Question 1

The Karmic Deed Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital?

Accepted Answer

A)   the owner's knowledge of how to prepare vegetarian entrees
B)   the money in the owner's account at the bank from which she borrowed money
C)   the tables and chairs in the restaurant
D)   the fresh fruits, vegetables, and grains the restaurant uses to prepare its mealsE) A) and D)
F) A) and C)

Question 2

Each day Sonja works 8 hours and produces 8 units of goods and services. Emma works 10 hours each day and produces 9 units of goods and services. It follows that

Accepted Answer

A)   Sonja's productivity is higher than Emma's.
B)   Emma's productivity is higher than Sonja's.
C)   Emma's income per hour will be higher than Sonja's.
D)   Sonja's income per day will be higher than Emma's.E) A) and B)
F) A) and C)

Question 3

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

Question 4

If a country made it easier for people to establish and prove the ownership of their property, real GDP per person would likely rise.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best describes the response of output as time passes to an increase in the saving rate?

Accepted Answer

A)   The growth rate of output does not change.
B)   The growth rate of output increases and gets even larger as time passes.
C)   The growth rate of output increases and does not change as time passes.
D)   The growth rate of output increases, but diminishes to its former level as time passes.E) A) and D)
F) A) and C)

Question 6

Which of the following can be measured by the level of real GDP per person?

Accepted Answer

A)   productivity and the standard of living
B)   productivity but not the standard of living
C)   the standard of living but not productivy
D)   neither the standard of living nor productivityE) All of the above
F) B) and C)

Question 7

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

Accepted Answer

A)   decreasing returns to scale.
B)   zero returns to scale.
C)   constant returns to scale.
D)   increasing returns to scale.E) All of the above
F) A) and B)

Question 8

Country A and country B are the same except country A has a capital stock of 5,000 a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000 and a population of 24,000 and employment of 20,000.

Accepted Answer

A)   Country A has a higher standard of living and country B will not catch up.
B)   Country A has a higher standard of living but country B will catch up.
C)   Country B has a higher standard of living and country A will not catch up.
D)   Country B has a higher standard of living but country A will catch up.E) B) and D)
F) None of the above

Question 9

Educational attainment tends to be

Accepted Answer

A)   low in countries with high population growth.
B)   low in countries with low population growth.
C)   high in countries with high population growth.
D)   None of the above are true.E) B) and D)
F) B) and C)

Question 10

Proprietary technology is knowledge that is

Accepted Answer

A)   known but no longer used much.
B)   known, but only recently discovered.
C)   known mostly by only those in a certain profession.
D)   known only by the company that discovered it.E) A) and B)
F) A) and C)

Question 11

Productivity can be computed as the number of hours worked divided by output.

Accepted Answer

A) True 
 B)False

Question 12

In the country of Suchnott, the price of silver increased from $30 per ounce to $32 per ounce during a time when the overall price level increased by 5 percent. During this period, the real price of silver

Accepted Answer

A)   increased.
B)   decreased.
C)   stayed the same.
D)   might have increased, decreased or stayed the same; more information is needed to be sure.E) None of the above
F) B) and C)

Question 13

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 if we know the values of A, K/L, H/L, and N/L, we also know the value of

Accepted Answer

A)   output.
B)   labor productivity.
C)   A.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 14

The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called

Accepted Answer

A)   physical capital.
B)   natural resources.
C)   human capital.
D)   technological knowledge.E) B) and C)
F) A) and D)

Question 15

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Accepted Answer

A) True 
 B)False

Question 16

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)   FranceE) All of the above
F) B) and C)

Question 17

Ryan plans on going to go to study engineering. What he learns about existing information increases

Accepted Answer

A)   both technological knowledge and human capital.
B)   technological knowledge but not human capital.
C)   human capital but not technological knowledge.
D)   neither technological knowledge nor human capital.E) B) and D)
F) A) and C)

Question 18

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) None of the above
F) A) and D)

Question 19

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Accepted Answer

A)   decreasing returns to scale.
B)   zero returns to scale.
C)   constant returns to scale.
D)   increasing returns to scale.E) A) and B)
F) C) and D)

Question 20

If there are constant returns to scale, the production function can be written as

Accepted Answer

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) .E) A) and D)
F) B) and D)

Exam 7: Production and Growth

In the country of Suchnott, the price of silver increased from $30 per ounce to $32 per ounce during a time when the overall price level increased by 5 percent. During this period, the real price of silver

Correct AnswerverifiedShow Answer

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 if we know the values of A, K/L, H/L, and N/L, we also know the value of

Correct AnswerverifiedShow Answer

The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called

Correct AnswerverifiedShow Answer

The Karmic Deed Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital?

Correct AnswerverifiedShow Answer

Each day Sonja works 8 hours and produces 8 units of goods and services. Emma works 10 hours each day and produces 9 units of goods and services. It follows that

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

You sell fruit smoothies. One day you double the time you spend and double all your inputs, and make twice as many smoothies. Your smoothie production function has

Correct AnswerverifiedShow Answer

Which of the following can be measured by the level of real GDP per person?

Correct AnswerverifiedShow Answer

Country A and country B are the same except country A has a capital stock of 5,000 a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000 and a population of 24,000 and employment of 20,000.

Correct AnswerverifiedShow Answer

Ryan plans on going to go to study engineering. What he learns about existing information increases

Correct AnswerverifiedShow Answer

Educational attainment tends to be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If there are constant returns to scale, the production function can be written as

Correct AnswerverifiedShow Answer

Proprietary technology is knowledge that is

Correct AnswerverifiedShow Answer

Productivity can be computed as the number of hours worked divided by output.

Correct AnswerverifiedShow Answer

Which of the following best describes the response of output as time passes to an increase in the saving rate?

Correct AnswerverifiedShow Answer

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

Correct AnswerverifiedShow Answer

If a country made it easier for people to establish and prove the ownership of their property, real GDP per person would likely rise.

Correct AnswerverifiedShow Answer

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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