Question 1

Scenario 7-1. An economy's production form takes the form Y = AF(L, K, H, N) .
-Refer to Scenario 7-1. If the production function has the constant-returns-to-scale property, then it is possible that the specific form of the production function is

Accepted Answer

A)   Y = 4L + 2K + 3H + N
B)   Y = (L + K + H + N) /4
C)   Y =2
D)   Y = 4E) B) and C)
F) B) and D)

Question 2

Which of the following is correct?

Accepted Answer

A)   Countries with the highest growth rates over the last 100 years are the ones that had the highest level of real GDP 100 years ago.
B)   Most countries have had little fluctuation around their average growth rates during the past 100 years.
C)   The ranking of countries by income changes substantially over time.
D)   Over the last 100 years, Japan had the highest real GDP growth rate, and now has the highest real GDP per person.E) A) and D)
F) B) and C)

Question 3

Haley discovers a new way to design automobile engines so that they use less gasoline. Haley's finding is an example of

Accepted Answer

A)   physical capital. If Haley's discovery leads to lower gasoline prices, it has made gasoline less scarce.
B)   physical capital. If Haley's discovery leads to lower gasoline prices, it has made gasoline scarcer.
C)   technological knowledge. If Haley's discovery leads to lower gasoline prices, it has made gasoline less scarce.
D)   technological knowledge. If Haley's discovery leads to lower gasoline prices, it has made gasoline scarcer.E) All of the above
F) A) and D)

Question 4

Natural resources

Accepted Answer

A)   are inputs provided by nature.
B)   include land, rivers, and mineral deposits.
C)   take two forms: renewable and nonrenewable.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 5

What is the difference between human capital and technology?

Accepted Answer

Technology is society's understanding of...

Question 6

The return to schooling for society is higher than the return to schooling for the individual if

Accepted Answer

A)   the concept of diminishing returns applies to education.
B)   the concept of constant returns to scale applies to education.
C)   human capital conveys positive externalities.
D)   investment in human capital involves no opportunity costs.E) All of the above
F) B) and D)

Question 7

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.E) A) and B)
F) A) and C)

Question 8

Dilbert's Incorporated produced 6,000,000 units of software in 2008. At the start of 2009 the pointy-haired boss raised employment from 10,000 total annual hours to 14,000 annual hours and production was 7,000,000 units. These number indicate that productivity

Accepted Answer

A)   fell by about 16.7%.
B)   stayed the same.
C)   rose by about 16.7%.
D)   rose by about 40%.E) C) and D)
F) A) and B)

Question 9

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

Accepted Answer

A)   Brazil
B)   Germany
C)   Canada
D)   United StatesE) A) and B)
F) None of the above

Question 10

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

Accepted Answer

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.E) A) and B)
F) None of the above

Question 11

Adam and Doug both build birdhouses. Adam works 20 hours a week and produces 12 bird houses. Doug works 30 hours a week and produces 15 bird houses. Which of the following is correct?

Accepted Answer

A)   Adam's production and productivity are higher than Doug's.
B)   Adam's production is higher than Doug's, but Doug's productivity is higher than Adam's.
C)   Doug's production is higher than Adam's, but Adam's productivity is higher than Doug's.
D)   Doug's production and productivity are higher than Adam's.E) B) and C)
F) None of the above

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Investment from abroad

Accepted Answer

A)   is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries.
B)   is viewed by economists as a way to increase growth.
C)   often requires removing restrictions that governments have imposed on foreign ownership of domestic capital.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 14

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

Accepted Answer

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.E) A) and C)
F) All of the above

Question 15

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

Accepted Answer

A)   real GDP.
B)   real GDP per person.
C)   nominal GDP.
D)   nominal GDP per person.E) A) and B)
F) A) and C)

Question 16

If a country's saving rate increases, then in the long run

Accepted Answer

A)   productivity is higher but real GDP per person is not higher.
B)   real GDP per person is higher but productivity is not higher.
C)   productivity and real GDP per person are both higher.
D)   neither productivity nor real GDP per person is higher.E) B) and C)
F) A) and D)

Question 17

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at larger levels of existing capital per worker.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)   0.5 percent per year.
B)   1.5 percent per year.
C)   2.0 percent per year.
D)   2.5 percent per year.E) None of the above
F) A) and B)

Question 19

Which of the following is indicated by the data on real income per person for various countries over the past 100 or so years?

Accepted Answer

A)   If, in a relatively poor country, real income per person had grown by 3.5 percent per year for the last 100 years, it would be a relatively rich country today.
B)   Rich countries became richer and poor countries became poorer.
C)   In the United States, real income per person today is about four times as high as it was 100 years ago.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 20

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.E) A) and B)
F) A) and C)

Exam 7: Production and Growth

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

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An increase in capital will increase real GNP per person

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The return to schooling for society is higher than the return to schooling for the individual if

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What is the difference between human capital and technology?

Correct AnswerverifiedTechnology is society's understanding of...View AnswerShow Answer

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

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Adam and Doug both build birdhouses. Adam works 20 hours a week and produces 12 bird houses. Doug works 30 hours a week and produces 15 bird houses. Which of the following is correct?

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Which of the following is indicated by the data on real income per person for various countries over the past 100 or so years?

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Scenario 7-1. An economy's production form takes the form Y = AF(L, K, H, N) . -Refer to Scenario 7-1. If the production function has the constant-returns-to-scale property, then it is possible that the specific form of the production function is

Correct AnswerverifiedShow Answer

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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Which of the following is correct?

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Dilbert's Incorporated produced 6,000,000 units of software in 2008. At the start of 2009 the pointy-haired boss raised employment from 10,000 total annual hours to 14,000 annual hours and production was 7,000,000 units. These number indicate that productivity

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at larger levels of existing capital per worker.

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If a country's saving rate increases, then in the long run

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Natural resources

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Haley discovers a new way to design automobile engines so that they use less gasoline. Haley's finding is an example of

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Investment from abroad

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

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Technology is society's understanding of...
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