will make a bigger impact on South Korea’s GDP than on its GNP b foreign direct investment The factory will make a bigger impact on South Korea’s GNP than on its GDP c foreign portfolio investment The factory will make a bigger impact on South Korea’s GDP than on its GNP d foreign portfolio investment The factory will make a bigger impact on South Korea’s GNP than on its GDP 28 Which of the following public policies would be least likely to result in more rapid economic growth for a poor or developing country? a policies designed to promote economic development in coastal areas b policies designed to foster strict enforcement of property rights c policies designed to foster free trade d inward-oriented policies 29.Which of the following is an example of the "brain drain?" a A country's most highly educated workers emigrate to rich countries b A country has such a poor educational system that human capital falls over time c The population of a country grows so fast that the educational system can't keep up d A country steals patented technology from another country 30 An increase in capital will increase real GDP per person a more in a poor country than a rich country The increase in real GDP 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 GDP per person will be the same whether the addition to capital is from domestic or foreign investment c less in a poor country than a rich country The increase in real GDP 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 GDP per person will be the same whether the addition to capital is from domestic or foreign investment