Question 1

To increase future living standards by pursuing higher current rates of investment spending, an economy must:

Accepted Answer

A)   allow higher rates of current consumption.
B)   reduce current rates of consumption spending.
C)   reduce the current capital stock.
D)   decrease the amount of future research and development spending.E) A) and B)
F) A) and C)

Question 2

GDP excludes important factors that affect people's well-being, such as the value of:

Accepted Answer

A)   leisure time.
B)   government purchases of goods and services.
C)   services purchased by households.
D)   goods produced domestically but sold to foreigners.E) C) and D)
F) B) and D)

Question 3

______ start new economic enterprises, while ______ run the enterprises on a day-to-day basis.

Accepted Answer

A)   Entrepreneurs; managers
B)   Mangers; entrepreneurs
C)   Mangers; laborers
D)   Entrepreneurs; laborersE) None of the above
F) A) and B)

Question 4

In Macroland, 500,000 of the 1 million people in the country are employed. Average labor productivity in Macroland is $20,000 per worker. Real GDP per person in Macroland totals:

Accepted Answer

A)   $1,000.
B)   $10,000.
C)   $15,000.
D)   $40,000.E) B) and D)
F) B) and C)

Question 5

Arguments that economic growth must be constrained by environmental problems and limits of natural resources ignore the fact that economic growth can:

Accepted Answer

A)   be measured in both nominal and real terms.
B)   increase both average labor productivity and the share of population employed.
C)   take the form of improved quality as well as increased quantity.
D)   occur with only benefits and no economic costs.E) C) and D)
F) All of the above

Question 6

When a firm builds a new factory, this is an example of an investment in:

Accepted Answer

A)   human capital.
B)   physical capital.
C)   the market.
D)   research and development.E) A) and B)
F) All of the above

Question 7

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

Accepted Answer

A)   crime, pollution, and economic inequality.
B)   better education, health and life expectancy.
C)   poverty, depletion of nonrenewable resources, and congestion.
D)   unemployment, availability of goods and services, and better education.E) None of the above
F) All of the above

Question 8

Average labor productivity times the proportion of the population employed equals:

Accepted Answer

A)   real GDP.
B)   real GDP per person.
C)   real GDP per worker.
D)   output per worker.E) A) and B)
F) None of the above

Question 9

Governments contribute to increased average labor productivity in each of the following ways except by:

Accepted Answer

A)   establishing well-defined property rights.
B)   maintaining political stability.
C)   imposing taxes on wages.
D)   allowing the free and open exchange of ideas.E) A) and C)
F) A) and B)

Question 10

Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved ______.

Accepted Answer

A)   availability of land and natural resources
B)   physical capital
C)   imports
D)   entrepreneurshipE) B) and C)
F) A) and B)

Question 11

Which of the following is an example of an investment in human capital?

Accepted Answer

A)   A firm replaces manually controlled production with a computer controlled procedure.
B)   A firm pays for workers to take college classes.
C)   A chemical firm supports research to develop new chemicals.
D)   A firm purchases new equipment for a manufacturing process.E) C) and D)
F) A) and C)

Question 12

GDP would be a better measure of economic well-being if it included:

Accepted Answer

A)   the costs of education.
B)   the total value of intermediate goods.
C)   the market value of final goods.
D)   the value of leisure.E) C) and D)
F) A) and D)

Question 13

An example of a government policy to enhance technological progress is:

Accepted Answer

A)   the construction of an interstate highway system.
B)   government support for basic research.
C)   maintaining a well-functioning legal system.
D)   the provision of publicly-funded education.E) A) and B)
F) A) and C)

Question 14

Over the period from 1950 to 2010, which country experienced the fastest average annual growth rate of real GDP per person?

Accepted Answer

A)   United States
B)   Japan
C)   China
D)   CanadaE) B) and D)
F) B) and C)

Question 15

Human capital is:

Accepted Answer

A)   the factories and machinery used by humans in the production process.
B)   the talents, training, and education of workers.
C)   the financial resources available to humans for investment.
D)   the factories and machinery made by workers.E) All of the above
F) C) and D)

Question 16

The productivity slowdown of the 1970's occurred:

Accepted Answer

A)   only in the U.S.
B)   only in the U.S. and the United Kingdom.
C)   only in the U.S, the United Kingdom, and Japan.
D)   around the world.E) A) and B)
F) A) and C)

Question 17

The establishment of well-defined property rights increases:

Accepted Answer

A)   average labor productivity.
B)   the amount of pollution.
C)   the unemployment rate.
D)   the labor force participation rate.E) A) and B)
F) C) and D)

Question 18

In symbolic terms where Y equals real GDP, POP equals total population, and N equals the number of employed workers, Y/POP must equal:

Accepted Answer

A)   Y/N × N/POP.
B)   N/Y × POP/N.
C)   Y/POP × N/POP
D)   N/Y × N/POPE) B) and C)
F) A) and B)

Question 19

Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP.

Accepted Answer

A)   higher; higher
B)   higher; lower
C)   lower; higher
D)   lower; lowerE) B) and D)
F) B) and C)

Question 20

If an economy maintains a small rate of growth for a long period of time, then the size of the economy:

Accepted Answer

A)   can only increase by a small amount.
B)   can increase by a large amount.
C)   can never double.
D)   will stay nearly constant.E) B) and C)
F) A) and D)

Exam 6: Economic Growth, Productivity, and Living Standards

Over the period from 1950 to 2010, which country experienced the fastest average annual growth rate of real GDP per person?

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To increase future living standards by pursuing higher current rates of investment spending, an economy must:

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Arguments that economic growth must be constrained by environmental problems and limits of natural resources ignore the fact that economic growth can:

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GDP would be a better measure of economic well-being if it included:

Correct AnswerverifiedShow Answer

______ start new economic enterprises, while ______ run the enterprises on a day-to-day basis.

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In Macroland, 500,000 of the 1 million people in the country are employed. Average labor productivity in Macroland is $20,000 per worker. Real GDP per person in Macroland totals:

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The productivity slowdown of the 1970's occurred:

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GDP excludes important factors that affect people's well-being, such as the value of:

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If an economy maintains a small rate of growth for a long period of time, then the size of the economy:

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Human capital is:

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Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved ______.

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Governments contribute to increased average labor productivity in each of the following ways except by:

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An example of a government policy to enhance technological progress is:

Correct AnswerverifiedShow Answer

In symbolic terms where Y equals real GDP, POP equals total population, and N equals the number of employed workers, Y/POP must equal:

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The establishment of well-defined property rights increases:

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When a firm builds a new factory, this is an example of an investment in:

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Which of the following is an example of an investment in human capital?

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Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP.

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Average labor productivity times the proportion of the population employed equals:

Correct AnswerverifiedShow Answer

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

Correct AnswerverifiedShow Answer

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start new economic enterprises, while run the enterprises on a day-to-day basis.

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Countries with high real GDP tend to have infant mortality rates and literacy rates than countries with low real GDP.

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