Question 1

In a market economy, the real, or inflation-adjusted, price of a resource measures its

Accepted Answer

A)   contribution to revenue.
B)   relative scarcity.
C)   productivity.
D)   contribution to efficiency.E) A) and D)
F) None of the above

Question 2

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

Accepted Answer

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.E) A) and D)
F) A) and C)

Question 3

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which well­known economist from the past asserted that "the power of population is infinitely greater than the power in the earth to produce subsistence for man?"

Accepted Answer

The econom...

Question 6

In 2010, income per person in the United States was about 14 times that in India.

Accepted Answer

A) True 
 B)False

Question 7

Currently a country has real GDP per person of 500. Raising capital per worker by one would increase output per worker by 4. Other things the same, which of the following long-run combinations are consistent with the effects of this country increasing its saving rate?

Accepted Answer

A)   real GDP per person is 520 and raising capital per worker by one would increase output per worker by 3
B)   real GDP per person is 520 and raising capital per worker by one would increase output per worker by 5
C)   real GDP per person is 480 and raising capital per worker by one would increase output per worker by 3
D)   real GDP per person is 480 and raising capital per worker by one would increase output per worker by 5E) C) and D)
F) A) and B)

Question 8

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) All of the above
F) A) and D)

Question 9

Country A experienced a growth rate of real GDP per person of 2.5 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Accepted Answer

A)   exceptionally high.
B)   moderately high.
C)   moderately low.
D)   exceptionally low.E) A) and B)
F) B) and D)

Question 10

Other things the same, a country that increases its savings rate will have

Accepted Answer

A)   higher future capital and higher future real GDP per person.
B)   higher future capital but not higher future real GDP per person.
C)   higher future real GDP per person but not higher future capital.
D)   neither higher future capital nor higher future real GDP per person.E) A) and B)
F) A) and C)

Question 11

Which of the following is a good gauge of economic progress?

Accepted Answer

A)   the level of real GDP per person, but not the growth rate of real GDP per person
B)   the level of real GDP per person and the growth rate of real GDP per person
C)   the growth rate of real GDP per person, but not the level of real GDP per person
D)   neither the level nor the growth rate of real GDP per personE) None of the above
F) A) and B)

Question 12

A forest is an example of a nonrenewable resource.

Accepted Answer

A) True 
 B)False

Question 13

All else equal, which of the following would tend to cause real GDP per person to rise?

Accepted Answer

A)   a change from inward-oriented policies to outward-oriented policies
B)   an increase in investment in human capital
C)   strengthening of property rights.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 14

What are the long-run effects on productivity and income of an increase in the saving rate?

Accepted Answer

In the long run, a higher savi...

Question 15

Which of the following is an observation made by economist Michael Kremer?

Accepted Answer

A)   World growth rates increased as the population increased.
B)   Technological progress allows for increasing population because of advances in agriculture.
C)   World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will decline.
D)   All of the above are observations made by Kremer.E) A) and B)
F) B) and C)

Question 16

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

Accepted Answer

A)   100 years.
B)   70 years.
C)   35 years.
D)   25 years.E) All of the above
F) None of the above

Question 17

An increase in the saving rate permanently increases the growth rate of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same, when an economy increases its saving rate

Accepted Answer

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

Question 19

Consider the nations of China, Japan, and the United States. Over the past century, which of these nations has progressed, in an economic sense, more rapidly than the other two nations?

Accepted Answer

Japan's growth rate 2.65 perce...

Question 20

A nation's standard of living is determined by

Accepted Answer

A)   the percentage of its GDP that is accounted for by government purchases.
B)   the quantity of natural resources with which it is endowed.
C)   the productivity of its workers.
D)   factors and events that are beyond the nation's control.E) B) and D)
F) A) and B)

Exam 7: Production and Growth

What are the long-run effects on productivity and income of an increase in the saving rate?

Correct AnswerverifiedIn the long run, a higher savi...View AnswerShow Answer

In 2010, income per person in the United States was about 14 times that in India.

Correct AnswerverifiedShow Answer

Which well­known economist from the past asserted that "the power of population is infinitely greater than the power in the earth to produce subsistence for man?"

Correct AnswerverifiedThe econom...View AnswerShow Answer

An increase in the saving rate permanently increases the growth rate of real GDP per person.

Correct AnswerverifiedShow Answer

In a market economy, the real, or inflation-adjusted, price of a resource measures its

Correct AnswerverifiedShow Answer

Country A experienced a growth rate of real GDP per person of 2.5 percent per year throughout the 1900's. In view of other countries' experiences during this time country A's growth was

Correct AnswerverifiedShow Answer

A nation's standard of living is determined by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an observation made by economist Michael Kremer?

Correct AnswerverifiedShow Answer

Other things the same, when an economy increases its saving rate

Correct AnswerverifiedShow Answer

Other things the same, a country that increases its savings rate will have

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consider the nations of China, Japan, and the United States. Over the past century, which of these nations has progressed, in an economic sense, more rapidly than the other two nations?

Correct AnswerverifiedJapan's growth rate 2.65 perce...View AnswerShow Answer

All else equal, which of the following would tend to cause real GDP per person to rise?

Correct AnswerverifiedShow Answer

Which of the following is a good gauge of economic progress?

Correct AnswerverifiedShow Answer

Currently a country has real GDP per person of 500. Raising capital per worker by one would increase output per worker by 4. Other things the same, which of the following long-run combinations are consistent with the effects of this country increasing its saving rate?

Correct AnswerverifiedShow Answer

Other things the same, an increase in population growth

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A forest is an example of a nonrenewable resource.

Correct AnswerverifiedShow Answer

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In the long run, a higher savi...
View Answer

Correct Answer
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Which wellknown economist from the past asserted that "the power of population is infinitely greater than the power in the earth to produce subsistence for man?"

Correct Answer
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The econom...
View Answer

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Japan's growth rate 2.65 perce...
View Answer

Correct Answer
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